“Economic Growth and Academic Entrepreneurship: Lessons

Learned and Implications for Industry, Academia, and

Policymakers”

Professor Donald Siegel

Dean-School of Business

University at Albany, SUNY

President, Technology Transfer Society

Editor-Journal of Technology Transfer

InterTradeIreland All-Island Innovation Conference

NUI Galway

June 13, 2012

Outline

Theoretical Rationale for R&D and Technology-

Based Economic Development (TBED)

Policies/Importance of Evaluation

Background Information on University Technology

Transfer/Academic Entrepreneurship

Summary of Key Research Quantitative and

Qualitative Results

Lessons Learned For Industry, Academia, and

Practitioners

Shameless Self-Promotion: University at Albany-

School of Business-Entrepreneurial Initiatives and Plugs

For Technology Transfer Society/Journal of Technology

Transfer

Economics of Innovation and Entrepreneurship

Joseph Schumpeter (1939)-

Stresses the Importance of Technological Competition,

Not Price Competition-The Role of the Entrepreneur

Technological Change is a Force of “Creative

Destruction”

Zvi Griliches/Edwin Mansfield/Richard Nelson-Diffusion

of Innovations/R&D is a Key Source of Economic Growth

(Especially Basic Research)/Technology Transfer/Role of

Universities

Why a Government Role in R&D?

Economic Rationale-Market Failure

Scientific Knowledge as a Public Good

Technical and Commercial Uncertainty

Associated With Basic Research

Complementary Assets May be Required for

Successful Innovation

Externalities

Government Actions

Financier

Lead User (e.g., Transistors, Integrated Circuits)

Provider of Complementary Assets (e.g.,

Infrastructure)

Establishing Price and Quantity Regulations

(e.g., Tariffs, Quotas, Price Floors, Price Ceilings,

and Subsidies)

Other Regulations That Affect Innovation

(e.g., Environmental and Safety Regulations)

Why do Governments Have R&D Policies?

Social Return > Private Return

Private Sector Under-invests in R&D? Why? –

Difficult to Evaluate and Fund Some Types of Research

External financing means revealing ideas

Benefits so diffuse recipients hard to organize or identify

Need large organization for implementation/commercialization,

but such organizations not necessarily good innovators

Standards-related R&D-public goods nature of standards

National Security and/or Strategic Industries

“Ripe” for technical advance

Closely linked to other industries

Enables program in many other industries (e.g. semiconductors)

Why do Governments Have R&D Policies? (cont.)

Education/human capital and imperfect human

capital markets

Individuals facing differing financial constraints in

investing in human capital-equality of opportunity

argues in favor of education subsidies

Externalities for society from human capital

formation by individuals (assuming they do not

capture all the benefits in their wages).

Institutions and Agents Who Receive

Public Support for R&D and TBED

Agents

University Scientists

Industry Scientists

Institutions

Universities/Technology Transfer Offices

University-Industry Research Centers (e.g., NSF-

ERC, NSF-IUCRC, CATs)

Science Parks

Incubators/Accelerators

Firms (both small and large-e.g., SBIR and ATP/TIP)

Key Points About Evaluation of Technology Programs and

Institutions

Outcomes

Most Important Criteria For Public Investment

-Fields With the Highest Social Returns

Also important to provide support when private

returns are insufficient to overcome ”hurdle

rates” (Link and Scott (1998), Siegel (1999))

Evaluation Should be Built Into the Design of

R&D and TBED Programs

Key Points About Evaluation of Technology Programs

and Institutions (cont.)

Quantitative and Qualitative Assessment

Multiple Indicators

Time Frame is Critical: Analyze Short-Run,

Medium-Run, and Long-Run Impacts

Indicators of Output/Performance Will Differ

According to the Unit of Observation

Control Group

Four Types of Measurements

Resources

Scientific Labor (to conduct research)

Equipment

Facilities

Outputs

The Funded Research Projects

Collaborative Research Relationships Arising From the Funded Research

Publications

Patents

Licenses

Models and Algorithms

Prototype Products and Processes

Four Types of Measurements (cont.)

