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Science-based entrepreneurial firms and regional impact Evidence, myths and future research needsEinar Rasmussen Science-based entrepreneurial firmsEven the most casual observation of the spinoff phenomenon demonstrates that some of the most important technology companies ever created were originally university spinoffs (Shane 2004)

Innovations Golden goosethe sole purpose of the Bayh-Dole legislation was to provide incentives for academic researchers to exploit their ideas. The culture of competitiveness created in the process explains why America is, once again, pre-eminent in technology. A goose that lays such golden eggs needs nurturing, protecting and even cloning (The Economist 2002)Economic impact

Source: Bank of Boston 1997

Societal impact?

Transferability?Efforts at emulation of the Bayh-Dole policy elsewhere in the OECD are likely to have modest success at best without greater attention to the underlying structural differences among the higher education systems of these nations. (Mowery and Sampat 2005)Cargo cult?

For the last 50 years cultists have clung to the belief that by dressing up as GIs and venerating US symbols they can somehow tempt back the wartime cargo (The Telegraph 2007)

Critical voicesUK: Mr Lambert said that spin-out creation had instead been driven by the University Challenge Funds, bankrolled by the government. [] There were no figures in the accompanying survey to prove that costs - including public investment - were less than sales of products, intellectual property or spin-out equity. The businesses could as easily have been destroying value as creating it. (Financial Times, 2004)these companies are technology lifestyle businesses not dynamic high-growth potential start-ups, and it is suggested that the prominence given to spin-offs in the analysis of technology transfer and in discussions of the economic impacts of universities is misplaced. (Harrison and Leitch, 2010)

Norway:The median firm turnover is around one million and its value added and employment are close to zero NOK and one employee respectively. Approximately five percent of the firms display patterns that are consistent with a high growth path and a strong future potential for employment and value added contribution. (Borlaug et al., 2009)

Literature reviewExamine the academic literature on Science-Based Entrepreneurial Firms (SBEFs):the types and extent of impacts generated by SBEFsthe links between the start-up conditions and the subsequent performance and impacts generated by SBEFsthe different methodologies and indicators used to measure the impacts of SBEFs?

MethodExtensive search of keywords in ISI Web of ScienceTitle and abstract, 1995 to date919 articles retrieved127 had SBEFs as a key topicNew search in 15 most cited journals

Full text search in these journals946 articles retrieved, 35 new articles addedFinal sample of 162 articles (prior literature reviews as reliability check)

9Year of publicationJournalsCountries with empirical dataType of studyImpact of SBEFsImpact of SBEFs rarely explicitly discussed Only 14 of 162 articles included impact as a key themeThe majority of these is related to one university/regionTwo views of impactDirect economic impact (often regional focus)SBEFs as technology transfer agentsData over long time periods seems necessary to identify significant impactsVincett 2010: We argue that the spin-off impacts represent incremental contributions to GDP, much larger than the government funding and directly attributable to it.Lack of rigorous studies of technology transfer impactsAutio 1997: The most important economic impact delivered by new, technology-based firms may be a catalyzing one, delivered through technology interactions between the firms and their operating environment. No studies of societal impact

Surprisingly weak documentation of the impacts of SBEFS

14Start-up conditions and performanceMore studies of what lead to start-up than what lead to performance28 of 162 articles included performance as a key themeA broad set of issues exploredIndividualUniversity contextWider regional and industry contextProcess oriented studiesComparative studies (USOs and CSOs)Several factors influencing performance has been identifiedLack of (theoretical) understanding of the mechanisms behind performanceResults likely to be highly context specific

Growing literature, but still fragmented picture

15Methods and indicatorsAssessed the indicators used in the 42 studies (14 + 28)A broad range of indicators used at firm levelSurvivalEmployment and financial indicatorsIntermediary (e.g. VC funding, speed)Few technology transfer indicators Patents, co-publishing, networking, interaction (all are proxies)

Usually short term indicators or restricted by data availability16Further researchWidespread belief that SBEFs are important, but empirical evidence on their impact is thin and mainly anecdotalNeed for longitudinal datasets (> 10 years)Vincett 2010: successful spin-offs grow over several decadesLawton Smith and Ho 2006: the acceleration of growth takes up to 10 years to start.Need to follow the technology rather than the firm levelSecond order impacts and firm transformations (e.g. acquisitions) has not been consideredNeed to go beyond single universities Difficult to generalize from single cases (usually highly successful ones)Difficult to separate university capabilities from the role of external actors (regional)?Need to go beyond direct economic effectsTechnology transfer (spillovers)Societal impact

17Further research agendaWhat leads to impact?Need to understand the venture creation processNeed to consider different contextsNeed longitudinal and multi-level dataMeasure impactsSufficient time lagAvoid survival biasInclude user impactInclude societal impact18Thank you

einar.rasmussen@uin.no19