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P-038Are third mission activities complements or substitutes of teaching andresearch?Adela García-Aracil, Davinia Palomares-Montero, Ingenio, Valencia, SpainIntroductionSince the mid eighties, a new paradigm has emerged to explain the new context within which economic, social and politicalrelationships are becoming established. This paradigm has three main characteristics: the globalisation of economic relationships;the speed of change; and the central role of the new information and communication technologies (ICT) in the economic andsocial development.As might be expected, the traditional role of higher education institutions (HEIs) of rather conservative creators and transmittersof knowledge is being questioned in this new globalised context. Their new role is being seen as a response to changes in theirenvironment that affect how universities are perceived by the various stakeholders in 21st century society.The higher education (HE) environment has changed in different ways, but such change is not new in its long history. What isnovel about the current changes are its depth and the direction, which has direct implications for HEIs in terms of their socialand economic development, to the point that the existence of these HEIs is being questioned. Competitiveness, productivity,quality and efficiency have become 'buzz' words related to the organization and daily operations of universities, although theseterms generally refer to the short term. However, the long term functions of universities as independent institutions are alsobeing questioned and are becoming subject to political and economic pressures.To make claims about on the diversity of universities may seem superfluous, but in some quarters there is a tendency to referto a 'desirable' university model. Some universities have a marked local or regional slant which influences their activities andspecialism; others have broadened their activities to become international actors.The responses of universities to these new conditions have had implications for their structure and administration; there is ademand for closer collaboration with their immediate environment, which has been accompanied by greater autonomy andcontrol over their activities and results.State of the artEducation institutions are of interest because education, especially HE, is one of the main sources of economic growth.Numerous in depth studies have looked at the productivity of universities. Measuring productivity in public HEIs provides anindirect evaluation of public funding management informs policy making and improves university productivity.Changes in productivity growth can be calculated using the Malmquist productivity change index, which is a particularly attractivemethodology. It does not require knowledge on input or output prices, nor does it require specific behavioural assumptions aboutthe institutions under consideration, such as cost minimization or profit or revenue maximization.This methodology has been applied in a number of service industry contexts, including (among others) healthcare, financialservices and insurance. Some studies of the education sector also use the Malmquist index approach, examining productivitychanges.Research focusThe promotion of so-called third-mission activities at universities might be seen as one of the major strategies adopted in recentyears. A large debate is ongoing about the consequences of including third mission activities within the institutional missions ofuniversities of research and teaching. This issue could be framed as a problem of complementarity vs substitution in output.Universities' activities should be seen as a vector of the jointly produced outputs, based on the vector for inputs. From thisperspective, both positive and negative effects are plausible. In general, studies that examine single scientific areas find apositive correlation between classical indicators of scientific activity and involvement in third mission activities, while studiesthat examine aggregate effects at university level more often find mixed results. Therefore, this system evolution is placingincreasing emphasis on the relevance of assessing university performance.This paper aims to provide some insight into the analysis of the trade-offs between the different universities' activities.MethodologyIn this paper we apply the Malmquist non-parametric approach to analyse productivity changes and trade-offs in Spanish publicuniversities from 1994 to 2006. We consider a three-input, three-output, general model. Four different specifications were usedfor that purpose: 'general', 'teaching-only', 'research-only' and 'industry-only' models.Madrid, October 20, 21 & 22 - 2010108