Virtuous cycles in knowledge transfers: Portals to more persistent and beneficial relations
Using Swiss firm-level data from 1999 to 2017, this study reveals that while financial constraints and limited absorptive capacity often lead to discontinuous knowledge transfer, specific forms like research consortia can serve as accessible entry points for resource-constrained firms to build organizational capital and establish virtuous cycles toward persistent, beneficial university-industry relationships.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
In the modern economy, the most valuable raw material is not oil or steel, but new ideas. For a company to invent a better battery, a faster drug, or a smarter software, it often needs knowledge that exists outside its own walls. This knowledge lives in universities, where researchers spend their days pushing the boundaries of science. The process of moving this knowledge from the lecture hall to the factory floor is called knowledge transfer. It is a vital engine for innovation, but it is also a complex relationship. Companies must decide how to engage with universities: should they simply read published papers, or should they hire a researcher to work in their lab? Should they send an employee to a short course, or launch a joint project that lasts for years?
These choices are not random. They depend heavily on what a company has to offer. A firm needs money to pay for expensive projects, but it also needs a specific kind of internal skill, known as absorptive capacity. This is the ability to understand, digest, and use the new information once it arrives. Without this skill, even the best external knowledge is useless. Furthermore, these relationships have a rhythm. Some companies work with universities for a single project and then stop. Others maintain a continuous, decades-long partnership. The question that drives this research is why some companies stay in the game while others drop out, and whether the specific way they choose to collaborate makes that difference.
Researchers Florian Hulfeld, Dominique Foray, and Martin Woerter set out to answer these questions by looking at the real-world behavior of thousands of Swiss companies. They analyzed data spanning nearly two decades, from 1999 to 2017, covering over 4,000 firms. The data came from three major surveys that asked businesses exactly how they interacted with universities. The researchers categorized these interactions into nineteen different forms, ranging from informal chats and reading journals to hiring graduates, using university labs, and conducting joint research. They also tracked whether these relationships were temporary or permanent, sorting the companies into three groups: those that just started working with universities, those that stopped, and those that kept going year after year.
The first thing the data revealed was a clear divide between the temporary players and the permanent ones. Companies that engaged with universities only for a short time tended to stick to low-cost, low-risk activities. They read publications, attended conferences, or took employees to training courses. These are easy to start and easy to stop. In contrast, the companies that maintained long-term relationships used a much wider and more demanding set of tools. They hired university graduates, sent staff for internships, built joint laboratories, and launched complex research cooperations. These activities require significant investment of time, money, and trust. They are not just transactions; they are partnerships that build a shared language and deep connections between the business and the academic world.
The study confirmed that a company's resources play a massive role in this divide. Firms that lacked money or the internal skill to understand new science were largely locked out of the high-value, long-term partnerships. They simply could not afford the upfront costs or did not have the staff capable of managing a complex joint project. However, the researchers found something even more interesting: even when they accounted for these financial and skill differences, the type of collaboration a company chose still predicted whether it would stay or leave. This suggests that the method of engagement itself shapes the future. Some forms of collaboration, like joint research, create a kind of "sunk organizational capital." This is a term for the trust, networks, and shared routines that are built during a project. Once these are established, they lower the cost of doing business again in the future, creating a positive cycle that encourages the company to keep going.
Yet, not all high-value activities require the same heavy upfront investment. The researchers discovered a specific type of collaboration that acts as a potential gateway for smaller or less experienced firms: the research consortium. A consortium is a group project that brings together multiple companies and universities under one roof. Unlike a direct, one-on-one partnership, a consortium spreads the risk and cost. The data showed that these consortia were surprisingly popular among companies that were new to university collaboration or those that had previously dropped out. This suggests that consortia can serve as a "portal," allowing firms to dip their toes into deep water without needing to build a massive bridge first. They can learn the ropes, build trust, and develop the necessary skills to eventually move on to more intensive, permanent partnerships.
However, the researchers caution that this portal is not a guaranteed success story. The same data showed that research consortia were also frequently used by companies that eventually left the partnership. This indicates that while consortia offer an easy entry point, they do not automatically force a company to stay. If a firm uses a consortium but fails to build the internal skills and trust needed to go deeper, it may simply use the arrangement as a low-commitment "revolving door," taking what it needs and walking away. The study concludes that for these portals to work, they must be paired with efforts to strengthen the firm's internal ability to learn and adapt. Without that internal growth, the positive cycle of innovation cannot begin.
Ultimately, the paper paints a picture of a landscape where the path to innovation is not a straight line but a series of choices. Companies with deep pockets and strong internal skills naturally gravitate toward the most beneficial, long-term relationships. Those with fewer resources often get stuck in a cycle of short-term, low-value interactions. But the research offers a hopeful path forward: by using research consortia as a stepping stone, and by simultaneously building the internal capacity to learn, even resource-constrained firms can break out of the low-intensity trap. They can move from fleeting contact to enduring partnership, turning the flow of scientific knowledge into a steady, powerful current for their own growth.
Drowning in papers in your field?
Get daily digests of the most novel papers matching your research keywords — with technical summaries, in your language.