Research Policy 31 (2002) 859–876

Science Parks and the growth of new technology-based

firms—academic-industry links, innovation and markets
Hans Löfsten a,∗ , Peter Lindelöf b
a Department of Industrial Dynamics, Chalmers University of Technology, SE-412 96 Göteborg, Sweden
b Department of Business Administration, School of Economics, University of Göteborg, SE-405 30 Göteborg, Sweden

Accepted 16 July 2001

Abstract
The analysis distinguishes between firms (273 firms) on and off Science Parks in Sweden (1996–1998), in an effort to
identify any element of added value which the park provides for new technology-based firms (NTBFs). The study showed some
differences between the experience of firms on- and off-park in respect to innovation and marketing issues. Firms located in
Science Parks were significantly more likely to have a link with a local university than off-park firms. Performance is examined
under three headings: employment growth, sales growth and profitability. Initiatives to promote NTBFs on Science Parks, will
yield a higher rate of job creation than policies to help NTBFs in general. © 2002 Elsevier Science B.V. All rights reserved.
Keywords: Science Parks; New technology-based firms; Growth; Links; Innovation; Policy

1. Introduction for research to more informal contracts as well as the

Universities and other higher education institutions
are important sources of new scientific knowledge. In-
dustry can gain access to this knowledge or resources
by developing formal and informal links with higher
education institutes (OECD, 1981, 1993). Therefore,
the development of higher education institute links
is assumed to encourage innovation and production
(Westhead and Storey, 1994). Hence, locales with
highly interlinked higher education institutes are ex-
pected to have enhanced levels of wealth creation and
job generation (Malecki, 1991). The assessing of aca-
demic knowledge and expertise by businesses located
on-site is a key principle of Science Parks. Research
links may take many forms, from formal contracts
∗ Corresponding author. Tel.: +46-31-772-12-30;
fax: +46-31-772-12-37.
E-mail address: halo@mot.chalmers.se (H. Löfsten).
transfer of personnel between academia and industry
(Quintas et al., 1992). Appold (1991) supports the idea
that a Science Park could have significant regional
implications. Appold finds that industrial research
laboratories tend to cluster in certain areas—typically
large urban areas with a good university.
The form of linkages between individual firms and
higher education institutes might include (Monck
et al., 1988):
• the transfer of people including founder-members
of firms, key personnel and staff into employment
in firms;
• the transfer of knowledge;
• contract or sponsoring research in the university by
researchers and students;
• contract development, design, analysis, testing,
evaluation, etc.;
• access to university facilities;

0048-7333/02/$ – see front matter © 2002 Elsevier Science B.V. All rights reserved.
PII: S 0 0 4 8 - 7 3 3 3 ( 0 1 ) 0 0 1 5 3 - 6
860 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876