Outcomes

Citations (both Patents and Articles)

Presentations and Other Forms of Dissemination

Revenue Generated by New/Improved Products

Productivity Effects on Firms

Firm Growth, Survival

New Firm Creation Changes in the Propensity of Firms to Collaborate

Four Types of Measurements (cont.)

Longer-Term Impacts (Broader Societal Goals)

Job Creation

Measures of Regional/State Economic Growth

Ability to Attract More Firms to A Region or State

Improvements in Quality of Life (e.g., Health, Safety,

Environment)

Effects on Ability of Region or State to Innovate

Technology (Primary) Industry Period Developed University Created Electronic University of 1940s Calculator Pennsylvania Computers Fiber 1960s Optics MIT Telecommunications Stanford, 1970s rDNA California Biotechnology 1980s Supercomputing Illinois Internet Sequencing of DNA/ Human Genome Cal Tech, 1990s Project Johns Hopkins Pharmacogenomics 2000s Nanotechnology UAlbany ?????

Universities, “GPTs”, and The Creation of New Industries

William Baumol-The Free Market Innovation Machine-

Analyzing the Growth Miracle of Capitalism

Routine/Systematic Innovation-Large Firms

Entrepreneurial Innovation-Small Firms

“David and Goliath Symbiosis”-Joint Efforts of

Individual Entrepreneur and Large Industrial

Firm Unprecedented Wealth Creation

Siegel (2006)-Universities Increasingly Developing

and Nurturing Startups; Also Linking Small and

Large Firms Who Engage in Entrepreneurial

Innovation

Background Information on

University-Industry Technology Transfer

U.S.-1960’s, 1970’s Decline in Competitiveness

(“Japanese Challenge”, Productivity Slowdown)

Dramatic Changes in U.S. National Innovation Policy

Expansion of Programs to Support Public-Private

Partnerships (e.g., Advanced Technology Program-

ATP/TIP, NSF-ERC, IUCRC)

Relaxation of Antitrust Enforcement to Promote

Collaborative Research (e.g., NCRA)

Policies Promoting More Rapid Diffusion of

Federally-Funded Technologies From Universities

and Federal Labs to Firms (e.g., Bayh-Dole,

Stevenson-Wydler, SBIR )

Legacy of the Bayh-Dole Act

Bayh-Dole Act of 1980: Universities Own the Rights to

Technologies That Arise from Federal Research Grants

Purpose: Accelerate the Rate of Technological

Diffusion, Promote Economic Development

Almost All Universities Have Established a Technology

Transfer or Licensing Office

Rapid Growth in Commercialization of University

Technologies:

U.S. Universities

1980 2010

University Patents 300 4469

Licensing Agreements 276 4284

Startups 35 651

Research on Institutions and Agents Involved in

Academic Entrepreneurship

Agents and Institutions

University Scientists

Industry Scientists

Entrepreneurs

Industry-University Cooperative Research Centers

University Technology Transfer Offices (TTOs)

Science Parks

Incubators/Accelerators

Firms That Interact With Universities

Venture Capital Firms

Selected Research Questions

How Does the Process of University Technology

Commercialization/Academic Entrepreneurship Work?

Which Universities “Perform” Best?

What is the Role of the TTO?

How Should We Measure Performance?

Which Factors “Explain” Variation in Relative

Performance? (e.g., Incentives, Organizational, and

Environmental Factors)

Do Incubators/Accelerators and Science Parks Add

Value?

Interdisciplinary Research on Institutions and Agents

Involved in Academic Entrepreneurship

Indicators of Output/Performance

Invention Disclosures

Patents

Number of Licensing Agreements

Licensing Revenue

Research Productivity of Industry Scientists/Firms

Research Productivity of University Scientists

“Productivity” of Universities in Technology Transfer

Start-Up Formation

Survival

Employment Growth

Changes in Stock Prices

Key Results for University and Regional Policymakers

Bayh-Dole Type Legislation Appears to Have Been

“Effective”

TTO Staff Add Significant Value Because Scientists Are

Not Disclosing Inventions

Important for TTOs to Educate Academics on Technology

Transfer and For TTO Staff to Interact With

Entrepreneurs (“Surrogate” Entrepreneurs)

Key Results for University and Regional Policymakers

(cont.)

