A Basic Tool Of Economic Competitiveness Commerce Essay


Brick and mortar does not make a home, the class rooms and white board does not make a university. It has associated some strong meanings in social, cultural, national and global concerns. Role of the universities have been changing with the time, for example , in ancient Greece, universities offered solutions to the intellectual curiosity of the rich and their children, in Alexandrian times, it was a source to increase the esteem of the state, in Roman and Byzantine time it built capabilities to produce high level of administrators, in Renascences it was a place of producing knowledge that can help to understand the ultimate goal of human being, and the process went on (Rector, University of Aegean) further explained that it was actually the reaction to the need of improving the competitiveness of the country. In the dynamic world due to technological and economical war, the role of the universities has been revolutionized from just a source of knowledge to academic entrepreneur institutions (Mohar et al., 2009), become a research institution and accomplishing teaching excellence as well.

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Studying the literature, we come to know about an important and strategic weapon for nations to excel in the ongoing economic war and that is The Economic Competitiveness (E.C). In this era of economics the EC has made a lot of place in the mind sets of people who are striving for excellence. The time has gone beyond the horizons of making merry and resting on our laurels. Now it time for economic competition that has become a vital source of survival because there is no other option. The EC means having capabilities to produce goods and services to cater the demand and supply patterns of national and international markets in a way that our citizens enjoy standard of living, focusing on rising and sustaining the level of competitiveness.

As the importance of EC rose on the shores of attention, simultaneously there raised various factors which were found to affect the EC such as role of government, work force and technology (victor, 2003, Pissano and willy, 2009). The government plays an important role for providing friendly registration process of firms (Victor, 2003), institutional infrastructure (Atkinson, 2007, victor, 2003) also reported by Mr. Schwab in Global Competitiveness Report 2009-10, tax incentives (Atkinson, 2007), foreign and economic policies (Baldwin, 2005).

Next important factor is technology, as mentioned by Victor, 2003, in case nation does not possess high technology then it has to maintain political stability, industrial incentives, business environment and institutional infrastructure to promote the FDI (Branstetter, 2007) eventually that FDI would bring the technology in the country. Next important factor is workforce. Educated, well trained and skilled labor (Victor, 2003), labor market efficiency, higher education and training, health and primary education (Schwab, 2009) increases the level of workforce to achieve competitiveness.

There is a long list of factors that influence the EC like, strategic planning, university-industry integration, IT & its applications (Atkinson, 2007), research and development, SME development, decision making, social structure (Gardiner et al, 2004), capabilities (pissano & willy, 2009, Victor, 2003, Gardiner et al, 2004 ), innovation (Schwab, 2009, Gardiner et al, 2004, Tan, 2004 ), business sophistication, markets (Schwab, 2009) and implementation of basic and applied research (pissano & willy, 2009).

1: Philosophical and Theoretical Complexities:

1.1: Philosophical complexities

These comprise Ontology and Epistemology, the branches of philosophy as discussed below;

Ontology, for being domain of philosophy, applies to vital knowledge that in fact exists in the world. Reported by Musosa (201, p.2), ontology is the theory of the nature of realism, concerns with what exists in the world, what exactly are its components, and how they connect to each other.

Epistemology, another aspect of philosophy, addresses, as Yeganeh, Sue, and Chrysostome (2004, p.1-2) imply the natural phenomena, sources and limitations of understanding. Epistemology looks into the opportunities, boundaries, origins, and truth of knowledge, and ways to obtained, verify and put it to use. Epistemology explores the way in which perception of truth identified by means of some empirical facts as well as which are the complications in validating the authenticity. The absence of epistemological segregation of knowledge could potentially cause problems

Epistemology explained in terms of issue of personal interest:

There is a great link between University and Industry which determines the level of economic competitiveness for any country. Educational sector is responsible for the growth and development of all those people who are getting knowledge from various institutes. The basic problem, in the issue of our personal interest, is of that of the gap between the understanding of the norms, environment and culture of the industry and the university. The knowledge which is provided to the students in the institutions is only applicable in a very controlled type artificial environment but actually the environment of the industry, in real terms, is complex and dynamic, so, for the students it becomes very difficult to handle those dynamic factors which they have studied in controlled and artificial settings. Keeping in view the discussion under consideration we say that the philosophical nature of issue of our personal interest is epistemological which deals with the disability of the policy makers, whether from industry or university, to anticipate the requirements of both the concerning entities.

