Influence of university-firm governance on SMEs innovation and performance levels

- How different university-firm governance styles impact SMEs' innovation?
- We differentiate between relational governance and contractual governance.
- Only contractual university-firm relationships have an impact on innovation.
- Relational activities promote and support contractual activities.

The purpose of this paper is to study how different university-firm governance styles impact SMEs' innovation and performance. In this sense, we differentiate between relational governance - based on interpersonal links of trust - and contractual governance - based on codified scientific and technological knowledge. The empirical analysis is based on data gathered through a questionnaire administered to a sample of 600 Spanish SMEs. The findings show that only contractual university-firm relationships have a direct and significant effect on innovation, whereas relational activities promote and support contractual activities. The findings have managerial implications not just for firms, but also for universities.