THE IMPACT OF HIGHER EDUCATION INSTITUTION–FIRM KNOWLEDGE LINKS ON ESTABLISHMENT‐LEVEL PRODUCTIVITY IN BRITISH REGIONS*

Abstract

In this paper we estimate whether sourcing knowledge from and/or cooperating on innovation with higher education institutions impacts on establishment‐level total factor productivity and whether this impact differs across domestically owned and foreign‐owned establishments and across the regions of Great Britain. Using propensity score matching, the results show overall a positive and statistically significant impact although there are differences in the strength of this impact across production and non‐production industries, across domestically owned and foreign‐owned firms, and across regions. These results highlight the importance of absorptive capacity in determining the extent to which establishments can benefit from linkages with higher education institutions.