• less formal interchange with academics which may joint-stock firms located in the nine target Science
lead to the important change of information. Parks (163 firms). The remainder of the NTBFs were
drawn from off-park locations (100 firms). The study
Science Parks provide an important resource net-
showed a general trend in sales growth (NTBFs on
work for new technology-based firms (NTBFs). The
Science Parks, yearly averages 1994–1996: 45.60%
government and other organisations—Swedish Board
and NTBFs, off-park: 12.93%), employment growth
for Industrial and Technical Development—have in-
(on-park: 27.95% and off-park: 10.17%) and prof-
troduced regionally targeted measures to provide an
itability (on-park: 4.70% and off-park: 9.63%).
appropriate physical infrastructure for the encour-
The collected data covers all 3 years of the NTBFs
agement of economic development in deprived and
operational life. The findings on Science Parks perfor-
depressed localities. Central government has a long
mance suggest that the parks milieu appears to have
history of providing support for R&D, the transfer
a positive impact on their firms growth as measured
of technology and its diffusion into industry. Lo-
in terms of sales and jobs. However, there was no ev-
cal authorities in Sweden have developed a range
idence of a direct relationship between Science Park
of local economic initiatives designed to create new
location and profitability. While this research provided
employment opportunities. One element has been the
several new insights into Science Parks in Sweden,
encouragement of new technology-based firms in or-
numerous questions remain.
der to achieve high rates of growth. Local authorities
To fulfil development ambitions the NTBFs will be
have also played a key role in encouraging universi-
faced with normal management problems associated
ties to take a more active role in the revival of local
with rapid growth. The problem of management de-
economies. Several financial institutions have made
velopment associated with entrepreneurial growth is a
commitments to Swedish Science Parks, although
well-known phenomenon. The conceptual model (see
these may have been prompted more by promotional
Fig. 1) is going to serve as the integrative framework
and social reasons than commercial criteria.
for this study and analysis. These dimensions are pre-
The main purpose of this study is to learn on an
sented in Fig. 1. The application of the framework
aggregate level of any differences (sales, employment
will provide an opportunity to synthesise information
and profitability) between NTBFs that locate on Sci-
from different sources and better understand the Sci-
ence Parks and those that locate elsewhere. This study
ence Parks performance in its context—on the firm-
will therefore explore the performance of firms located
level.
in and off Science Parks in Sweden. The paper also re-
The importance of NTBFs on Science Parks is
views the evidence for statements of higher education
related to their performance: they are expected to
industry links that are assumed to encourage innova-
“perform better” than the average firm. Further, anal-
tion and production. The enthusiasm for a partnership
ysis of the empirical and theoretical basis for Science
between university and industry exists in a range of
Parks, drawing on current understanding of the inno-
areas but, in this study, particular emphasis is placed
vation process and the relationship between academic
on research-related, technology-based linkage.
research and industrial activity, suggests that the Sci-
ence Park model is problematic in itself. Researchers
have missed the important link and interaction be-
2. The framework and setting tween the firm’s resources, innovation/diffusion,
risk and strategy in our Science Park model (en-
In a previous study—the pilot study—Löfsten trepreneurial infrastructure effects). It is important to
and Lindelöf (2001) used a comparative evalua- measure entrepreneurship in economic terms.
tion approach and took into consideration NTBFs There is however, a need for caution. Allen and
in nine Swedish Science Park organisations during Bazan (1990) have commented on the generally
the period between 1994 and 1996. The hypothe- modest perceptions of value-added components by
ses are empirically tested on the basis of 263 new incubator tenants saying that, “entrepreneurs are not a
technology-based firms in Sweden located both on- particularly appreciative group, and their high degree
and off-park. The pilot study endeavoured to cover of autonomy and self-esteem shade their perceptions
 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876
Fig. 1. Framework for studies on the firm-level. Source: Löfsten and Lindelöf (2001, p. 319).
of how much they are really being helped”. How-
ever, we can expect Science Parks to play a role in
innovation and industrial renewal. For the majority
of Science Park firms undertaking R&D, the ultimate
purpose is the launch of new products and markets.
We will underline that some researchers have argued
that a competitive market is a stimulus to innova-
tion, whereas others have argued that oligopolistic
conditions are a greater stimulus.
This study is based on measures of output of per-
formance of new technology-based firms, such as
growth rates and profitability—the 1996–1998 period.
Growth must be seen as employment growth and sales
growth, which leads to increasing resources within
the firm. To confirm the “added value” of a Sci-
ence Park location the innovativeness of independent
technology-based Science Park firms are compared
with the levels recorded by a comparable group of
firms not located in a Park. Expanding sales are a
central element in a successful innovation process,
but it is also important to measure profitability (profit
margin), a sort of relative performance measure (the
“business” perspective). We therefore propose the
following assertions:
• independent Science Parks (NTBFs) will have
a higher entrepreneurial capability—growth and
profitability, than independent off-park sample
(NTBFs), and
• independent Science Parks (NTBFs) will record
higher levels of product and market innovation than
independent off-park sample (NTBFs).
861
The notion that networks are important to innova-
tion, and that firms will build networks if they are close
seems to satisfy some need for rational argument. We
therefore propose the following assertion:
• independent Science Parks (NTBFs) will record a
higher ability of building networks/links than inde-
pendent off-park sample (NTBFs).
3. Review of literature
3.1. Science Parks and incubators
There is no uniformly accepted definition of a Sci-
ence Park, and there are several similar terms used
to describe similar developments, such as “Research
Park”, “Technology Park”, “Business Park”, “Innova-
tion Centre”, etc. (Monck et al., 1988). Currie (1985)
and Eul (1985) have attempted to distinguish between
Innovation Centres, Science Parks and Research Parks.
MacDonald (1987) says that each of these terms is
used interchangeably to describe the following pack-
age: (1) a property-based initiative close to a place of
learning, and (2) one which provides high quality units
in a pleasant environment. Westhead (1997) claims
that Science Parks reflect an assumption that techno-
logical innovation stems from scientific research and
that parks can provide the catalytic incubator environ-
ment for the transformation of “pure” research into
production. Some researchers have questioned policies
encouraging the clustering of technology-based firms
862 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876
in locales because they may not be in the best inter-
est of the regional economy (Bezdek, 1975; Galbraith,
1985).
Considerable resources are being devoted to Sci-
