Paper Series on Academic Entrepreneurship

by Professor Tom Allen and Dr. Rory O’Sheas

August 30, 2005

The creation of start-up companies is an important way of transferring research results from universities into the marketplace. The aim of this paper series on academic entrepreneurship is to explore, explain and describe why some universities are more successful than others at generating technology-based spinoffs from a U.S. system of innovation context.

Once the concern of several ‘enlightened’ land grant institutions in the US, the goal of enhanced spinoff company formation has become a common part of institutional and university planning. The growing acceptance of the importance of spinoff activity to national economies has been reflected in the explosion of policy and research publications seeking to better understand and address the forces that shape spinoff activity in higher education.

The explosion of recent research on this topic has served to refine, supplement, and, in some cases, challenge our understanding of the complex forces shaping university spinoff creation. It has given rise to a much needed debate in both research and policy circles about the adequacy of past theory and the effectiveness of existing programs to enhance spinoff formation on campus.

The consequence of this growth in spinoff activity from higher education is not trivial. According to the AUTM, university spinoffs have created over 140,000 jobs and $16.5 billion in value-added activities for the U.S. economy (Shane, 2004). Interest in the spinoff phenomenon amongst national policy makers and university heads has been sparked by the belated recognition of the emergence of the knowledge-based economy and the need for knowledge based jobs. Globalization of the economy means that the only way that developed-western economies such as the U.S. can compete with lower paying economies worldwide is with technology, talent and entrepreneurship. And with these changing dynamics the role of higher education becomes critical for the growth of national economies, in particular their role at generating technology-driven enterprises.

Little wonder then that US universities are actively looking to contribute indirectly to regional societies through the creation of spinoff companies. However for many institutions the path to enhanced start-up creation is not an easy or smooth one. Successful spinoff efforts are difficult to mount, if only because of our continuing inability to make sense of its longitudinal character and the complex forces which give rise to spinoff creation. Furthermore, our knowledge of successful forms of action is no less limited. Despite having acquired information from a variety of spinoff programs, we have yet to distinguish attributes of successful programs that are institutional specific from those that are more generally essential. Though we have a sense of what seems to work, we are not yet able to tell administrators how and why spinoff rates vary between institutions in the US. Moreover, we have not been able to tell institutional officials what procedures they should follow to initiate successful retention programs suited to their own financial needs and resources. As a consequence, the advice has been quite general and descriptive, rather than explanatory in nature.

What we have yet to do, and what we clearly need to do, is to produce a synthesis of what we know about the character and causes of spinoff behavior and the nature of successful spinoff programs. We need to develop a theory of spinoff behavior, which clearly explains from a longitudinal perspective the complexity of determinants that underlie the phenomena. And we must do so in a fashion that leads to concrete answers to the questions administrators ask about enhancing university start-up activity.

In this paper series on academic entrepreneurship, we have developed a series of articles that begin to address the limitations of this research domain. In our first paper “Determinants and Consequences of Spinoff Behavior: A Conceptual Framework”, we give order to the extensive body of research in spinoff departure by proposing a theory of departure from institutions of higher education which focuses on the ‘individual’, ‘organizational’, ‘institutional’ and ‘environmental’ dimensions of spinoff behavior. The theory provides a view of spinoff behavior, which stresses the limits of institutional action and the unique responsibility institutions share in the development of academic entrepreneurship on campus. Our second article “Creating the Entrepreneurial University: The Case of MIT” builds further on this topic and explores the dynamic factors contributing to the development of a top ranked entrepreneurial university in the US, Massachusetts Institute of Technology (MIT). Utilizing qualitative and quantitative data sources, the paper brings together the mutual roles of the ‘environmental’, ‘institutional’, ‘organizational’ and ‘individual’ perspectives and uncovers the interrelated micro- and macro-level factors contributing to successful academic entrepreneurship at MIT. The third paper of the series “Entrepreneurial Orientation, Technology Transfer and Spinoff Performance of U.S. universities”, utilizes panel data from 141 U.S. universities between 1980-2001, and provides a systematic account of why some universities in the US are more successful that others at generating technology based spinoffs. Drawing from evolutionary and resource-based perspectives, we develop a theoretical and econometric model to capture the non-linear process of university spinoff creation, wherein learning effects from previous success partially determines current spinoff counts. The random effect negative binomial estimators of our study reveal evidence of history dependence for successful technology transfer to occur. Our results also find quality of faculty, commercial capability and size and nature of science & engineering funding as significant determinants of higher rates of university start-up formation.

To access our working papers, please click here.

Should you wish to join our research team and contribute to this emerging area of university technology transfer research, we would be glad to hear from you. You can contact us at roshea "at" mit.edu / tallen "at" mit.edu.

Publications to date:

Journal Articles
O’Shea, R., Allen, T., Roche F. and Chevalier, A. (2005) “Entrepreneurial Orientation, Technology Transfer and Spinoff Performance of U.S. Universities”, Research Policy 34 (In Press).

O'Shea, R., Allen., T., O’Gorman, C. and Roche F. (2005) “Universities and Technology Transfer: A Review of Academic Entrepreneurship Literature”, Irish Journal of Management 26 (In Press).

Book Chapters
O’ Shea, R., Allen, T. (2006) “Determinants of University Start-Up Activity”, in F. Therin (ed) Handbook of Research on Techno-entrepreneurship, Edward Elgar, forthcoming 2006.

Conference Papers
O’Shea, R., Allen, T., and Morse, K (2005) “Creating the Entrepreneurial University: The Case of MIT” in Entrepreneurial Universities: Constituents, Consequences and Concerns session, at Academy of Management Conference, Hawaii, USA, August 2005.

O’Shea, R., Allen, T., Roche, F. (2005) “Internal Determinants of University Spinoff Activity: A Longitudal Study of 141 U.S. universities”, in New Contexts for Innovation and Entrepreneurship: International Perspective on University Spinoffs session, at Academy of Management Conference, Hawaii, USA, August 2005.