Higher Education’s Role in Economic Development
Dr. Dustin Swanger, Monroe Community College
Introduction
Economic development is a key issue for the survival and growth of any
community. While this has always been true, the recent downturn in the economy and the
continuing impacts of September 11, 2001 have intensified the need for communities to
focus their skills and resources on economic development. Generally, economic
development activities can be divided into three major efforts 1) attracting new
businesses to the region, 2) growing existing businesses in the region, and 3) developing
new businesses in the region through innovation and investments.
Some college and university presidents see regional economic development as
critical to the academic mission of their college while others view it as an extraneous
activity to the college mission. For those who see economic development activities as a
relevant function for their institution, there are several reasons often cited including
revenue, community outreach, and image.
The traditional areas in which colleges and universities have played a role in
economic development have been research, consulting, and workforce development.
However, some colleges and universities have expanded their role to areas of technology
transfer for new business start-ups, business development (including assisting companies
develop business plans), providing or linking to venture capital funds, providing a
leadership role in the development of industry clusters, providing incubators for small
businesses to develop, and to actively participating in the recruitment and retention of
business and industry to their regions.
During the meeting it also became clear that an important aspect of economic
development can include the arts, tourism, and other activities contributing to the cultural
vitality of a region. Academic institutions often provide centers for the arts, creating a
climate of innovation, tolerance for diversity and creativity that also contributes to the
economic development of a region.
Need for College Participation
Why should colleges and universities consider participating in economic
development activities? Those institutions that are involved in economic development
cite several reasons for their participation in such activities.
First, for research universities, sponsored research funds brought into the region
create in themselves economic development activity. Additionally, research and
technology development through corporate sponsorship and the various federal and state
agencies (DOD, NIH, NASA, etc.) can lead to an economic development outcome ( i.e.
new technology can spin-off into a new company).
Second, many colleges, as well as research universities, cite academic
opportunities for collaboration. Participation in economic development activities
including small business start-ups, workforce development, entrepreneurship, etc. can
provide faculty the opportunity to gain additional experiences in their field and bring
those experiences to the classroom. Such collaborations also offer opportunities for
students to conduct research, gain experience, participate in business competitions and
other activities.
A third reason cited is more altruistic. Many presidents simply state that what is
good for the community, is good for the college or university. That overarching theme
implies that participation in economic development activities means short and long-term
benefits for a higher educational institution. These benefits can include a strong tax base,
increased enrollments, positive public image, and others. Higher education participation
in economic development activities builds a stronger community. It follows that
attracting strong faculty members to the university or college is easier by nature of the
strong community; successful individuals are attracted to successful communities.
Issues to Address
The issues identified for higher education range from leadership to procedural in
nature. They all require a leadership buy-in and, in some cases, suggest or imply policy
modifications. We will take each issue identified and discuss briefly the concerns.
1. Presidential Leadership
An issue mentioned on several occasions regarding the economy and its
development is the apparent lack of an articulated vision for the region. Clearly the
development of such a vision is an overall community strategy and agenda; however,
college and university presidents must take a leadership role in economic development. A
meeting of the area presidents provides an excellent forum for college presidents to
discuss economic development activities and to decide the leadership role they will take.
While recognizing that economic development is “led” by several agencies and
governments in any given region, college presidents who have had a presence at that
leadership table have had great impact on their communities.
In addition, presidents should consider creating a regional committee (permanent
or ad hoc) consisting of representatives who would serve as their colleges’ economic
development officer. Presidents should identify who on their campus is the person
primarily responsible for their college’s economic development activities to serve on
such a committee. The committee would provide coordinated input of higher education’s
role and contributions into the development of marketing strategies for the recruitment of
companies to the region, inventory the assets of the region’s colleges that can be
leveraged for economic development activities, share information to help guide regional
curricula, and coordinate the resources available to business and industry in the region.
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2. Policy Modifications
Regarding college and university policies and practices, there may be issues
around embracing economic development initiatives and the policies and practices of
each institution. The issues are as follows:
First, few institutions include economic development or any reference to such
activities in their mission statements. Mission statements set the priorities and activities
of any organization. The lack of any reference to economic development suggests, then,
that economic development is not a priority. Those institutions without such a reference
should examine their mission and its relation to economic development and determine
their role, if any. Will they conduct research? Will they provide engineering services
and/or consulting? Is their focus on providing business graduates? What opportunities
will students in career and business programs have to participate with companies? Will
they support a business incubator for students or small businesses? Such questions of
broad mission and policy are the purview of the president and the institution’s board.
Second, consideration might be given to broadening the traditional criteria for
faculty promotion and tenure to recognize some activities related to economic
development as appropriate intellectual or scholarly activity. Few, if any, area colleges or
universities now consider economic development activities in their promotion and tenure
processes. Could the development of a new technology, and its patent, be considered
comparable to a publication and therefore equally worthy for consideration? Could
activities to develop the region’s workforce in new high technology areas also be
considered as reasonable activities or service toward promotion and/or tenure?