ence Parks as policy instruments aimed at promoting
research-based industrial and innovative activity. The
concept of linkage between commercial enterprises
and academic research is central to the US and UK Sci-
ence Park model (Quintas et al., 1992). Findings show
that current UK experience does not demonstrate high
levels of such linkages. Lorenzoni and Ornati (1988)
have suggested that firms located in “constellations”
are more willing to seek information from outside
sources such as higher education institutes, consul-
tants and community entrepreneurs than other types of
firms. They also assert that a supportive environment
with a leading organisation, e.g. higher education in-
stitute/Science Park is crucial not only to new firm for-
mation but also to organisational survival and develop-
ment. Universities have been shown to be significant
actors in their regions both in terms of employment
Fig. 2. The role of national systems, resources and firms. Source: Löfsten and Lindelöf (2001, p. 310).
and economic activity (Bleaney et al., 1992; Brown-
rigg, 1973). Roure and Keely (1989) presented the fol-
lowing factors as important facilitators of technology
availability or market opportunities in the process of
creating NTBFs:
• the presence of “incubator” type companies in the
area;
• attractive potential market, preferably nearby;
• universities with a strong interaction with firms;
• government purchase contracts, research projects
and incentives or subsidies to innovation.
The incubator is an organisation—private or
public—which provides resources that enhance the
founding of new small business, and are assumed—
directly or indirectly—to support corporate spin-offs,
such as new technology-based firms. As depicted
in Fig. 2, the proposed model for the incuba-
tion process is based on management policies and
their effectiveness. The key elements include: (i)
services provided; (ii) financing; (iii) goals and
 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876
structure; (iv) resources and support to NTBFs, and
(v) creation of an entrepreneurial milieu. The per-
formance outcomes are assessed using three cate-
gories: (i) NTBFs survived and growth; (ii) program
growth and sustainability, and (iii) community-related
impacts.
Westhead (1997) says that there is a growing lit-
erature surrounding the relationship between a firm’s
environment and its ability to innovate (Davelaar and
Nijkamp, 1989; Kleinknecht and Poot, 1992; Feld-
man, 1994; Goss and Vozikis, 1994; Pfirrmann, 1994,
1995; Leung and Wu, 1995). From the incubation
business literature reviewed (Allen, 1985; Allen and
Levine, 1986; Smilor and Gill, 1986; Campbell et al.,
1988; Mian, 1991; Rice, 1983) it is clear that most
of the incubator-related knowledge does not have a
sound theoretical base of its own and is by and large
anecdotal in nature (Mian, 1996). Amirahmadi and
Saff (1993) found, in a review and critique of Science
Park literature, wide ranging motivations for govern-
ment support of Science Parks. A common motiva-
tion was the belief that a Science Park would pro-
mote economic growth at a regional and/or national
level.
3.2. The added value of Science Parks
It is difficult to appraise the effectiveness of Sci-
ence Parks because the objectives of the different
partners in the parks may differ considerably (Monck
et al., 1988). A university may be interested in achiev-
ing a satisfactory level of income from the park by
promoting business activities closely linked to its
own research interests. Private sector organisations,
such as banks, are likely to have a more strictly com-
mercial set of objectives towards investments in the
park or its constituent firms. Monck et al. (1988)
say that despite the performance and contribution of
NTBFs to the economy, the survey identified several
constraints on the ability of NTBFs, in general, to
fulfil their economic potential. These included man-
agement capacity, finance and weakness in sales and
marketing.
The extent to which Science Parks can help NTBFs
to overcome these constraints depends partly on the
quality of the on-site management resources, and
partly on access to appropriate sources of equity and
loan funds. Science Parks probably attract a more mo-
863
tivated group of entrepreneurs than off-park locations.
When comparing differences between Science Park
and off-park firms, observed differences could reflect
the motivations of the firms as well as the benefits
of a Science Park location. It is also “clear” that, in
terms of NTBF performance, whether or not a firm is
in the high technology sector is maybe of greater im-
portance than whether or not it is located in a Science
Park.
Felsenstein (1994) examines the role of Science
Parks as “seedbeds” for innovation. Felsenstein makes
the distinction between spatial and behavioural con-
ceptions of the seedbed metaphor, the paper surveys
the evidence related to the limited interaction effects
between Science Park firms on the one hand, and
their neighbouring Park firms, local universities and
off-park firms on the other. This suggest that Sci-
ence Parks might be functioning as “enclaves” of
innovation rather than seedbeds. Felsenstein claims
that the “seedbed” hypothesis is only supported
under certain conditions. The level of interaction
between firms located in Science Parks and local
universities is, in common with other empirical evi-
dence (Massey et al., 1992; MacDonald, 1987; Steed
and De Genoa, 1983; Joseph, 1989) generally low.
Survey evidence from firms located in Dutch and
Belgian Science Parks indicates that only 37% of
firms in the former, and 16% in the latter, attribute
their origins to universities (Van Dierdonck et al.,
1991).
To confirm the “added value” of a Science
Park location the innovativeness of independent
technology-based Science Park firms are compared
with the levels recorded by a comparable group of
firms not located in a Park (Westhead, 1997). Monck
et al. (1988) showed that when a direct comparison
was made, and taking into account the different ages
of the firms, those in Science Parks had achieved
somewhat lower levels of employment by a given age
than otherwise comparable firms located off-park.
This might suggest that parks were actually hinder-
ing the development of such firms. Further analysis
indicated a more plausible explanation, which was
that almost one-fifth of businesses in Science Parks
was founded by academics and ex-academics, and
it was those businesses which under-performed—in
terms of employment growth—compared with other
businesses.
864 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876
4. Methodology and sample
4.1. Data collected
The total number of “Science Parks” in Sweden is
23 (see Swedepark; the Swedish Science Park Associ-
ation). We initially chose to limit our study to 10 Sci-
ence Parks. The main participants establishing Science
Parks in Sweden, such as universities, local authori-
ties and development agencies, have encouraged the
formation of a heterogeneous group of parks. We ex-
cluded 13 of the Parks in this study because the parks
are brand new or acting as a “firm hotel”. The total
number of firms in the 10 parks with a technologi-
cal base was 477. However, defining what is and what
is not high technology is problematic. Much empha-
sis is placed on high technology industries, and so a
workable definition would seem to be essential. These
include (Monck et al., 1988): new knowledge-based,
leading edge, and R&D intensive industry. Science
Parks not only contain independent, entrepreneurially
managed firms but also firms which may be part of
a group and where the ultimate ownership is outside
the park. In order to make valid comparisons between
this and other studies, only single-plant independent
firms are included—joint-stock firms, trading compa-
