What The U.S. Can Learn From Denmark’s Industrial PhD Program

Denmark’s industrial PhD program is associated with higher patent applications, increased gross profit, increased overall employment, and increased total factor productivity for the participating companies. Students in the program experience an increased salary and higher corporate leadership roles compared to conventional PhD students and ordinary graduates. While a program that has an annual budget of $27 million for 120 projects in a country of 5 million people may seem small from a U.S. perspective, it offers a relevant and interesting comparison for many states in the United States and state university innovation programs.

The Value of Denmark’s Industrial PhD Program

The goal of the Industrial PhD Program is to increase knowledge sharing between universities and private sector companies, promote research with commercial perspectives, and take advantage of competences and research facilities to increase the number of PhDs. Denmark’s industrial research program began in 1971 and was upgraded in 1988 so that participants could earn a PhD. In 2011 and in 2013, the Danish Agency for Science, Technology and Innovation commissioned independent assessments to determine the cost-benefit aspects of the program. Over 1,200 projects including 430 Industrial PhD students at 270 companies were surveyed and measured against a control group of companies that did not participate in the program and a group of conventional PhD students and university graduates in similar fields to the Industrial PhD.

Among companies that participate, they generally experience a doubling of the number of patent applications versus companies that don’t participate in the project. They experience higher gross profit, an increase in the number of total employees, and an increase in total factor productivity. Additionally, the companies report other benefits from the program, including new knowledge, new market opportunities, and an increased network in the academic world.

The Industrial PhD students find that they earn about 10 percent more than conventional PhD students and 7 percent more than university graduates. Few experience long-term unemployment. Their average salary is equivalent to $115,000, and those with degrees earned in the social sciences averaged even higher salaries, $142,000. (Bear in mind that Danish law requires six weeks of vacation and one year of maternity leave which can be shared between parents.) Industrial PhDs are three times more likely to hold senior leadership positions in the company than conventional PhDs. The reports also finds that industrial PhDs who go to the public sector earn the same as those in the private sector, but conventional PhDs earn less. Students come to the program with an average of four years of industry experience. Only four Industrial PhDs left the country after the program, so brain drain is not a concern.

The fields of inquiry for the Industrial PhD Program include the technical sciences (almost 60 percent), medical science, natural science, veterinarian/agricultural, pharmaceutical science, and social science. To be sure, participating Danish companies are involved in knowledge-intensive industries, particularly business services, IT, chemicals, pharmaceuticals, medical equipment, finance, food production, wholesale trade, and advanced manufacturing. The majority of companies expect patents and at least half expect higher corporate income as a result of participating in the program.

How Denmark’s Industrial PhD Works

Denmark’s Industrial PhD Program has emerged as a solution to the traditional challenges faced by industry and academe. Many academics are very knowledgeable, but they are removed from the issues and concerns of corporations. Much of their research is too abstract to be applied in corporate settings. Companies, on the other hand, often fail to take advantage of strategic knowledge and research. They often don’t take the time to think critically nor to pursue key research questions.

The Industrial PhD Program focuses on a change agent, the Industrial PhD student. As part of the program, the student enters a Danish university and is hired by a Danish company (or accepts a defined contract from the employer) for a three-year period. For a new university graduate, the annual salary is around $64,000 USD. The salary for a university graduate with four years of work experience is approximately $77,000. All salaries include employee and employer retirement fund contributions.The student spends 100 percent of his or her time on the project, and shares his or her time equally between the company and the industry in a way that makes sense for the specific project.

The Danish Agency for Science Technology and Innovation pays the full tuition to the university and a supplement of approximately $2,700 to the company per month (about 30-50 percent of the student’s salary) plus incidental fees for travel, conferences, etc. The student has both a project leader at the university and the company. The program is open to any student in the world.

About 60 percent of projects come from Denmark’s largest companies. The remainder are comprised of small and medium sized businesses, some as small as a few employees. In those cases, the Industrial PhD is the seed funding for a valuable patent, product, service, or enterprise.

The program strikes a balance between commercialization and academics. Students are subject to all the rigorous requirements of the university’s PhD program (coursework, doctoral thesis, teaching, etc.). Typically this also includes that Danish students study abroad and an international group of peer reviewers is assembled to review the doctoral thesis.

Though it was not included in the survey, the Danish Agency for Science Technology and Innovation also offers a PhD program for the public sector. As Denmark’s public sector comprises 60 percent of GPD and is largely exercised through delivery of social services and transportation, there is a general desire to make it more efficient. This program allows public sector agencies to grow their PhD talent in house.

An additional survey conducted in 2013 concluded that the PhD program creates value for students, businesses and universities. Students are enriched by the combination of practical experience and research. Companies find concrete results with increased revenue; new products and services; and an increase in patent applications and licensing. Universities get a better sense of the research needs for business, not to mention a supply of highly qualified and motivated PhD students. All parties enjoy the benefit of networking. Finally the Danish society is served by a program that delivers value for money, increases national competitiveness, and increases employment.

The Industrial PhD is not a substitute for fundamental research in the sciences, but it is a valuable supplement to academic, corporate and national research agendas. The World Academic Summit Innovation Index recently ranked Denmark #9 in the world for corporate investment per research scholar, outpacing the United States at #14. Given the fact that Danish companies and the government both participate in the Industrial PhD Program, there is a shared incentive to make it a success.

Aalborg University’s Center for Communication, Media and Information Studies

While Danish universities compete vigorously for public and private funding in Denmark and the EU, PhD education in Denmark is highly structured with strict academic requirements and compliance requirements for all universities.  Funding is allocated on a rational points systems based upon the number and types of publications where articles are published, among other metrics. The Industrial PhD Program injects another level of competition into the system by allowing universities to compete for the best PhD students from companies.

The City of Aalborg sees its young university as key to the city’s strategy to reinvent itself after the closure of factories and the shipping trade. Founded in 1974, Aalborg University desires to offer more relevant education than established universities and to use contextual knowledge, problem-based, learning and project work rather than traditional academic disciplines. The strategic plan has included the acquisition of competing schools and investment into its programs for medicine and engineering. There are 17,000 students and the university has doubled the number of PhD students in recent years. The University took over Nokia’s former R&D center in Copenhagen and opened a campus with 3,000 students. There I sit with engineers, economists, political scientists, mathematicians and other academics at the Center for Communication, Media and Information Studies (CMI), a multidisciplinary program inside the Center for Tele Infrastructure in the University’s Department of Electronic Systems.

Owing to Copenhagen’s historical role in the development of the European mobile industry, CMI has had a variety of collaborations in this area, as well as innovative research projects on digital sound, service innovation and security. CMI has partnerships with a number of universities include Ghana Telecom University which sends 20 students to Denmark, Viswa Niketan Higher Secondary School in India, and Princeton University in the United States. CMI hosts an annual conference on ICT and other conferences with the leading academic engineering organizations.

The other partner in my Industrial PhD project is Strand Consult, an independent company that produces strategic knowledge for the mobile telecom industry. Topics include mobile infrastructure, mobile broadband policy, value added services, MVNOs, smartphones, and prepaid strategy. In my Industrial PhD project, I use internet economics to evaluate policies to support broadband infrastructure investment.

There is a brisk demand for highly skilled foreigners in Denmark, and this is the reason I was recruited to work in the country. In fact, Americans comprise one of the largest groups of expats in Denmark. While I could have pursued a PhD in the United States, and there are many excellent educational opportunities, I find that because the US being a big and powerful country tends to over focus on “American” perspectives. Denmark, because it is a small and dependent on an export economy, has no choice but to take an international approach in research and education. Small can be beautiful.