Academic Entrepreneurship

Academic Entrepreneurship

University Spinoffs and Wealth Creation

New Horizons in Entrepreneurship series

Scott Shane

In this unique and timely volume, Scott Shane systematically explains the formation of university spinoff companies and their role in the commercialization of university technology and wealth creation in the United States and elsewhere. The importance of university spinoff activity is discussed and the historical development of university spinoff ventures is traced over time.

Chapter 5: Environmental Influences on Spinoff Activity

Scott Shane

Subjects: business and management, entrepreneurship, management and universities, education, management and universities


Does the geographic location of a university influence its tendency to found spinoffs? Some researchers suggest that the answer to this question is ‘yes’. For example, DiGregorio and Shane (2003) argue that the geographic location of academic institutions influences spinoff activity because some economic, legal and cultural environments are more supportive of spinoffs than others. This chapter explores the theoretical arguments for, and empirical evidence of, the effects of environmental influences on spinoff activity. The chapter is divided into two sections. The first section provides evidence that spinoff activity does, indeed, vary significantly across geographic locations. The second section discusses the possible explanations for this variation, focusing on access to capital, locus of property rights, rigidity of the academic labor market and the industrial composition of the area. VARIATION IN SPINOFF ACTIVITY ACROSS GEOGRAPHIC LOCATIONS University spinoff activity varies significantly across countries. Although a variety of anecdotal evidence supports this proposition, the best evidence for it lies in comparisons of the results of surveys of university technology transfer operations in the United States, Canada and the United Kingdom. Using data from the Association of University Technology Managers, Pressman (2002) found that Canadian educational institutions were much more likely than US educational institutions to generate spinoff companies; in 2000, 15.2 percent of licenses from US institutions were executed with spinoffs, while 22 percent of licenses from Canadian institutions were executed with spinoffs. Other researchers have compared the rate of spinoff activity, not per license, but per dollar of research and development...

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