nies, limited partnership companies, etc. As expected,
the new and emerging technologies such as informa-
tion and software technology and electronics domi-
nated the 10 Science Parks.
The on-park sample (N = 265 NTBFs) is a random
sample of 477 independent NTBFs located in Science
Parks in Sweden, and were drawn on a stratified ba-
sis from the total number of on-park from locations.
To identify the off-park NTBFs CD-ROM business
data bases were used and a database of new, Swedish,
technology-based firms that were developed within the
CREATE group at the Department of Industrial Dy-
namics at Chalmers University of Technology. The
database includes all Swedish firms that fulfil certain
criteria of size, year of foundation, independence at
start and industry (Rickne and Jacobsson, 1999). The
1126 firms were identified as fulfilling these criteria.
The off-park random sample consists of 500 inde-
pendent firms and was drawn on a stratified basis—
branches, according to weights from Science Park
firms, step-by-step. The 200 firms were excluded ac-
cording to technology base, etc. The identification
of comparable off-park firms was a time-consuming
project and off-park selection problems were com-
pounded due to name changes, changes of loca-
tion and business closures. Science Park firms were
“matched” with a similar group of off-park firms
based on the selection criteria (Westhead and Storey,
1994): industry, ownership type of the firm, age of
the firm and location of the firm.
A survey study was selected in order to give
information about the factors that explain any dif-
ferences in performance (on- and off-park). Ques-
tionnaire responses were collected from independent
organisations (respondent: manager/director) during
early 1999 and in the middle of 1999. After two
remainders—and one remainder by telephone—in
springtime, 283 firms had responded to the survey. Of
those firms that had responded to the survey, about 10
were wrongly classified. Of the firms that had not re-
sponded to the survey, some could not be localised or
had no activity and some said they did not have time to
answer the questionnaire. The questionnaire included
questions about, for example, customers/marketing,
forecasting and planning, co-operation with universi-
ties, the environment, products and patents, etc.
4.2. Matching criteria
Weiss (1972) has suggested three conditions that
experience suggests particularly recommend the use
of comparative evaluations: (1) when the issues are
real and policy-makers are faced with vital decisions
among alternative strategies for action; (2) when the
alternative programs are relatively well-defined, with
substantially similar aims, and (3) when there is pre-
liminary evidence that programs have the viability
and strength to offer some likelihood of success.
However, the use of “matched samples” has become
widely appreciated and utilised in the small firms and
entrepreneurship research fields—according to Peck
(1985), O’Farrell and Hitchens (1988), and Westhead
(1995).
One rational way of assessing the performance of
Science Parks is to compare the performance of their
tenants to similar firms not located there. Previous re-
search has shown that this approach has its limitations
(Mian, 1991): (1) there is no reliable and cost-effective
way to identify a comparison group because of poor
data sources on small start-up firms; (2) there is no
 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876
reliable way to identify a comparison group because of
a strong selection bias of university technology busi-
ness incubator; (3) lack of control on firm variables,
and (4) the effects of university technology business
incubators are not limited to their tenant firms. It is
difficult to say if the combined on and off-park sample
can be regarded as being a representative sample of
all NTBFs in Sweden (1996–1998). The Science Park
sample was however, reasonably representative of all
NTBFs located in parks.
4.3. New technology-based firms—characteristics
of surveyed firms
According to Monck et al. (1988), the first compar-
ative study of NTBFs was undertaken by Little (1979).
They compared the growth of NTBFs in the US with
those in the UK and in Germany, and encountered
problems concerning definition. Little settled for the
following characteristics of an NTBF:
1. It must not have been established for more than 25
years.
2. It must be a business based on potential invention
or one having substantial technological risks over
and above those of normal business.
3. It must have been established by a group of
individuals—not as a subsidiary of an established
company.
4. It must have been established for the purpose of
exploiting an invention or technological innovation.
Studies of new technology-based industry include a
section intended to define high technology (Markusen
et al., 1986; Hall et al., 1987). These indicators fall
into two groups (Monck et al., 1988): measures of
resource inputs to high technology activity, such as
R&D effort, R&D expenditure and the employment
of qualified personnel and measures of output or per-
formance of high technology firms, such as growth
rates, patent records and technological innovations.
A range of questions in the survey were intended to
provide an indication of the technological capabil-
ity of the NTBFs. These include information on the
inputs to R&D, percentage of staff employed—and
founders—by firms that are qualified scientists and re-
search links with universities. Other measures of tech-
nological level focus on measures of outputs, such as
patents and the launch of new products.
865
The NTBF characteristics in our study refer to the
firm’s number of patents, licenses and education level.
Patents are often used as an indicator of technolog-
ical development, although the propensity to patent
varies between sectors, firms and countries (Taylor
and Silberston, 1973). Over the years, there have been
a number of surveys of entrepreneurs which have
investigated the question of whether higher levels of
education are associated with smaller firms that have
a better performance than otherwise comparable firms
which are owned by less educated individuals. How-
ever, the results have been somewhat inconsistent. See
Gudgin et al. (1979) and Pickles and O’Farrell (1987).
The tracking of NTBFs in Swedish Science Park
organisations was successfully achieved because in-
formation was more extensive from Science Park
managers surrounding organisation name changes
and/or organisation changes. The main difference be-
tween the groups—Science Park and off-park—could
be apparent with regard to stated technology structure
and R&D intensity. A number of firms are leading
edge firms undertaking R&D. Others are less sophis-
ticated, undertaking little R&D, and are essentially
involved in downstream commercial activities.
4.4. Measurement of performance—the business
perspective
Growth in this study is not analysed as a separate
employment element. Growth must be seen as employ-
ment growth and sales growth (see also the pilot study,
Löfsten and Lindelöf, 2001), which leads to increasing
resources within the firm. Expanding sales are a cen-
tral element in a successful innovation process, but it
is also important to measure profitability (profit mar-
gin), a sort of relative performance measure. Growth
dimensions are expressed as sales growth (turnovers)
and employment growth (number of employees):
(xn+1 /xn ) − 1 + (xn+2 /xn+1 ) − 1
ḡgrowth %/year =
2
where xn = value year n, and n = year (base).
The profitability (profit margin) is calculated as:
net income + financial costs
profitability =
sales
Many will argue that among all the single valued
parameters of a population, the average contains the
866 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876

