Technological Innovation (TI) is a critical outcome of innovation systems. Previous studies have investigated the drivers of university–industry (U–I) collaborations without looking at relationships and their influencing factors. This paper fills this gap by examining U–I links in the automotive and biotechnology sectors in Malaysia. The exercise produced three key results. Firstly, there was a significant but negative association between perceived importance of universities and firm-level TI, which indicates that firms have used universities in Malaysia less than their perceived importance. Secondly, the results demonstrate that the sequential effect of knowledge transfer (KT) channels and perceived barriers fully mediate the relationship between universities and TI. Firms that regard universities as important to TI also placed emphasis on KT channels and barriers. While professional recognition and advancement depend on being first to disclose and publish research results, industrial innovation relies heavily on secrecy. Thirdly, the perceived importance of universities when viewed together with KT channels and perceived barriers, explains and predicts firm-level TI, which was significantly different in the two sectors. Furthermore, automotive firms reported higher perceived importance of universities than biotechnology firms in research, teaching, and entrepreneurship.
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