Private Universities and Those With Medical Schools

Appear to Be Somewhat More Productive

Universities Are Becoming More “Strategic” in Technology

Transfer (More On That Later) –More Heterogeneity and

Application of Management Theories to Practice

Property-based Institutions (Incubators and Science

Parks) Appear to Enhance Commercialization

Incentives Matter (e.g., Royalty Distribution Formulas),

But So Do Organizational Practices and Institutional

Policies

Key Results for University and Regional Policymakers (cont.)

Universities Increasingly Focusing on the Entrepreneurial

Dimension (Evidence Mixed on Success of University Based

Startups)

Academic Entrepreneurs Are Not Less Productive in Their

Academic Research After Commercialization

Foreign-Born Scientists Are More Likely to Become

Academic Entrepreneurs

Social Networks of Star Scientists Key for New Firm

Creation

Key Stylized Facts From Qualitative Research

Major Impediments to University Technology Transfer:

Informational and Cultural Barriers Between

Universities and Firms (Especially for Small Firms)

Insufficient Rewards for Faculty Involvement in

Technology Transfer at Some Institutions, Especially

w.r.t. Entrepreneurial Activity

Key Stylized Facts From Qualitative Research (cont.)

Major Impediments to University Technology Transfer (cont.):

Technology Transfer Office Staffing and Compensation

Practices (High Rate of Turnover, Insufficient Business/

Marketing Experience, Possible Need for Incentive

Compensation)

Education/Training is Needed for Faculty Members, Post-

Docs, and Graduate Students in the Specifics of the

Entrepreneurial Process, the Role of Entrepreneurs, and

How to Interact with the Business/Entrepreneurial

Community

Key Stylized Facts From Qualitative Research (cont.)

A Failure to Address These Barriers Will

Induce More Faculty Members and Firms to

Circumvent the TTO and Engage in

“Informal” UITT

University Technology

Transfer/Commercialization/Academic

Entrepreneurship Should be Considered From a

Strategic Perspective

Strategic Implications of University Technology Transfer

/Academic Entrepreneurship-Formulation Issues

Setting Institutional Goals/Priorities

Resources Devoted to University Technology Transfer

Choices Regarding Technological Emphasis

Strategic Choices Regarding Modes of University

Technology Transfer:

Licensing

Startups

Sponsored Research

Other Technology Transfer Mechanisms That are

Focused More Directly on Stimulating Economic

Development (e.g., Incubators and Science Parks)

Strategic Implications of University Technology Transfer

/Academic Entrepreneurship-Implementation Issues

Improving Information Flows

Organizational Design/Structure

HRM Practices-Staffing/Compensation of TTO

Personnel

Reward Systems for Faculty Involvement in University Technology Transfer (perhaps including P&T- e.g., 6/-06-Texas A&M)

Implementation Issues Regarding Modes of University Technology Transfer

Different Ways of Structuring Licensing Agreements

Academic vs. Surrogate Entrepreneurs

Different Ways to Manage University-Based

Incubators and Science Parks

Recommendations Based on

Studies of Academic Entrepreneurship

Stressing Entrepreneurship (As Opposed to Patenting and Licensing) Promotes Technology Commercialization and Enhances Economic Impact of University

Strong Need to Enhance Incentives for Faculty Members to Be Engaged in Entrepreneurial Activity (and Perhaps For Successful Ones to Serve As Mentors)-Including P&T

More “Open” Immigration Policy for Scientists and Engineers Promotes Academic Entrepreneurship

Recommendations Based on

Studies of Academic Entrepreneurship

Important to Increase Participation/Success of Women & Minorities in Academic Entrepreneurship (as we found in the NRC Evaluation of SBIR)