most information. Of course, this statement is judg-
mental and is conceivably open to argument. The
population’s average is also known as the population’s
mean. Note that the arithmetic average calculated
from grouped data is an approximation, since the
use of the midpoint for each class-interval is only
an estimate of the true class-interval average. When
the number of classes is large and each class-interval
is relatively narrow, as in our case—small firms in
different business sectors, etc.—the approximation
is good.
4.5. Descriptive statistics—means and frequencies
This section is devoted to a description of the
broad characteristics of the firms involved. A total of
273 NTBFs were surveyed, of which 134 were on a
Science Park and 139 were not on a park. It will be
recalled that the objective of the off-park sample was
to identify primarily high-tech independent firms. In
terms of employment (firm start), the off-park firms
are somewhat larger than the Science Park sample
(see Table 1). It is necessary to subdivide the firms

Table 1
Means and frequencies of surveyed high technology organisations over the 1996–1998 period
On-park sample Off-park sample

Response rate
N 265 300
n 134 139
No valid firms 5 5
Response rate (%) 52.1 48.0

On-park sample Off-park sample

Response (R) No response (NR) Response (R) No response (NR)

Mean S.D. Mean S.D. Mean S.D. Mean S.D.

Variables—means and frequencies

Growth (%)
Sales 38.75 66.62 31.31 43.35 11.19 31.01 12.54 31.11
Employment 27.94 66.19 25.76 65.06 4.20 25.21 6.84 20.60
Profitability 2.97 21.99 1.56 24.85 6.51 12.71 6.07 15.26
Start
Salesa 9292.4 16360.7 10658.8 16540.2 11532.7 16054.5 12101.0 13023.4
Employment 10.37 19.19 10.35 13.96 11.72 14.67 11.49 12.77
Branchb 3.29 2.06 3.31 2.00 3.42 2.02 3.28 2.02
Age 7.19 2.94 8.37 2.19 9.00 1.83 9.17 1.55
Regionc 120.40 256.77 101.13 224.89 123.94 217.06 74.55 140.26
On-park sample Off-park sample

Response No response Response No response

Branch—frequencies (%)
Software/information technology 34.3 30.0 29.7 30.7
Technology consultants 25.4 23.6 26.1 24.8
Electronics/electrical 11.9 16.4 13.0 13.9
Pharmacology and pharmaceutical preparation 14.2 15.5 13.0 13.9
Mechanics 9.7 10.9 11.6 11.9
Industrial chemistry/plastics industry 4.5 3.6 6.5 5.0
Sum 100.0 100.0 100.0 100.0
a Sales (1000 SEK).
b Branch (6 branches), different weights.
c Region (10 regions), different weights.
 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876
not solely between those located in and off the Sci-
ence Park, but also in a number of other ways—such
as branch, whether or not they are located in the
north of Sweden (region), etc. The branches are soft-
ware/information technology, technology consultants,
electronics/electrical, pharmacology and pharmaceu-
tical preparation, mechanics and industrial chem-
istry/plastics industry.
The table indicates that despite efforts to match
on- and off-park firms, in terms of employees and
turnovers, it is not possible to achieve this perfectly.
Most of the businesses are somewhat recent (mean;
7.19 and 9.00 years), probably reflecting the fact
that small firms tend to be newer than medium or
large-sized firms. When comparing the performance
of small firms, it is of importance to recognise the
importance of age. It is easy to observe illusory differ-
ences in growth amongst a group of small firms over
time if one group is younger than the other, since—in
proportionate terms—younger firms grow faster than
older firms.
Monck et al. (1988) say that it is strange that data
on profitability performance of high-tech firms is
very different from that of other measures of per-
formance. The low proportion of firms in a Science
Park making profits in their early years of life is
attributable to the fact that many actually start with-
out any product to sell. There is some conflicting
evidence of differential performance of firms in a
Science Park. This should not come as a surprise
since off-park firms were specifically chosen to be
“comparable” with those on the park. The fact that
Table 2
Relationship between sales and other variablesa
1b
Groupc 0.249∗∗∗
Business sector 0.029
Age −0.026
Region 0.008
Sales (start) −0.031
Science Park (individual) – –
nd 437 (0.065)
a Dependent variable: sales (growth).
b 1—(on-PR, on-PNR), (off-PR, off-PNR); 2—(on-PR, off-PR); 3—(on-PNR, off-PNR); 4—(on-PR, on-PNR).
c On-park or off-park.
d Number of observations.
∗∗∗ P < 0.001.
867
areas in which NTBFs are concentrated also experi-
ence an “above-average” performance in their con-
ventional sectors which can be explained in two ways
(Monck et al., 1988). The first is that the high-tech
sector “leads” economic development and that the
conventional sectors benefit from the additional pur-
chasing power generated. The second explanation is
that the type of “environment” which includes the
establishment and growth of NTBFs is also one that
is likely to lead to growth amongst conventional
business.
4.6. Relationship between sales, employment and
other variables
The forthcoming analysis (regression analysis is
used, see Tables 2 and 3) is made for two sets of
relationships: (1) the relationship between sales level
of the firm (a) Science Park or off-park (group), (b)
branch/business sector, (c) age, (d) region, (e) sales
(start), and (f) Science Park (individual), and (2)
the relationship between employment level of the
firm and (a) Science Park or off-park (group), (b)
branch/business sector, (c) age, (d) region, (e) em-
ployment start, and (f) Science Park (individual). Type
of business sector, region, Science Park (individual)
and sales (start) were hypothesised as exerting an
influence of sales level. The model shows that only
the variable group (Science Park and off-park) is sig-
nificant. There are no relationships between sales and
business sector, age, region, sales (start) and Science
Park (individual).
2 3 4
0.231∗∗∗ 0.242∗∗∗ 0.053
0.087 0.054 0.007
−1.08 −0.032 −0.028
−0.027 0.033 0.052
−0.017 −0.020 −0.091
– 0.071
235 (0.087) 202 (0.063) 214 (0.021)
868 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876

Table 3
Relationship between employment and other variablesa
1b 2 3 4

Groupc 0.217∗∗∗ 0.151∗ 0.200∗∗∗ 0.003

Business sector −0.039 0.036 −0.125 −0.123
Age −0.039 −0.303∗∗∗ −0.047 −0.038
Region 0.066 0.042 0.026 0.168∗∗
Employment (start) −0.032 −0.021 −0.006 −0.078
Science Park (individual) – – – 0.017
nd 437 (0.055) 235 (0.149) 202 (0.056) 214 (0.041)
a Dependent variable: employment (number of employees, growth).
b 1—(on-PR, on-PNR), (off-PR, off-PNR); 2—(on-PR, off-PR); 3—(on-PNR, off-PNR); 4—(on-PR, on-PNR).
c On-park or off-park.
d Number of observations.
∗ P < 0.05.
∗∗ P < 0.01.
∗∗∗ P < 0.001.