1.2: Theoretical complexities:

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Theoretical complexities arise when the philosophical nature (epistemological) of the issue comes into action. As discussed earlier, the policy makers are not visualizing the strategic demands of the entities, misperceiving the scenario and start taking short and long term decisions on their poor judgments. The syllabi defined by the universities vary at very high extent as required by the industry. The subjects taught are not compatible with industry requirements. This in return produces just graduates but not the managers who have the skills and capabilities to work in the dynamic and stimulated environment of the industry. Furthermore there is less focus on the development of the society in relation to the economic development and competitiveness.

1.3: Implications of Philosophical and Theoretical Complexities:

Research is a key tool to generate knowledge. Research can explore and improve new dimensions of any concept through scientific methodologies. The generated knowledge can be applied in the organizations to satisfy the deficiency of novelty or for improving the existing issue. Now a days in the university setups most of the research is carried out just for the sake of subject formality in contrary to be more practical, synchronized and compatible with the demands of the industry. It could be made better if more real time projects and research problems are catered by using universities as a problem solving platforms (Iqbal et al, 2010).

University produce graduates who lack in the skills and capabilities (technical, conceptual and entrepreneurial). If these graduates get a job opportunity, do not contribute in the industry in a competitive manner and if they are not employed anywhere, the un-employment ratio increases and disturbs the economic patterns of the country.

The universities focus on the theoretical knowledge. The researchers at universities do not generate the knowledge required by the practitioners in the industry. There exists a huge gap between theory taught in the universities and practice demanded in the industry (Guo, 2005). This knowledge gap restricts the graduates to become entrepreneurs and slowing down the process of developing the enterprises.

Considering the production of the 'good citizens' from the universities, as it is the ultimate target of any educational institution, now universities are producing graduates with more individualistic and materialistic desires, these desires bounded citizens destabilize the social structure of the society. These citizens create hindrances in the economic development and competitiveness of the country.

2: Research concepts

University has always been offering a valuable solution to the society, industry, national ideology and economic concerns but with the changing role of university, from knowledge producers to knowledge capitalizes, has improved the economic performance of the countries (Iqbal et al., 2011). Following are the ways in which research concepts have been varyingly interpreted and used within the issue of personal interest.

Social and Economical forces

Slaughter & Rhoades (2004) explained political, social and economical forces that triggered the idea of academic capitalism. Thus the idea of academic capitalism affected the University for its Performance. Research in humanities and social sciences has promoted social and economical concerns (Loon, 2005). Hill, (2006) explained that university research provides new testing instruments and legal services to the changing needs of the markets. Universities produce such human capital that caters the needs of the labor markets (Waal & Chachage, 2011).

Sustainable Competitive Advantage

Sustainable economic growth (Mohar et al., 2009) caused universities to produce such outcomes which could achieve sustainable competitive advantage in long run. Supply of skilled and qualified human resources to industry, empirical knowledge based on basic and applied research (Iqbal et al., 2011), problem solving platforms for business needs, strengthen the need of Strategic planning keeping in view the human resources are critically discussed in the scenario of University-Industry integration.

Coping up the theory-practice gap

Analyzing a common problem that showed there is a gap between theory taught in the institutions and practices carried on in the market, so bridging the gap between knowledge consumer and producers (vessuri, 2007)instigated universities to go accordingly.


Globalization which started affecting the universities in terms of knowledge economy (vessuri, 2007); (Cowan, 2005); (Geuna et al., 2003); (Mok, 2003), trading policies and providing knowledge accepted all over the world for universal benefits.

Social development

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Social development (Abbot & Doucouliagos, 2004); (Etzkowitz et al., 2000); (Cowan, 2005)was one of the major reasons, for universities, to play its role for the development of the societies to produce good citizens.