Third, some college and university faculty, are now involved in business start-ups
based on technologies developed or enhanced in university labs. However, faculty often
struggle between leaving the university to start and manage such a new company, and
remaining a member of the faculty where they can continue to teach, conduct research,
and participate in the academe. Universities should consider policies that make it possible
for faculty to participate in a business start-up while maintaining their faculty status and
provide clarity about any related intellectual property issues. Such policies may enable
the faculty member to remain on the faculty yet serve a new company as the Chief
Technical Officer or on a Scientific Advisory Board. The University may become a
partner in the company and provide venture capital as an investment. Efforts in this area
would allow faculty to be entrepreneurial while enabling universities to retain high
quality faculty and perhaps attract additional faculty who would be interested in joining
an entrepreneurial community.
3. Inter-Institutional Collaborations in Technology and the Arts
Another area for consideration is that of Inter-Institutional Collaborations. There
are many areas where, through collaboration, greater outcomes toward economic
development efforts will be achieved. A model of university collaboration for research
projects comes from Chicago. There, the major research universities get together to
discuss areas in which they wish to pursue research funding. They also determine how
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they can best pursue funding as a consortium in order to be successful. While the Chicago
universities also pursue grants on their own, this collaborative effort has increased the
research dollars coming to the region. It has increased inter-college communications and
projects that leverage the strengths of the various regional institutions as well.
Through collaborative efforts, area colleges and universities can pursue the
development of technology clusters. With the participation of all of the area colleges,
there is more to gain for each college and as a community. In conjunction with the
development of industry clusters, area institutions can facilitate the development of
Centers of Excellence. In such Centers, collaborative research is done, training is
conducted, professional meetings take place, and high technology symposia are
presented. Each area institution would bring with it expertise to add to the centers.
Beyond the technology and business skills that colleges and universities bring to
the economic development table, there is another aspect to economic development which
higher education brings to the community: creativity. Insight from a recent book by
Richard Florida, “The Rise of the Creative Class”, Florida and researchers from Carnegie
Mellon University identified entrepreneurially successful communities as those that are
attractive to a “creative class” of individuals. These cities have not only technical
expertise, but also an active arts community and a tolerance for diversity and alternative
ideas.
Activities in this area include the development of the arts and providing an outlet
for students to express their art with the community. Embracing an atmosphere of
creativity and diversity on campus affects a similar atmosphere in the community.
Through collegiate art and theatre competitions open to the community, community
education classes, open houses, community art exhibitions on campus, and other
activities, the development of an atmosphere of creativity begins to develop. Those
communities that have experienced success in these areas (San Francisco and, more
recently, Austin, TX) have successfully attracted young creative people to the
community, inspired creativity in area companies, and increased the economic impact of
hospitality and tourism in their regions.
4. Relations with the Community, Students, and Graduates
Another means by which the colleges and universities can help, is in keeping the
best and brightest students in the region. Many communities experience what is
commonly called the “brain drain”. College and university graduates who are highly
successful either return home from their experience in higher education or often move to
other parts of the country upon graduation. Efforts can be made to keep those successful
individuals in the region. These efforts include colleges and universities collaboratively
working with business and industry to develop opportunities locally through internships,
co-ops, and placements. One such effort could operate in concert with the local
businesses and business organizations, where placement directors for all of our colleges
convene regularly to hear from smaller companies about hiring needs. This increased
communication helps us to understand company needs better, and it helps companies find
out that they too can gain entrée to some of the smartest and best students.
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Efforts toward developing an atmosphere of creativity also help in keeping recent
college graduates in the region. Collaboration with a marketing campaign can assist in
presenting an image of the local economy as a place to live and grow.
5. Seed Venture Capital
Lastly, and perhaps the most controversial and thus requiring a more detailed
exploration, there is an opportunity for colleges and universities to use some funds as
venture capital in the development of companies in the region. While it is recognized that
fiscal management of any university is the purview of its board, evidence supports that
managed venture capital investments are equally as secure as investment in the stock
market (a practice common with university endowments).
The reason often cited for not investing in seed capital funds locally is the risk
involved and the fiduciary duty to the fund being managed. In light of the rates of return
demonstrated in all the recent studies of investment performance nationally, colleges and
universities should examine this position and give further consideration to investing in seed
funding for emergent companies in the region. Recent studies by the Harvard Business
Review, the National Venture Capital Association and the Wharton School have
demonstrated that such investments, over long periods by the Universities cited above,
have, in fact, provided an impressive return on investment.
The higher education community has an opportunity to change the economic
landscape for its own benefit, the benefit of its local communities, and that of its faculty
and students. A vibrant emerging technology market will attract top faculty to the
universities and national firms to the area to partake in the emerging opportunities from all
our endeavors.
Conclusion
Historically, higher education has served three major functions in society;
educating future leaders, training individuals for a profession, and preparing individuals
to participate in the society. Later, higher education also took on the role of the creation
of new knowledge through research and the dissemination of knowledge through
scholarly publication. Thus, through these traditional functions, higher education has
served an economic development mission; but now the academic community is being
challenged to play a more direct role in a knowledge-based economy. While many
colleges have, in fact, embraced the economic development aspects of higher education,
there are some for which their participation is unclear. New policies and practices are
now needed to support the economic development mission of area colleges and those
faculty who participate in these activities.
Higher education can and does have a tremendous impact on the economic
foundation and development of a community. Additionally, in those communities rich
with higher educational resources, when those institutions developed collaborations for
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economic development, success followed. Such a collaborative effort can be done with
the leadership of the area presidents. The time and the opportunity are now.
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