The other model below (relationship between em- importance of academic-owned business on a Science
ployment and other variables, Table 3) illustrates Park having significant consequences as it is likely
that the variables group, age and region are signi- that such firms will perform less well than those
ficant. owned by “professional” businessmen.
NTBFs in the off-park sample have significantly—
see Appendix A for an independent sample tests
for on-parks, NTBFs, and off-parks, NTBFs—lower 5. Market characteristics and
growth of employment and lower growth of sales academic-industry links
turnover (see also Löfsten and Lindelöf, 2001, em-
ployment growth and sales growth during 1994 and 5.1. Market characteristics
1996). Monck et al. (1988) and Westhead and Storey
(1994) claim that some firms have moved to Sci-
The markets in which small high-tech firms op-
ence Parks simply because of the “image and overall
erate are competitive. Marketing is often especially
prestige of the site” rather because of “access to fa-
difficult for technologically innovative firms, particu-
cilities of the higher education institute (HEI)/centre
larly when they are addressing new needs and mar-
of research” and the “prestige of being linked to the
kets. Independent technology firms have a much wider
HEI/centre of research”. To maintain rental income
market distribution throughout the UK and abroad
some park managers have relaxed their “selection”
criteria for tenants (Westhead, 1997). However,
Monck et al. (1988) found that performance in terms Table 4
of employment size, sales turnover and profitability Age and other variables
depends upon the age of the firm and show that there n Significancea
is no significant difference between the performance,
Sales growth 259 0.138
in terms of employment, of firms on and off Science High profits 259 0.451
Parks. Employment growth 259 0.303
The absence of statistically significant differences in
profitability between Science Park and off-park firms Mean S.D.
cannot be viewed as an unexpected result. NTBFs Means—geographical markets
in the off-park sample have a significantly lower Region 35.19 37.89
growth of employment and lower growth of sales Other markets 64.81 37.89
turnover. Monck et al. (1988), however, underlines the a Chi-square test.
 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876 869

Table 5
Group (on- or off-park) related to other variables
Economic activity Significancea Customers Significance

Branch/business sector 0.931 Large firms 0.831

Production type 0.693 Small firms 0.765
Finishing level 0.658 Public sector 0.092
Other 0.486
Education
Postgraduate studies 0.145 Field of application (products/services)
Undergraduate studies 0.266 Private consumption 0.368
R&D 0.085
Internal (group of firms) 0.203
nb 273
a Chi-square test.
b Number of firms.

Table 6
Significant variablesa
Significant variables Mean F Significance P-value S.D. Scaleb

