For decades, Australian policy has been anchored on a familiar refrain: universities must do more to engage with the end-users of research.
The underlying assumption has been that if universities became better at outreach, collaboration and commercialisation, the nation’s innovation performance would follow.
Recent data paints a different picture. According to analysis reported in Future Campus (‘Australian industry not playing ball on R&D collaboration’), universities have significantly lifted their collaboration with industry, but almost all the growth has been with international companies, not Australian ones.
That does not bode well for increasing the nation’s productivity.
One implication of the growth in R&D investment from international companies is that universities may wish to focus more deliberately on marketing their capabilities to attract inward investment from these global players.
This trend validates that our research and the technologies emerging from it is indeed world class. International companies are discerning investors; they have the resources and expertise to assess opportunities in the global research and technology market, and their willingness to invest here is a positive sign.
However, this success also highlights a weakness. If Australian companies cannot engage with and benefit from these same research outputs, we risk boosting the innovation capacity and productivity of other nations while failing to strengthen our own.
The problem is not that universities are unwilling or incapable of working with industry. The problem is that much of Australian industry lacks the capacity to engage.
Absorptive capacity is a concept from innovation theory describing an organisation’s ability to:
- Recognise the value of new knowledge
- Assimilate it
- Apply it to commercial ends
This is not a passive process. It requires skilled people often with advanced education such as PhDs who can translate research into product development and operational improvement.
It requires organisational processes to integrate external research with internal priorities. And it requires resources to sustain the effort from idea to implementation.
Large international companies tend to have high absorptive capacity because they employ more highly skilled, dedicated R&D and product development teams, maintain established processes for integrating new knowledge into products, services, or operations and can allocate budgets specifically for technology adoption and deployment, not just discovery.
The contrast with Australia is stark. Our industrial landscape is dominated by SMEs. These businesses often lack in-house R&D staff, have little experience engaging with universities (many don’t know where to start) and struggle to commit resources beyond their immediate operational needs.
Even among the relatively few large Australian companies, absorptive capacity is often low compared to peers in Asia, Europe, and the United States. This is reflected in the low levels of research engagement that the Future Campus article describes.
Too often, university-industry collaborations end at the delivery of research results. Universities complete a project, hand over the findings, and look for the next project. This is not enough.
From the industry side, even applied research results can be meaningless without people who understand the research and can translate it to their context, a plan for adoption that begins at project inception and resources to implement changes in processes, products, or services.
Larger companies overseas especially in sectors like pharmaceuticals integrate these considerations into their R&D strategy from day one. They involve implementers early, build cross-functional teams, and plan for scale-up alongside discovery.
By contrast, many Australian projects reach Technology Readiness Level (TRL) 6 or 7, only for the results to gather dust. Millions of dollars can be spent without meaningful uptake.
Australia has had more success commercialising research by creating new companies rather than licensing technology into existing firms.
Spin-outs can build absorptive capacity from scratch, bringing together the original researchers with commercial, product development, and manufacturing expertise.
They are unencumbered by the cultural, political, and structural inertia that often exists in large organisations.
Another way large companies have addressed the absorptive capacity challenge is by investing directly in start-ups. This approach bypasses much of the internal inertia the cultural, social, and political complexities that can slow or derail adoption.
Some large firms are better consumers of technology than developers or implementers. Rio Tinto, for example, invests in start-ups and growth companies with the aim of becoming customers if those technologies succeed.
This can be far more efficient than attempting in-house development, with all its attendant implementation hurdles. In practice, most large companies Rio included employ both strategies: building capability internally while also leveraging the agility of external innovators.
If we are serious about lifting R&D investment and impact, the focus must shift from blaming universities for poor commercialisation to growing absorptive capacity on both sides.
For industry, this means:
- Investing in specialist skills to interpret and integrate research
- Embedding adoption planning into R&D investment from the outset
- Bringing end-users and implementers into the research process early
For universities, this means:
- Going beyond delivering research outputs to actively helping partners absorb and apply findings
- Providing expertise, training, and “technology deployment” support as part of the project
- Embedding “transfer agents” individuals who bridge the research and industry worlds, clarifying expectations, solving problems, and driving implementation
We have been grappling with Australia’s absorptive capacity problem for decades, and it has long been a drag on our business R&D investment.
In the early 2000s, I helped build what became the largest industry research consortium in the country. At its peak it had 25 member companies – every one of them international. Not a single Australian company could be persuaded to join.
They lacked the in-house expertise to engage on early-stage research and development, and they struggled to convince their management to invest.
The mindset was too operationally focused, with little familiarity or comfort with partnering with universities on research that might take years to bear fruit.
Fast forward to today, and I work with a large international company managing a diverse research portfolio. They are world-class at spotting research that could lead to breakthrough technologies, but they too have recognised a weakness in turning that promise into reality.
Their solution was to create a dedicated “deployment” function within their innovation program, tasked with taking over once projects reach TRL 6/7. Importantly, this group will now get involved much earlier, working alongside research teams to prepare the relevant parts of the organisation for adoption.
It’s a pragmatic acknowledgement of the absorptive capacity challenge and one that Australia’s businesses could learn a great deal from.
Without absorptive capacity, increased R&D investment will yield a poor return. Australia’s industry makeup dominated by SMEs, with few large firms operating at scale makes this a particularly thorny problem.
Simply urging businesses to “invest more in R&D” will fail if they lack the skills, structures, and strategies to use what they develop.
If we want enduring, impactful research–industry partnerships, we must:
- Build absorptive capacity in Australian firms
- Equip universities to support adoption, not just discovery
- Foster roles and processes that bridge the gap between research and practice
Otherwise, we risk continuing the cycle of promising research that never makes it to market a loss for industry, universities, and the nation’s innovation future.
Victor Pantano is A technical generalist with an engineering and science background working across multiple industries: manufacturing, resources technology and minerals processing, clean energy, software development, IT, defence, space, medical products and health. His roles have included CEO, Director and General Manager and Associate Vice President covering functions as diverse as sales, operations, investment management, equity raising, R&D, industry and business development and executive management. He is a Member of the Acton Institute for Policy Research and Innovation
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