Regional innovation effects of applied research institutions

Abstract

We analyze the effect of applied research institutions on regional innovation activity. Exploiting a policy reform that creates tertiary education institutions conducting applied research, the Universities of Applied Sciences (UASs) in Switzerland, we apply difference-indifferences estimations to investigate the effect on innovation quantity and quality. Findings show a 7.7 to 13 percent increase in regional patenting activity (i.e., quantity), and a 1.3 to 11 percent increase in patent family size, and the number of granted patents, claims, and citations per patent (i.e., quality). Findings are robust to various model specifications, suggesting that applied research taught in UASs boosts regional innovation.

Innovation effects of universities of applied sciences: an assessment of regional heterogeneity

“…3 The differences in the innovation effect sizes of these different studies also support the argument of country heterogeneity by Ghinamo (2012). Pfister et al (2021) cover not only the causality caveat but also the evidence provided by Ghinamo (2012) that the type of research conducted by higher education institutions is crucial. Pfister et al (2021) analyze the establishment of UASs, i.e., higher education institutions of applied research, in Switzerland and find evidence for a positive effect on innovation.…”

“…Pfister et al (2021) cover not only the causality caveat but also the evidence provided by Ghinamo (2012) that the type of research conducted by higher education institutions is crucial. Pfister et al (2021) analyze the establishment of UASs, i.e., higher education institutions of applied research, in Switzerland and find evidence for a positive effect on innovation. 4 Both the innovation quantity, measured by patent applications, and innovation quality (e.g., citations and claims per patent) increased by 13% and 11%, respectively, in regions where UASs were established.…”

“…The establishment of UASs is useful for analyzing heterogeneity in innovation effects linked to economic preconditions for two reasons. First, the location of the newly established UASs in Switzerland was chosen in a quasi-random manner, i.e., it can be treated as an exogenous education expansion (Pfister et al 2021;Pfister 2017), and thus helps to identify causal effects.…”

“…Second, UASs are shown to interact with the regional economy in different ways. They cooperate with local firms (Arvanitis et al 2008)-having also an effect on firms farther away from the research frontier and from doing research on their own-, increase the share of R&D personnel in local firms (Lehnert et al 2020), and positively affect innovation in general (Pfister et al 2021). In addition, UAS graduates followed a vocational education and training track before studying at a UAS and, thereby, combine practical vocational skills with applied research knowledge.…”

“…In our empirical analysis, we match three different data sets using municipalities-the smallest political entities in Switzerland-to spatially merge data on (1) the UAS establishment, (2) economic preconditions and (3) innovation. First, to identify regions with a newly established UAS, we build on a dataset by Pfister et al (2021). We assign municipalities to either a treatment group (i.e., within a 25 kilometer radius around a newly established UAS) or the control group (i.e., outside a 25 kilometer radius around a newly established UAS).…”