Research and development activities conducted at universities and firms fuel economic growth
and play a key role in the process of innovation. Specifically, prior research has investigated the
widespread university-to-firm research development path and concluded that universities are
better suited for early stage of research while firms are better positioned for later stages. This
thesis aims to present a novel explanation for the pervasive university-to-firm research
development path. The model developed uses game theory to visualize and analyze interactions
between a firm and university under different strategies. The results reveal that as academic
research signals knowledge it helps attract tuition paying students. Generating these tuition
revenues is facilitated by university research discoveries, which, once published, a firm can build
upon to make new innovative products. In an environment of weak intellectual property rights,
moreover, the university-to-firm research development path enables firms to bypass the hefty
costs that are involved in basic research activities. The model also provides a range of solution
scenarios where a university and firm may find it viable to initiate a research line.
Author Keywords: Game theory, Intellectual property rights, Nash equilibrium, Research and development, University to-firm research path