DEVELOPING THE ENTREPRENEURIAL UNIVERSITY: A MANAGEMENT
METHOD FOR SUSTAINABLE DEVELOPMENT AND ENHANCED INCOME
GENERATION IN EUROPEAN HIGHER EDUCATION
S. Hagen*, N. Toivonen**, N. Kolesnikov**, O. Oleinik**
*Mercia Institute of Enterprise, University of Warwick,
**Northern European Open University, Petrozavodsk State University
toivonen@petrsu.ru, ksk@petrsu.ru
In recent decades, trends such as globalization, the development of common trading zones,
intensification of international competitiveness, increasingly require organizations to be innovative in the
way they operate and in the products and services they produce. Indeed, many government policies have
encouraged greater collaboration between the three worlds which were once very separate: namely,
private and public research, business (as a structure for wealth creation) and education. All three, it is felt
by policy-makers, can converge into a virtous circle to produce successful innovation. This model is a
spiral (as opposed to the traditional linear) of innovation that aims to capture multiple reciprocal
relationships across institutional settings (public, private and academic) at different stages of the
innovation process to form the so-called «Triple Helix». According to this model, higher education
institutions (HEIs) become the «hybrid agents of innovation», with the university hi-tech spin-offs, with
venture capital funds set up by universities. Universities today, in this school of thought, are held to be
vortexes which can combine use of knowledge with industrial and regional growth and provide a habitat
for the dynamic interaction between educational, R&D, business and government sectors. Universities are
starting to play the role of «innovation coordinators» responsible for coordination and management of the
various phases of innovation activity in their regions.
So it is that the Higher Education research-led sector worldwide, and particularly in Russia, are facing
new challenges that require new and innovative systems for sustaining and developing new and innovative
technology-transfer activities in support of the modern competitive economy. «Traditional» financing
mechanisms – when a public institution is funded from state sources alone – are likely to become less
evident and more and more limiting in their effect on reform in the Higher Education environment as state
funding becomes more and more allocated on a market-led basis. This has become true in the UK with its
development of new Third Mission policies which favour increasing state funds to the more ‘successful’
entrepreneurial universities. Russia, which always has a keen eye on innovation in university management
methods and funding systems worldwide, is likely to follow the same trend. Currently the Russian system of
Higher Education and the Research Institutes is undergoing a series of changes initiated by the Ministry of
Education and Science. The main idea of the reform is to encourage institutions to promote their educational
and research services to the private sector. By implication, the number of H.E. institutions obtaining funding
from federal government sources will decrease considerably.
What is going on in Russia nowadays is similar to what happened in UK in 80th when the cabinet of
Prime Ministers Mrs Thatcher cut state funding to UK HEIs by, on average, 17,5%. This led to the rapid
development of the income-generation schemes at the univweristies that were hardest-hit like Salford and
Warwick, forcing these univeristies to become entreprenerial, i.e. earning money through the providing
services to the market as they were unable to maintain their level of educational provision with the loss of
state funding. However, even though at the beginning, fundraising activities (such as raising charitable
donations from alumni and local business) were considered a good short-term solution to plug the shortfall
in state funding, it was not a reliable form of recurrent funding in the long-term. The practice of earning
money by focusing on various commercial and innovative activities, e.g. from selling education to joining
business in a series of profitable joint ventures involving the exploitation of technological development
(where business needed the advanced research outputs of a univeristy) was a moiré sustainable method of
recovering lost revenue in the longer-term. This process had the effect of transforming a number of British
universities, previously renowned for their excellent classical education, into centers of successful
technology transfer, business development and entrepreneurial and innovative activities.
