The Review of Austrian Economics, 16:2/3, 271–284, 2003.
2003 Kluwer Academic Publishers. Manufactured in The Netherlands.
The Austrian Theory of Institutions Applied
to Science-Industry Relationships: The Relevance
of Innovative Institutions
JACQUES-LAURENT RAVIX ravix@ideﬁ.cnrs.fr
CNRS (LATAPSES/IDEFI) and University of Nice-Sophia-Antipolis
Abstract. This contribution aims at using an Austrian approach of institutions to discuss speciﬁc institutional
arrangements in the current working of science-industry relationships. By combining distinctive characteristics
between Menger’s and Hayek’s research programs, we establish a typology of institutions that goes beyond the
usual way to approach business institutions and allows us to identify transitory types of institutional arrangements
called “innovative institutions”. We apply that Austrian approach of institutions and address its relevance to
highlight some puzzling issues derived from empirical evidence. Then, innovative institutions reveal particularly
suited to understand how public and private research work together in science-industry relationships.
Key Words: innovation, entrepreneurship, institutions
JEL classiﬁcation: B53, L33, M13, O31.
This paper aims at applying an Austrian approach to institutions to the analysis of speciﬁc
forms of relationships that recently developed among academics and industrial companies.
These relationships are designed to pursue the general purpose of creating and promoting
new “science-based” products and processes. In that respect, they are refractory to standard
economic analyses of science-industry relationships referring to the notion of scientiﬁc
knowledge as a public good fuelling from academic institutions to ﬁrms through information
ﬂows. Actually, science-industry relationships take the form of institutional arrangements
co-organized by public researchers and private ﬁrms, the very object of which being the
joint creation of knowledge that does not exist beforehand, even in the realm of basic
research. Modern theories of organization (principal-agent theory, property rights theory
and transaction cost economics) seem appropriate to deal with such a phenomenon for two
reasons. They focus on contractual relations, and some of them use incomplete contracts
which seem to be ﬁtted to the uncertain outcomes of R&D joint ventures. However, this body
of theory is open to different shortcomings that relate to technological change (Langlois
1988) and the treatment of knowledge (Foss 1999). Moreover, these theories do not really
raise questions concerning either the emergence of institutions or how they can evolve in
the future. The central aim of our paper being to promote a clear-cut understanding of the
emergence and the evolving of new forms of science-industry institutions, we suggest to