2008), “Does knowledge diffusion between university and Industry increase innovativeness?”, The

Empirically this paper seeks to assess the effect of firms ’ R&D collaboration with universities on innovation. A cross-sectional propensity score matching estimator is applied to the Swedish Community Innovation Survey data over 1998-2000, which provides information about cooperation on innovation reported by 790 R&D or innovation investing firms with at least 10 employees. Approximately 25 percent of these firms collaborated with universities on innovation projects. The results shows that university/industry collaboration has a significant and positive influence on three measures of innovative activity. First, the average R&D firm that cooperate on innovation with universities spend more money on R&D compared to an almost identical R&D firm (constructed by the two nearest neighbours) witch has no collaboration with academic researchers. Second, collaborating firms have a larger propensity to apply for patents than other R&D firms. Finally, income from new product sales is considerable greater for a firm that have joint research projects with universities than for a non-collaboratin