Innovation triggered universities to carry on with activities that fulfill the creative standards (Etzkowitz et al., 2000). University-industry relationships (Atkinson et al., 2010); (Cowan, 2005); (Vincent & Wu, 2000); (Atlan & Taylan, 1990)and (Peters & Fusfeld, 1982) have reshaped the role of university in modern era to satisfy the needs of innovative organizations. Novel ideas, innovative activities and new business models depict the university performance, (Hollanders & Arundel, 2006); (Dhalman & chen, 2005); (Atkinson et al., 2010); (Howard, 2005).

Application of Information Technology (IT)

The Possession of IT experts and application of their skills enhances the performance of any industry (Iqbal et al., 2011). The quantity of IT experts in a non-technological environment represents its strength (Hollanders & Arundel, 2006); (Dhalman & chen, 2005); (Atkinson et al., 2010); (Howard, 2005).

Intellectual Property

One sign to rate the innovation is the intellectual property. The intellectual property like patents etc. participates as central part in economic development (Iqbal et al., 2011).

Research and Development

Country with lofty contribution of R&D demonstrates high knowledge performance (Hollanders & Arundel, 2006); (Dhalman & chen, 2005); (Atkinson et al., 2010); (Howard, 2005). Applied Research and development engenders innovations, enhances the knowledge foundation of industry, and is a key economic intensification driver (Hollanders & Arundel, 2006); (Dhalman & chen, 2005); (Atkinson et al., 2010); (Howard, 2005). Basic Research and development not only provides a base to applied research but also facilitates private sector to carry on with further researches (Hollanders & Arundel, 2006); (Dhalman & chen, 2005); (Atkinson et al., 2010); (Howard, 2005).

Entrepreneurial Activities

The university performance is dependent on the Entrepreneurial Activities that are executed in the university to better integration with industry. the importance of entrepreneurial activities for economic and social growth is well known across the world (Chen et al., 2011); (Jack & Anderson, 1998). Universities have the ability to produce "better entrepreneurs", who in return boost up the social and economical growth (Anderson, 2011).

Workforce Education and Training

In knowledge based economy, workforce education and training is significant and necessary to boost the intensity of novelty and invention of creative products and services (Hollanders & Arundel, 2006); (Dhalman & chen, 2005); (Atkinson et al., 2010); (Howard, 2005). Selecting and hiring the workers, High-Tech Employment, stimulate the innovation in the industry. High-technology jobs, then, are considered as lavish source of income for high-tech and skilled workers (Hollanders & Arundel, 2006); (Dhalman & chen, 2005); (Atkinson et al., 2010); (Howard, 2005).

Knowledge Capitalism

With its reshaped role, the university performance reflects the nation's capacity to deliver knowledge to world market (Iqbal et al., 2011), knowledge capitalism (Etzkowitz et al., 2000) and generating and disseminating the knowledge (Salmi, 2009).


The other reflections of the university performance include patens and publications (Hollanders & Arundel, 2006); (Dhalman & chen, 2005) (Atkinson et al., 2010). Publications are considered as scholarly outlet of university value (Sullivan, 1996).

Social and National Development

The university performance also reflects social cohesion (Cowan, 2005), social sciences (Loon, 2005), national economic prosperity (Etzkowitz et al., 2000) national development (Salmi, 2009); (Wang, 2001) global competitiveness (Salmi, 2009)supporting and legitimating government actions (Salmi, 2009).

Commercialization of Research Findings

Research findings considered as University's research represents the university performance, institutional and educational intensification (Li et al., 2008). Research findings, either in the form of basic research or patent, have noteworthy impact on social and economic life of people (Loon, 2005).

Knowledge Production

Universities carry on to play an outstanding function in knowledge production, particularly in the pure or basic research fields, (Anonymous, 2005); (Conroy, 1989); (Geuna, 1998); (Loon, 2005). Objectives of universities and its stakeholders drive them to attain excellence in research areas (Li et al., 2008).

3: Tension between Science and art

Art refers to the talent and science empirically justifies that talent. University-Industry integration a basic tool of Economic Competitiveness is a dimension of economics which is studied under its branch of social economics.

Social Economics is defined as "A branch of economics that focuses on the relationship between social behavior and economics. Social economics examines how social norms, ethics and other social philosophies that influence consumer behavior shape an economy, and uses history, politics and other social sciences to examine potential results from changes to society or the economy".

