University R&D

Cooperation Can Stop German Firms from Going Overseas for Research

An Indian chemist working for Germany's BASF in Mumbai. Source: BASF
An Indian chemist working for Germany's BASF in Mumbai.

Germany’s current debate on the relationship between business and science is being waged using incorrect assumptions. While critics cite a growing influence of industry on university research, the exact opposite is happening. German businesses are increasingly relying on overseas research while withdrawing from involvement from the country’s colleges and universities. This may calm the critics, but it should instead be seen as an alarm signal.

We do not need less cooperation between businesses and universities – we need more.

Despite the impression given by the media, German industry is playing an increasingly smaller role as a source of third-party funds for the country’s universities. In 2005, the percentage of external funds from industry was at 28.1 percent, but by 2012, it declined to a historic low of 19.9 percent. Now, over 70 percent comes from the state or state-financed sponsors.

The reasons for this development are complex. For example, the state has distinctly and disproportionately expanded its involvement through various research packages and excellence initiatives. The expenditures of companies for university research have risen in absolute numbers – 3.9 percent annually – but not as strongly as industry research spending in general.

German companies today do 78 percent of their own research and development and spend €53.8 billion ($71.91billion) annually with 22 percent spent outside Germany. In 2005, 11.3 percent of research funding was flowing to German institutions, but by 2011, the percentage plunged to just 6.8 percent, the lowest level since 1991, when statistics were first compiled. While domestic universities and colleges are getting less than their fair share from research investments, the percentage of research conducted for businesses outside the country has risen dramatically.

In the last two reports filed by the German Commission of Experts for Research and Innovation, the increase in spending by German companies on research abroad was clearly explained. Industries are seeking access to new markets and specific know-how with automobile manufacturers and engineering and machinery firms leading the way by increasing overseas research spending by 25 percent annually. Information and communications technology companies as well and genetic and medical technology companies also are increasing their dependence on research abroad, where they specifically cite broader and deeper understanding of their needs.

Germany needs a culture of research that relies on the innovative factor of cooperation and the transfer of knowledge, ideas, and people.

These are logical arguments, but it still is an alarming trend to watch core German industries overlooking German institutions of higher learning. We should take these warning signals seriously before highly qualified work is shifted away from the country for the long-term. We need to create ideal conditions before it is too late in order to bring top scientists to Germany, finding rules for universities to transparently report on their research for companies and, not least of all, by creating a positive climate for cooperation between industry and science.

We should be able to agree that without the contribution of industry, our research and innovation system would be much less productive. Consequently, its involvement with science is not objectionable, but essential. Germany needs a culture of research that relies on the innovative factor of cooperation and the transfer of knowledge, ideas, and people who know their way around the various spheres of universities, companies, labor and ministries.

This also means understanding and respecting the partnership. Most German companies are conscious of the importance of independent research and are well advised not to compromise it. After all, they expect the universities to do what they themselves cannot, specifically, basic research that may not have any concrete application.

The valuable relationship between German industries and higher education is simply too vital to allow it to wither away.

The author is the secretary general of the Stifterverband für die Deutsche Wissenschaft, an association for the promotion of German science and research by the country’s business community. He can be reached at: gastautor@handelsblatt.com

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