Does learning from prior collaboration help firms to overcome the ‘two-worlds’ paradox in university-business collaboration?

There is now substantial evidence of the positive contribution universities can make to helping firms’ innovation. Building university-business collaborations, however, confronts the ‘two-worlds’ paradox, and the difference in institutional logics and priorities between businesses and universities. Here, we consider whether firms’ experience from prior collaboration can generate learning which can help to overcome the two-worlds paradox and improve firms’ ability to generate new-to-the-market innovations in collaboration with universities. Our analysis is based on panel data for UK companies and controls for the decision to innovate. We find evidence of significant learning effects which both increase the probability that firms collaborating with universities are able to develop new-to-the-market innovations and then benefit from those innovations. For smaller firms learning effects are strongest from prior collaboration with customers, while for medium and larger firms the strongest learning effects arise from prior collaboration with consultants.