Issue of Personal Interest is an 'art' and a 'science':

A phenomenon more related towards the human beings is normally considered as an art. The intrinsic capability forces the human being to behave in an artistic way. As the topic under consideration is purely regarding the social economics, and social economics involves human interaction that in results forces the topic of personal interest to incline more towards being it an 'art'. The scientific portion of the topic under consideration is also of a great importance that presents data collection procedure and statistical & mathematical approaches to show its part of being a 'science'.

4: Gaps between relevant Theory and Practice

There exist a gap between theory taught in the universities and practices required to carry on the pace of development in era of economic competitiveness. This gap has started influencing the standards of the innovation. The UK's Department of Innovation, Universities and Skills in its report in 2008 have pointed out that universities are important because they unearth the hidden talents of students; work for local and national economic development; develop highly skilled manpower; promote innovation in products and services; generate jobs; and support communities. It was identified that the universities are providing help to

Unlock the potentials by:

increasing participation and exposing the hidden talent;

pulling, fostering and retaining the talent;

participation in growth

Economic development by:

creating a highly skilled manpower,

creating jobs;

encouraging entrepreneurial activities; and

Involving the industry for innovation and competitiveness.

As in the introductory part of the essay, the role of the universities has been discussed, and now with the changing demands of the industry and economic competitiveness, it has become the need of the hour for universities to change themselves accordingly. The universities tried their best and also managed to cope up with the gap generated by the modern times and their demands. Then it became the responsibility of the university to upgrade its level of responsibility towards economic concerns like economic competitiveness. Alan H. 2006 while discussing the local innovation system project (LIS), 2005 of MIT has identified four basic responsibilities of universities which universities are supposed to perform. Firstly, provide quality education to people and supply skilled and qualified human resource to industrial sector. Secondly it has a role in development of research activities (basic or applied) which accumulate the codified knowledge having useful commercial elements. Thirdly, university worked as problem solving platform for some specifically articulated business needs. Finally, the universities are supposed to develop informal social interactions to promote entrepreneurial activities. This is not only helpful in transfer of tacit knowledge but also helped to get feedback from the market to strengthen the other three roles.

In the international collaborative study of regional patterns of university interactions, the Local Innovation Systems Project at MIT has devised a typology which provides the different dimensions of useful activities for different local economic development pathways (Lester (2005)). In this research, one of the pathway focused on the creation of new industries in which the emphasize has been give on the leading edge science and engineering research, aggressive technology licensing policies, and the promotion or assistance of entrepreneurial businesses. Second pathway underlined the role of universities in the regions which focused on the importation or transplantation of industries. In such conditions responsive curricula as per industry requirements and associated education and workforce developments along with technical assistance is the key. Thirdly, the universities should work as bridge between disconnected actors in the system while filling the structural gaps in the networks. Finally, the university should support the industry while acting as a problem-solver and through consulting and contracting research.

As discussed earlier in the essay, there is shortage of the skill and capability level of the graduates. There is lack of collaboration between university and industry. There is no new knowledge being generated as par the requirement of the hour. There are very less number of start-ups which could have been more in number. There have been issues while developing the curriculum of the university subjects. These all are gaps which have caused universities and industries not to perform as they could have done. If these entities come in collaboration, many problem and gaps can be handled easily. Following are some benefits which universities and industries can earn from each other if they integrate in a positive manner.

4.1: Potential Benefits from University-Industry Interactions

(Source: Geisler and Rubenstein (1989: 54))

1. Benefits to Industry

• Window to Hi-Tech setups.

• Methodical evaluation of faculty study outcomes.

• Consultancy provided by faculty for some certain capabilities and knowledge

• Training of industrial/technical personnel - part-time, full-time, on-site, night courses

• Collaborative industrial conferences for faculty members

• Source of highly skilled scientific/technical employees

• Increased rate of technological progress in fields of lagging technology

• Solving specific problems for industrial projects

• Joint effort, start-up businesses, and economic payoffs

• Access to university facilities

2. Benefits to University

• Realistic update of faculty and students

• Financial support for research and capital investments

• Development and improvement of university syllabus

• Summer employment and internship opportunities

• Industrial membership on university advisory committees

• Access to industrial amenities and equipment

• Capability to make the most of government funds for applied research with industry

• Joint effort, start-up businesses, and economic payoffs

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