1c 0d 1 0

Customers/marketing
Location, importance (new customers) 2.14 2.79 20.56 0.00 0.00 1.33 1.68 1–5
Marketing of products to new customers (last 12 months) 1.00 1.36 85.70 0.00 0.00 0.00 1.05 1–5
The environment
Firm actions: cautiousness—rapidity 3.13 2.72 0.04 0.85 0.01 1.23 1.20 1–5
Geographical markets
Global 12.39 7.07 5.98 0.15 0.03 20.9 17.1 Procent
Market research/R&D
Long-term forecasting 2.25 1.77 13.50 0.00 0.03 1.41 1.14 1–5
Focus on R&D, innovation and technology 3.23 2.54 5.57 0.02 0.00 1.70 1.53 1–5
Change of products/services last 12 months 2.59 1.99 0.20 0.89 0.00 1.57 1.53 1–5
Time interval between changes of products 12.24 14.93 4.03 0.05 0.03 10.7 8.49 Months
Long-term forecasting (markets) 2.40 1.91 9.45 0.00 0.00 1.39 1.18 1–5
Marketing research 2.17 1.71 6.85 0.01 0.00 1.28 1.04 1–5
Analysis of competitors 2.64 2.20 5.37 0.02 0.00 1.33 1.16 1–5
Co-operation with universities/links 0.67 0.51 15.81 0.00 0.01 0.47 0.50 Yes/no
Doctoral candidates, research projects, etc. 1.64 0.98 18.67 0.00 0.00 1.67 1.30 1–5
Doctoral candidates, consulting, etc. 1.38 0.91 5.21 0.02 0.00 1.45 1.24 1–5
Discussions with doctoral candidates 1.82 1.33 2.78 0.09 0.02 1.80 1.63 1–5
Jointly-owned R&D projects 1.34 0.97 2.80 0.09 0.03 1.43 1.29 1–5
Transfer of R&D documents 1.26 0.86 4.35 0.04 0.01 1.37 1.13 1–5
R&D equipment 1.43 0.94 7.24 0.01 0.01 1.51 1.31 1–5
Recruitments 1.85 1.29 4.19 0.04 0.01 1.82 1.59 1–5
Basic research 1.07 0.77 0.00 0.98 0.04 1.19 1.12 1–5
Applied research 1.46 0.98 7.98 0.00 0.01 1.57 1.32 1–5
a Significance at the 5% level (P < 0.05).
b 1: very poor; 5: very high. Yes: 1; no: 0.
c On-park.
d Off-park.
870 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876
than is typical of other small firms (Monck et al.,
1988). The “typical” pattern of heavy dependence on
a limited number of customers or geographical mar-
kets was not demonstrated in our study. Almost 65%
of the NTBFs customers were “other markets” (see
Table 4).
Information on the location of customers shows
whether firms are linked to local, national or in-
ternational markets, and thereby their potential for
growth. One significant variable is geographical mar-
kets (global market). NTBFs (on-park) have much
wider market distribution throughout Sweden and
abroad than is typical for small firms. Market re-
search and market planning are important. Table 5
illustrates the two different groups (on- and off-park)
related to branch variables and there is no significance
at the 5% level. Given the short product life-cycle
of many technology-based products and services,
there is a requirement to reach a large international
market quickly to exploit the profit potential of the
product.
5.2. Significant variables
Some significant differences can be seen between
Science Park firms and the off-park firms. Science
Park firms tend to be more involved in co-operation
with universities. Firms located in a Science Park,
in 1998, were significantly more likely to have a
link with a local university. Science Park managers
have an important role not only establishing links,
but also encouraging the development of more for-
mal links over time. Westhead and Storey (1995)
believe higher education institutions should appre-
ciate the necessity of having an effective manage-
rial structure designed to “add value” to tenant
firms.
The linkage between Science Park NTBFs and the
university is fundamental to the concept of Science
Parks. In different universities certain institutes or
departments strongly relate to industry. Table 6 (see
Appendix A for non-significant variables) shows the
nature and extent of linkages between Science Parks
firms and the university/higher education institute.
There are differences, which is expected, between
Park and off-park firms—in some cases, significance
at the 1% level. Park-based firms also appear to place
greater emphasis upon access to equipment, R&D
and personnel categories. There are formal and in-
formal contacts with academics, i.e. student project
links, employment of graduates, research projects,
etc. One measure of output is the level of patenting
activity in firms. For the majority of NTBFs under-
taking R&D, the ultimate purpose is the launch of
new products, although some firms undertake contract
R&D for client firms. The typical development pat-
tern for new firms has been typified as an initial heavy
dependence on contract research and development
activities.
6. Conclusions and implications for policy
The results obtained in earlier sections show that
NTBFs on Science Parks have a rate of job cre-
ation which is substantially higher than that for
NTBFs in general. Initiatives and policies to pro-
mote NTBFs on Science Parks, will yield higher
rates of job creation than policies to help NTBFs in
general or conventional small firms. Because of the
high employment growth of NTBFs, Science Parks
fulfil an important objective of regional policy. How-
ever, the purpose of this study was not to directly
estimate the role which Science Parks play in re-
gional development. There are four key conclusions
(assertions 1–3) that have emerged from this sur-
vey, which have crucial implications for government
policy:
1. The first is that Science Parks NTBFs stand out
as a special group of small firms in terms of
performance, i.e. employment and sales growth.
Profitability measures of performance do not fol-
low the same pattern. On the basis of firms sur-
veyed, there is no evidence of a direct relationship
between Science Park location and profitability.
It is curious that the data on profitability per-
formance of NTBFs is very different from that
on other measures of performance. The com-
mercial pressures—sales growth and employment
growth—upon Science Park managers may have
influenced the presented results. It is likely to be
many years before such firms achieve high profi-
tability.
2. The second is that the survey makes it clear that
the proportion of NTBFs on Science Parks with
 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876
links with universities is comparatively high. There
is also evidence that Science Park location has in-
creased the formal relationships between NTBFs
and universities. Complementing this picture is the
evidence pointing to the generally low level of links
between Science Park NTBFs and local universi-
ties. Most accessing of academic resources relates
to low-level contacts based on recruiting university
graduates or informal contacts. However, no single
university will provide the full range of scientific
or management skills required by the park NTBFs.
There may be park-based firms which have the
majority of their formal links with universities.
Science Parks are a particularly suitable location
for new businesses and opportunities exist for
Park Managers to develop training and business
placing programs to assist potential entrepreneurs.
Opportunities also exist for Park Managers to
develop “added value” networks with similar
organisations.
3. One significant finding from this research is that
Science Park NTBFs are not able to channel this
resource investment into greater R&D “outputs”
(patents, etc.) than comparable off-park NTBFs.
Further research should explore whether the lack
of difference in R&D “output” levels is due to
the management activities of Science Park Man-
agers. R&D activity is notoriously difficult to
measure. Small firms usually do not have clearly
demarcated R&D departments or functionaries.
Examples of other types of indicators are R&D
effort and R&D expenditure. Here, additionally
more refined research is needed here to iden-
tify R&D input and output differences between
independent firms located in and off Science
Parks.
4. This study showed some differences between the
experience of firms on-park and off-park in respect
of innovation and marketing/market research is-
sues. Science Parks are probably attracting a more
motivated group of entrepreneurs than off-park lo-
cations. On-park firms clearly place a greater em-
phasis on market research. There does not appear to
be any clear relation between market research/R&D
and new products launches. Turning to actual prod-
ucts and services, it is striking how the responses
of off-park NTBFs are similar to those of Science
Park NTBFs.
871
The analysis distinguishes between firms on and
off Science Parks in Sweden in an effort to identify
any element of added value which the park provides
for the NTBFs. The responses appear very similar be-
tween the two groups, with the most-often-mentioned
categories being products and services, planning,
customers and export (see Appendix A). This re-
search has explored the formal linkages made by
high-technology-based firms located in and off Sci-
ence Parks in Sweden. Firms located in Science Parks
were significantly more likely to have a link with a
local university than off-park firms. The growth of
NTBFs can be enhanced if managers, decision-makers
as well as academics in universities, appreciate the
potential benefits of university co-operation. It should
be noted that, even if local linkage structures are
weak, this does not mean that the total impact of
the Science Park on the local economy is negligi-
ble. Universities are beginning to develop innovative
new forms of relations with industry such as lim-
ited partnerships, R&D seed funds, etc. The Science
Park is just one of a collection of policy instruments
that aim to encourage the development of firms of
innovation.
Appendix A
A.1. Independent sample tests
Differences between firms in the two groups—
on- and off-park—are apparent with regard to stated
sales—turnovers—and employment—number of em-
ployees. There was no significant difference with
regard to profitability. Hypotheses H01, H02, H04,
H06 and H08 cannot be supported (P > 0.05,
F -test > 1.43). No statistically significant differ-
ence was recorded (H08) between Science Park
firms and off-park firms with regard to profitability
(P > 0.05).
Independent sample tests for on-parks (NTBFs) and
off-parks (NTBFs).
H01: There is no difference in frequencies of
branches between Science Park (NTBFs) and off-park
(NTBFs).
H02: There is no difference in age between Science
Park (NTBFs) and off-park (NTBFs).
872 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876

Branch Age

F Significance P-value F Significance P-valuea

On-PR, off-PRb 0.22 0.64 0.60 70.67 0.00 0.00∗∗

On-PNR, off-PNRc 0.03 0.87 0.99 3.30 0.07 0.39
On-PR, on-PNRd 0.38 0.54 0.97 3.68 0.06 0.21
Off-PR, off-PNRe 0.11 0.74 0.65 2.69 0.10 0.35
a F-test; Levene’s test for equality of variances; F, 2-tailed (F-test > 1.43).
b On-park response, off-park response.
c On-park no response, off-park no response.
d On-park response, on-park no response.
e Off-park response, off-park no response.
∗∗ P < 0.01.

