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 6: The Types of Technology that Lead to University Spinoffs

Scott Shane

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


Established firms have a variety of advantages in commercializing university technologies. For instance, they have market knowledge, relationships with customers, distribution systems and related products, all of which facilitate the creation and sale of new technology products and services (Lowe, 2002). As a result, established companies can often make money by commercializing technologies that do not justify the expense of creating a new firm. Therefore most university technologies are licensed to existing companies, and very few university inventions are appropriate technologies for creating spinoffs. In fact, some observers have argued that only about 3 percent of all university inventions are right for founding spinoffs (Nelsen, 1991), although the proportion of spinoff-appropriate inventions being developed in universities has probably risen in the last decade. The fact that most university technologies are licensed to established companies, but that certain technologies make spinoffs possible, begs the question: what kind of university technology enhances the likelihood that spinoffs will be founded? As Table 6.1 summarizes, university spinoffs tend to be founded to exploit technologies that are radical, tacit, early stage and general-purpose, which provide significant value to customers, represent major technical advances and have strong intellectual property protection. Table 6.1 The types of technology that lead to spinoffs and established firm licenses Spinoff firm Radical Tacit Early stage General-purpose Significant customer value Major technical advance Strong IP protection 103 Established firm Incremental Codified Late stage Specific-purpose Moderate customer value Minor technical advance Weak IP protection 104 Academic entrepreneurship This chapter explores these seven aspects...

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