The new economics of the university: a knowledge governance approach

University is becoming a cornerstone of the new emerging mode of governance of the generation and dissemination of knowledge as it reveals remarkable institutional advantages both in providing a solution to the knowledge trade-off and in reducing agency costs. The typical academic labor relationship emerges as an appropriate institutional device to handle the principal-agent problems when creative talents are required. The unique quasi-hierarchical setup of the academic system creates a supply of certified skills that are ready to operate on a professional basis. Such academic consultants can be paid on an ex-post per job basis matching only their variable costs. This supply leads to the creation of a specific market for research services where the demand is provided by the knowledge outsourcing of corporations. For this system to work effectively the non-exclusivity of intellectual property rights on the results of the research performed under contract is necessary. Non-exclusivity in academic employment relations should parallel non-exclusivity in knowledge ownership.