H03: There is no difference in region between Science Park (NTBFs) and off-park (NTBFs).
H04: There is no difference in sales (start) between Science Park (NTBFs) and off-park (NTBFs).

Region Sales (start)

F Significance P-value F Significance P-value

On-PR, off-PR 0.04 0.64 0.90 0.36 0.55 0.29

On-PNR, off-PNR 5.09 0.03 0.31 0.87 0.35 0.60
On-PR, on-PNR 1.10 0.30 0.56 0.33 0.57 0.52
Off-PR, off-PNR 15.10 0.00 0.05 0.96 0.33 0.87

H05: There is no difference in sales (growth) between Science Park (NTBFs) and off-park (NTBFs).
H06: There is no difference in employment (start) between Science Park (NTBFs) and off-park (NTBFs).

Sales (growth) Employment (start)

F Significance P-value F Significance P-value

On-PR, off-PR 16.97 0.00 0.00∗∗ 0.02 0.88 0.54

On-PNR, off-PNR 6.32 0.01 0.00∗∗ 0.44 0.51 0.55
On-PR, on-PNR 3.30 0.07 0.37 0.10 0.75 0.98
Off-PR, off-PNR 0.16 0.69 0.74 0.81 0.37 0.93
∗∗ P < 0.01.

H07: There is no difference in employment (growth) between Science Park (NTBFs) and off-park (NTBFs).
H08: There is no difference in profitability between Science Park (NTBFs) and off-park (NTBFs).
 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876 873

Employment (growth) Profitability

F Significance P-value F Significance P-value

On-PR, off-PR 17.56 0.00 0.00∗∗ 4.62 0.03 0.51

On-PNR, off-PNR 11.97 0.00 0.01∗ 6.44 0.01 0.13
On-PR, on-PNR 0.25 0.62 0.83 0.25 0.62 0.30
Off-PR, off-PNR 0.52 0.47 0.44 0.16 0.69 0.82
∗P < 0.05.
∗∗ P < 0.01.

Chi-square test gives a significant difference between growth of employment and employment (start) (Chi-square
test, P < 0.05). For an analysis of sales and other variables—on- and off-park, branch/business sector, age, region,
employment start, Science Park individual, etc. and employment and other variables.
Relationship (Chi-square test) between sales growth and sales (start) and employment growth and employment
(start).
H09: Sales growth is independent of sales (start).
H10: Employment growth is independent of employment (start).

Sales growth—sales (start) Employment growth—employment (start)

n Significance n Significance

On-PRa 112 0.240 112 0.000∗∗∗

On-PNRb 102 0.240 102 0.000∗∗∗
Off-PRc 123 0.243 123 0.000∗∗∗
Off-PNRd 101 0.240 101 0.000∗∗∗
a On-park response, off-park response.
b On-park no response, off-park no response.
c On-park response, on-park no response.
d Off-park response, off-park no response.
∗∗∗ P < 0.001.

A.2. Non-significant variables
The Table below compares those firms that
have launched new products in the last 12 months
with those that have not—yes or no, no signifi-
cance between on and off-park NTBFs—in terms
of their assessment of where their competitive
advantage lie. The responses appear to be very
similar between the two groups (on and off-park).
A higher rate of on-park firms valued access to
university—co-operation with universities/links, gen-
eral development—than did other high-tech firms
(off-park). It is striking how similar the responses
are of off-park firms to those of on-park firms re-
garding export, turnovers, planning and products/
services.
874 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876

Non-significant variables Mean P-value Scale

1a 0b

Customers/marketing
Same or similar customers last 12 months 3.32 3.68 0.08 1–5
Changed marketing of products 2.06 1.99 0.65 1–5
Export
Products/services (finished) 43.27 44.36 0.85 Procent
Subcontractor 1.93 4.76 0.15 Procent
Licenses 4.53 4.20 0.89 Procent
Joint-ventures 2.24 0.36 0.08 Procent
Facilities 2.36 2.00 0.84 Procent
Other 1.97 2.86 0.60 Procent
Customers/products
Turnover (three biggest customers) 3.68 3.60 0.65 ca. 60% (1–6)
Turnover generated from products >3 years 3.63 4.03 0.05 ca. 60% (1–6)
Purchasing (three biggest firms) 3.14 3.48 0.06 ca. 50% (1–6)
Importance of business rumour 4.09 4.22 0.40 1–5
Importance of earlier business experience (for sales) 2.55 2.58 0.90 1–5
Co-operation with universities/links
General development 1.43 1.10 0.08 1–5
Planning
Long-range planning of investments 1.80 1.57 0.09 1–5
Long-range planning of technology development 1.94 1.77 0.24 1–5
Analysis of consumer behaviour 2.54 2.66 0.49 1–5
Changed products (last 12 months) 0.80 0.74 0.42 Yes/no
Patents/products
Patents 0.32 0.36 0.56 Yes/no
New products (before competitors) 0.62 0.68 0.34 Yes/no
Products and services
Excluding products and services 0.23 0.25 0.76 Yes/no
Licenses 0.23 0.18 0.33 Yes/no
Patents 0.04 0.07 0.25 Yes/no
Franchising 0.03 0.04 0.70 Yes/no
Other 0.02 0.02 0.99 Yes/no
Share of turnovers (licenses, patents, franchising and others) 7.39 4.23 0.13 Procent
a On-park.
b Off-park.
 H. Löfsten, P. Lindelöf / Research Policy 31 (2002) 859–876
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