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This exploratory research examines environmental, institutional, and behavioral factors that affect interorganizational knowledge development and transfer between United Kingdom business schools and business. Three theoretical bases—transaction cost economics, extension of transaction cost economics, and power properties—are integrated in order to understand and identify the antecedents and dynamics of the interorganizational interface. Results support the hypothesis that interface collaboration and face‐to‐face communications are important mediators of academic‐business outcomes—learning business practices and cooperative research.

Proposes that by redirection performance appraisal can become a pivotal force for translating, articulating and instilling commitment to an organization′s strategy. Presents a framework for assessing the success and failure of performance appraisal systems in achieving their evaluation and development role on several dimensions. Resolves the limitations of conventional systems by transcending the dysfunctional conflict between evaluation and development. The transformational performance appraisal system is consistent with the new ways of managing and with new organizational forms.

This paper reports on a comprehensive study of business schools in the UK. Data were obtained from two mail surveys ‐ one of faculty members and the other of deans from all of the UK business schools. Among the factors studied were demographic and institutional characteristics; the time faculty spends on major activities; faculty rewards, competencies and networks; faculty interaction with business; receptivity and support for increased interaction; benefits of increased interaction; characteristics of faculty who do applied research; barriers to applied research; and the role of advisory boards. The results show an internal alignment of activities and rewards for teaching and research, but limited support for applied and collaborative research, and a divergence between the two principal activities ‐ academic research and teaching. Interaction by business school with business appears to be mostly information passing.