COMMERCIALISATION OF UTM RESEARCH FINDINGS:
PROBLEMS AND CHALLENGES
By
Assoc. Prof Dr. Amran Md. Rasli
Universiti Teknologi Malaysia
ABSTRACT: As Malaysia lags behind its major competitors in the region, policy makers began to
develop strategies for Malaysia to gain competitive advantage through innovation. However, most
commercialisation efforts have failed mainly due to the lack of connectivity between the industry
and academia. Recent assessment by the Ministry of Science, Technology and Innovation
(MOSTI) indicated that most academia research and development (R&D) activities are funded by
the ministry and other governmental agencies with only 0.68% university R&D funding coming from
the industry as compared to the more advanced countries such as Canada (11.8%), Germany
(7.5%), UK (6.2%) and USA (5.5%). The key reason for the poor university-industry linkage in the
life sciences sector is the lack of development of the industrial sector which ‘prefers’ to be labor
intensive and not invest into technology to gain competitive advantage. As such, Malaysia’s
commercialisation effort to date has been quite modest with low number of patents indicated by 8.8
patent applications per population million as compared to Australia (546), USA (623) and South
Korea (1,561). Further compounding the situation is the fact that the commercialisation movement
has not resulted in any significant licensing revenue for the Malaysian universities, i.e., no R&D
output from Malaysian universities has been commercialised yet on a national scale. Such
challenges are also faced by Universiti Teknologi Malaysia (UTM), the premier engineering
institution in Malaysia. Though UTM had received a lot of funding from MOSTI for basic and
applied research, its achievement includes 102 invention disclosures, 34 filed patents, 1 intellectual
property granted, 107 national awards, 64 international awards and 2 commercialised projects. Key
areas of challenges to improve the commercialisation rate are mainly in the areas of funding,
industry link, incentive mechanism, manpower and technology transfer infrastructure. UTM had
taken bold moves by allocating pre-seed funding for commercially viable researches, develop
technology incubators to nurture the viable research projects, and conduct business matching
forums to increase industry-academic interaction.
Keywords: Competitive advantage, commercialisation and university-industry linkage
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Introduction
Sustainable competitive advantage allows the maintenance and improvement of a nation’s
competitive position in the global market. It is an advantage that enables business to survive
against its competition over a long period of time. Sustainable competitive advantage is achieved
by continuously developing existing and creating new resources and capabilities in response to
rapidly changing market conditions. Among these resources and capabilities, in the new economy,
knowledge represents the most important value-creating asset.
The opportunity for a country to sustain their competitive advantage is determined by of two kinds
of capabilities: (1) distinctive capabilities and reproducible capabilities1; and (2) the unique ability to
achieve synergy2. Distinctive capabilities, or the characteristics which cannot be replicated by
competitors, or can only be replicated with great difficulty, can be of many kinds: patents, exclusive
licenses, strong brands, effective leadership, teamwork, or tacit knowledge. Reproducible
capabilities are those that can be bought or created by competitors and thus by themselves cannot
be a source of competitive advantage. Many technical, financial and marketing capabilities are of
this kind. A nation’s distinctive capabilities need to be supported by an appropriate set of
complementary reproducible capabilities to enable a nation to sell its products in the market it
operates.
The Case of Malaysia
As Malaysia lags behind its major competitors in the region, policy makers began to develop
strategies for Malaysia to gain competitive advantage through innovation. As mentioned before,
another component to sustain competitive advantage is the ability to create and achieve synergy.
Though Malaysia has embarked on an aggressive program to enhance research and development
science and technologies through the establishment of universities and research institutions in the
last three years, the anticipated commercialisation activities have failed mainly due to the lack of
connectivity between the industry and academia. Connectivity between industry and academia are
typified by the following issues: (1) commercialisation of R&D has not been traditionally a high
priority of universities; (2) during the last decade these efforts have been restructured in leading
universities; and (3) increased emphasis has been put on connecting R&D capabilities to the
commercial strengths and responsibilities of the university. Recent assessment by the Ministry of
Science, Technology and Innovation (MOSTI) indicated that most academia research and
development (R&D) activities are funded by the ministry and other governmental agencies with
only 0.68% university R&D funding coming from the industry as compared to the more advanced
Refer to the seminal work by John Kay (1995) entitled Foundations of Corporate Success: How Business
Strategies Add Value, Oxford University Press
1
Lengnick-Hall C. A. (June, 1992). Innovation and competitive advantage: what we know and what we need
to learn, Journal of Management, refer: www.findarticles.com/p/articles/mi_m4256/is_n2_v18
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countries such as Canada (11.8%), Germany (7.5%), UK (6.2%) and USA (5.5%) 3. Countries such
as Canada, Britain, Australia and Germany exhibits strong university-industry linkage.
One key reason for poor university-industry linkage in Malaysian especially in the life sciences
sector is the lack of industry receptors due to limited state of development of this industry in
Malaysia. The Malaysian industrial sector ‘prefers’ to be labor intensive and not invest into R&D in
technology to gain competitive advantage. It is not surprising to note that the World Economic
Forum Report 2003-20044 classifies Malaysia as a non-core technology-innovating economy. Noncore innovators depend more on technological adoption from abroad. Statistics to support these
facts are based on a study of 102 countries, whereby Malaysia is ranked:

20th in the technology index,

41st in the innovation sub-index,

32nd in the ICT sub-index,

29th in Growth Competitiveness Index rankings Malaysia
As such, Malaysia’s commercialisation effort to date has been quite modest with low number of
patents indicated by 8.8 patent applications per population million as compared to Australia (546),
USA (623) and South Korea (1,561)5. Further compounding the situation is the fact that the
commercialisation movement has not resulted in any significant licensing revenue for the
Malaysian universities, i.e., no R&D output from Malaysian universities has been commercialised
yet on a national scale. Only 5.1 % of 5,232 R & D projects implemented during 7 th and 8th
Malaysia Plans were considered as having commercialisation potential.
The Case of Universiti Teknologi Malaysia
Since its establishment in 1972, UTM has increased its participation in R&D activities in key areas
of science and technology. The university has established several world class laboratories such as
Chemical Engineering Pilot Plant, Marine Lab Institute of High Voltage to conduct high end R&D
activities whilst at the same time nurtured and developed specific competencies in key areas of
technology such as nanotechnology, biotechnology and advanced electronics.
So where did we go wrong? Despite huge R&D funding from MOSTI for the 7th and 8th Malaysia
Plans, i.e., RM86 million and RM130 million respectively, UTM conducted a record number of 724
research projects6. However, upon closer scrutiny the tangible outcomes only included 102
invention disclosures, 34 filed patents, 1 intellectual property granted, 107 national awards, 64
Refer to Noraieni Mokhtar’s presentation entitled The Economics Of Innovation during Malaysian
Economic Outlook Conference organized by ASLI on 3rd February 2005.
3
4
World Economic Forum (2004). The Global Competitiveness Report 2003-2004. Oxford University Press
5
Data from MOSTI, 2005
6
Data from UTM’s Research Management Centre, 2005
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international awards in the past 5 years7. However, only 2 projects had achieved “fully
commercialised status” with the formation of companies and investment from the external
investors. To make matters worse, the two projects have not performed up to the expectations of
the university.
Challenges
Commercialisation is a new culture among most UTM researchers as most feel that their tasks are
mainly to generate and transmit knowledge through research conducted8. However,
commercialisation is now seen as an important contributor to universities to achieve financial
independent now that the government had reduced allocation to all public universities by 30
percent. Key areas of challenges identified to improve the commercialisation rate are mainly in the
areas of funding, industry link, incentive mechanism, manpower and technology transfer
infrastructure.
The ultimate challenge is to change the mindset of the industry and even to some extent the
government, which feels that research done at the local universities are inferior and irrelevant to
their requirements. Perhaps this phenomenon is the legacy of the colonialist to the point that
Malaysians doubt their own technological capability and prefer to import technologies instead.
Even if the university, developed researches which are considered as breakthroughs, the industrial
sector would under-value its potential. If this trend were to continue then Malaysia will forever be a
non-core technology-innovating economy.
It is also apparent that the is a lack of awareness of commercialisation potential of R&D activities
among UTM researchers, coupled with insufficiency of trained personnel in areas related to
technology assessment, intellectual property evaluation and management as well as
entrepreneurship. Most researchers are just good researchers, they are not interested in becoming
entrepreneurs. As an example, a recent program designed and sponsored by Multimedia
Development Corporation for ten IT based researches to be commercialised could only gather
response from three researchers.
The tendency to disclose their finding prior to intellectual property protection is another problem,
which together the issue of intellectual property ownership9 further compounded UTM’s
commercialisation problem. In some cases, some researchers had jumped the gun by negotiating
with the industry without referring to the commercialisation office. They would only refer once they
encountered problems. In most cases, they failed to legally protect themselves and the university
resulting in long-term repercussions.
7
Data from UTM’s Bureau of Innovation and Consultancy, 2005
Martin, B. R. and Etzkowitz, H. (2000). The origin and evolution of the university species. Science and
Technology Policy Research Unit (STPRU), Electronic Working Paper Series, Sussex University.
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UTM owns 100% of any intellectual property rights generated from UTM’s research activities. However,
royalty gains could be negotiated between the university and the researcher.
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Solutions
Realising the need to complement its strong basic research capabilities, UTM had taken bold
moves by allocating pre-seed funding for commercially-viable research projects, develop
technology incubators to nurture the viable research projects and conduct business matching
forums to increase industry-academic interaction. Having learnt from past mistakes, the
researchers must enroll for courses and identify industrial partners first prior to applying for the preseed funding. Another area of focus is to develop incubators and enterprise lots for
commercialisation activities. UTM had been able to convince Malaysian Technology Development
Corporation (MTDC) and MARA to develop technology garages and incubator lots while at the
same time provide more funding to complement the pre-seed funding made available by UTM.
Venture capitalists such as MTDC and MARA are keen to finance some of UTM research findings
to the stage of IPO.
UTM should be more market oriented in their R&D activities. Collaborative research activities
between UTM and the industry need to be enhanced to ensure that research in appropriate
technologies are focused instead of conducting ‘logical’ basic researches, i.e., reinventing-thewheel type of researches. At the same time, UTM should ensure that personnel at the
commercialisation office should be sufficient and adequately trained in critical areas related to
project management and intellectual property assessment.
Workshops and seminars related to commercialisation are now conducted on a frequent basis to
inculcate the importance of commercialisation among the researchers. Successful universityentrepreneurs were invited to share their experience while mentoring researchers that has ideas
and researches with commercialisable values. At the same time, elements of flexibility in allowing
researchers to form spin-out companies and joint-ventures with investors were added in the
university’s intellectual property policy. Though involving academics with spin-outs is often viewed
as one of the positive outcomes to be gained from supporting this type of activity, some believed
that there are opportunity costs involved as well. Academics focusing time and effort on
commercialisation activities may divert attention from their core activities of teaching and research the classical situation of conflicts of interest. A proper guide needs to be developed to ensure that
academics could benefit from both perspectives.
Conclusion
What awe need are some success stories to ensure that commercialisation is viewed in a positive
manner. Though it may seem like an uphill battle to convince local researchers to change their
mindsets, the commercialisation culture must be a part of UTM’s culture to ensure that UTM will
achieve its dream to be a world-class institution by 2010.
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