The role of university-based industrial extension services in the business performance of small manufacturing firms: case-study evidence from Western New York

Abstract

This paper investigates the role of university-based industrial extension services in the business performance of small manufacturing firms in an economically declining region of the United States (Western New York). The outreach initiatives of a specific University at Buffalo (UB) programme are described. Particular attention is given to the activities of UB's Centre for Industrial Effectiveness (CIE), an outreach unit with a mandate to improve the product and/or process development efforts of local manufacturing firms. Our data suggest positive returns on investment for firms that have sought technical support under CIE programmes. A key finding is that CIE's services typically entail the transmission of well-established procedures rather than radically new ways of doing things. A further finding is that firms that have used CIE to develop improved products have experienced stronger investment returns than their counterparts that have focused upon process development (although the returns are positive in both instances). More broadly, our data suggest positive correlations between levels of project investment and a variety of commercial outcomes, including sales growth, job-retention, and unit-cost reduction. The implications of these results for regional economic development policy are discussed. The paper also reviews some of the weaknesses that curtail the effectiveness of university-based centres such as CIE.

Keywords:

• university-industry linkages
• extension services
• technical and engineering assistance
• business performance
• small manufacturing companies

Acknowledgements

The authors wish to thank Edward Malecki for useful comments and suggestions on an earlier draft of this paper. They would also like to thank two anonymous referees for detailed recommendations for improving the paper. All remaining errors and omissions are the sole responsibility of the authors.

Notes

Notes

1. The Centre for Industrial Effectiveness [CIE] is not a Technology Transfer Office [TTO]. The TTO for the University of Buffalo [UB] is the Office of Science, Technology Transfer and Economic Outreach.

2. Other than financial services (banking and insurance), the Buffalo/Niagara region has a lower 2001 location quotient for business services (0.81) than any other metropolitan region in the USA northeast (mean = 1.16).

3. Industrial jobs account for less than 10% of total employment across most US metropolitan areas. In Western New York, however, 13% of total employment is factory-based. This 13% earns roughly 22% of the region's total income.

4. These referrals are typically to non-engineering consultancies in spheres such as marketing, management, information technology, or finance/accounting.

5. CIE has 7.75 professional and support staff measured on an FTE basis.

6. In 2004, CIE won the University Economic Development Association (UEDA) ‘Project of the Year’ award for excellence in extension services. UEDA is a national organization that annually ranks the effectiveness of various types of university-based economic development efforts. The award was given on the basis of CIE's worker training programmes and TQM initiatives.

7. The CIE estimates that clients typically invest between $12 000–$18 000 in their projects. Our survey has captured firms that spend at the higher end of the investment scale.

8. The term ‘CIE project investment’ refers to the total amount of dollars spent by clients on projects that were supported by CIE consulting services. In all cases, CIE developed the framework plan for project implementation.

9. ISO certification is in many cases sought to satisfy customer stipulations rather than to introduce dramatically improved manufacturing procedures. Several firms noted that ISO compliance was good for customer relations, but that process improvements were actually quite minimal.

10. Export-based models calibrated over the period 1980–2001 (quarterly data) suggest that a 1% increase in regional exports delivers a 0.76% increase in gross regional income. Few other US metropolitan regions exhibit such a high export elasticity of income (notable exceptions include Seattle [aircraft exports], San Francisco [electronics], and New York City [financial, business, and media services]).

11. For an exploratory assessment of these issues in the context of TTOs, see Siegel et al. 2003.

12. University-based centres often lose key staff members because central or base-funding is allocated on an annual basis, leading to fears about job-security and/or rewards (e.g. salary growth).