Similar to the UK 20 years ago, Russian universities have now to create innovative competitive
advantage in a world marketplace and develop entrepreneurial schemes in order to successfully compete for
more resources on the open market. Currently, «third stream» activities (as opposed to first stream –
teaching – and second stream – research- activities) are often separate from each other and remain in their
organizational silos – a system that reflects the importance of the practical organizational challenge facing
university managers and leaders, as well as demonstrating the rigidity of well-established structures in
Russia at present. However, the example and experience of British universities show that the institution as a
whole cannot develop entrepreneurial activities effectively if it is marginalized on the periphery of the
university and physically., as well as conceptually, separate from university’s «traditional» activities i.e.
education and research. For the new approach to work, entrepreneurship has to be seen as an integral part of
both first and second stream activities. In other words, there has to be a dynamic interrelationship between
the three parts. If the third stream activities are merely standalone, they will not survive for long. The
academic community has to understand why there are there, sympathise with them and support their
continuation as an integral part of university life. Mechanisms for supporting market-targeted innovations
should be implemented in every research and education division, academic and research staff should share
entrepreneurial culture and skills, students should be involved in entrepreneurial activities from the early
stages of education – a list of measures for interlacing «third stream» activities with the first two could be
extended further on. In that connection, entrepreneurial development requires the introduction of a new
management method, or culture, not the establishment of a separate unrelated appendage to the University.
The «Enterprising University Seminar Programme» for Russian Universities
A Partnership between The Northern European Open University (NEOU at Petrozavodsk
University and the Mercia Institute of Enterprise at Warwick University UK.
In light of the changes that currently take place in Russia and forecasting strong market demand in
next 5 years, NEOU in cooperation with Mercia Institute of Enterprise, University of Warwick, Great
Britain have agreed to develop a dual award training program focused on how to develop the Enterprising
University. The project is funded by the British Council. The consortium will develop a continuous
professional development courses: «Entrepreneurship at the University: Strategic Management of the Third
Stream Activities» for the top-level university managers – rectors and vice-rectors, and «Entrepreneurship at
the University – Managing Third Stream Activities» for the university managers and administrators. The
training programs are aimed at raising the level of awareness and management competence in Russian
universities in in order to develop «third stream» activities, thus ensuring their competitiveness.
The course would focus on the issues, which are most attractive to regional universities. Since
universities are usually the heart of knowledge, education and research in the region, they can take the
responsibility of bringing together business, education sectors and local governing bodies in effort to aid
to the competitiveness of the region as a whole, based on its innovative advantages.
The Russian Partner: The Northern European Open University (NEOU) was established as a
division of Petrozavodsk State University (PetrSU) and runs a set of university’s «natural» activities –
educates students, implements educational and research projects etc. The distinguishing characteristics of
NEOU is that it acts on a fully self-financing basis i.e. does not obtain a regular funding from government
sources or mother institution. NEOU is the first division of PetrSU where the features of entrepreneurial
university are introduced into management system.
The UK Partner: The Mercia Institute of Enterprise
The Mercia Institute of Enterprise (MIE) was launched at Warwick University by Lord Sainsbury
in January 2001 on behalf of the UK government. The Mercia Institute consortium is based at Warwick
University, the leading entrepreneurial university of Europe. The membership of the Institute has now
expanded to include 12 university members and comprises the Universities of Aston, Birmingham,
Coventry, Keele, Staffordshire, Central England, Open University, Warwick and Wolverhampton. In
addition, three West Midlands University Colleges, Harper Adams, Newman and Worcester, are
associated with Mercia Institute and have been accepted as members. This makes the Institute the largest
University. Enterprise Consortium in England.
The Mercia Institute of Enterprise was set up with the intent of developing scientific entrepreneurs
and commercialising the knowledge base of the universities. The Institute’s broader mission is to promote
the development of Enterprise and Entrepreneurship programmes in the West Midlands universities and
achieve knowledge transfer through permanently changing attitudes to entrepreneurship and business
start-up within Higher Education.
The Institute’s activities are currently focused on developing new curriculum opportunities for
students and academic staff to study and engage in Enterprise and Entrepreneurship. Working closely
with the exploitation and commercial units of the universities, the Institute seeks to facilitate the
exploitation of the rich research base of the Universities in the Region and their niche capabilities and
encourages university spin-outs. The combined research income of the West Midlands leading research
universities exceeds £147m per annum with over 1,850 research active staff in departments which have
been assessed by the Higher Education Funding Council as having attained national (RAE 4) or
international (RAE 5 and 5*) excellence in research. The Institute works closely with the Centre for Small
and Medium sized Enterprise (CSME) at Warwick Business School, which is one of only three Business
Schools in the country to achieve the coveted 5* maximum rating for research.