Universities as Knowledge Buffers of Cyclical Industries: Evidence from Pulp and Paper Firms

We analyze the effects of demand contractions on industry-university relationships. We track the patenting, scientific publication, and R&D worker mobility data of the thirteen largest pulp and paper firms over twenty years. We show that hiring researchers and inventors from academia positively impacts the annual number of patents and papers published by these firms. Furthermore, firms that allow employees to keep or create academic links further increase these innovation outcomes. The level of patenting and scientific publications directly oscillate with the pulp price cycle. When firms face lower prices, R&D personnel leave pulp and paper firms for academic institutions either to work or study. Academic institutions benefit from recruiting the most productive R&D personnel from pulp and paper firms. These findings imply a symbiotic relationship between cyclical industries and academia. Universities can act as “knowledge buffers,” preserving industry knowledge in periods of downturn, allowing corporate technologies time to mature despite changes in industry cycles, and helping firms to build new—or regain lost—capabilities in periods of industry recovery. Policy and managerial implications are discussed.