Entrepreneurship Research, Education, and Community-Based Initiatives Are Key Complements

Important To Develop An Entrepreneurial Culture at the University and in the Local Region (More on That Later)

Corporate Partnerships Yield Better Results With Respect to Academic Entrepreneurship

Entrepreneurship As An Academic Field

Entrepreneurship (2007) vs. Strategy (1989)

Returns to Studying This Topic Are High (e.g., NSF-IGERT, Kauffman, development/fund-raising for the university)

Universities Focusing on Start-up Formation Should

Develop a Technological Entrepreneurial Curriculum,

Applied to Stakeholders-Role of Faculty Conducting

Research on Technological Entrepreneurship

Interdisciplinary Theory

Evaluation/Policy Research

Practitioner Research

Academic Conferences

Research Workshops

Ph.D. program

Aspects of a Technological Entrepreneurship Curriculum

-Institutional Level

Incubator/Accelerator

Science/Technology Park

Technology Transfer Office (Link to Business Schools)

Knowledge Clusters

Angel Network

Venture Forum

Senior Administrative Position in Entrepreneurship (e.g., Vice Provost-Entrepreneurship)

Enhance Pecuniary and Non-Pecuniary Incentives for Faculty Members to Be Engaged in Academic Entrepreneurship

Aspects of a Technology Entrepreneurship Curriculum

-Relating to (Internal and External) Stakeholders

Focused Graduate Courses and Executive Programs for the Growing Class of Managers Involved in Technology Commercialization (e.g., AUTM, Federal Labs, Teaching Hospitals, Lawyers )

Additional Entrepreneurship Courses (e.g., on TBED, cognitive, sociological, and economic aspects)

Add Evaluation and Assessment Tools to Existing Courses in Technology Management/Strategy

Technology Familiarization

Internships

Idea Labs

Business Plan Competitions

Venture Forum

UAlbany School of Business-Refocusing on Entrepreneurship

and Regional Economic Development

School of Business, UAlbany, SUNY Strategies

Converge

Strong Support From Central Administration for

New Focus on Entrepreneurship (Chancellor, President,

Provost)

At All Levels–Emphasis on University’s Role in Job

Creation, Economic Development and

Entrepreneurship

Key Tactic: Collaboration (With Other Colleges on

Campus and Other Universities in the Region)

UAlbany School of Business-Entrepreneurial Initiatives

New Undergraduate Concentration in Entrepreneurship

Entrepreneurship Track in Full-Time MBA Program

New York State Student Business Plan Competition

Collaborations with Community Colleges

Life Sciences Entrepreneurship-RNA Institute

Thermo Fisher Student Venture Fund

Entrepreneurial Finance Research Conferences

Small Enterprise for Economic Development (SEED)

Program (Winner of 2012 Tribeca Disruptive Innovation

Award)-Focus on “Bottom of the Pyramid”

Young Entrepreneurs Academy Chapter

“Small Enterprise for Economic Development (SEED) Program Launched With SBDC and the School of Social Welfare ($2.6 Mil) and ESD (State) Grants of $200K

Key/Unique Features

“Character-Based” Lending-Recipients Take Business

Courses And Are Assigned To A Local Mentor

Teams Of Students From Both Schools Assist Recipients

Evaluation Built Into Design of the Program

The First Character-Based Micro-loan fund project

(with evaluation) Ever Based at a University (and the

partnership between a School of Social Welfare and a

School of Business is unprecedented!)

UAlbany SEED Program

Young Entrepreneurs Academy Chapter at UAlbany

Young Entrepreneurs Academy (YEA!)–Kauffman

Foundation Sponsored Program –Established at the

University of Rochester and High Schools in Rochester

A Year-Long Program Teaching Middle and High School

Students How to Start and Run Their Own REAL

Businesses-“Start as a Student, Finish as a CEO!”

($1000, $900 for a Student With a UAlbany Connection)

Lead Sponsor-Turf Hotels, Inc. -Thanks to Michael

Hoffman and Brian Straughter!!!