Academic Entrepreneurship
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Academic Entrepreneurship

University Spinoffs and Wealth Creation

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.
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Chapter 2: Why Do University Spinoffs Matter?

Scott Shane


For researchers to justify devoting scarce resources of time and effort to explaining an economic or business phenomenon, that phenomenon should be important. The first chapter alluded to the importance of university spinoffs by identifying three major technology companies that began as university spinoffs (Cirrus Logic, Genentech and Lycos) and by showing the high level of performance of spinoffs created at MIT between 1980 and 1996. This chapter builds on that initial introduction and explains why university spinoffs are an important topic of scholarly investigation, pointing to their economic impact and the impact that they have on the universities that spawn them. The chapter is divided into two sections. The first section identifies several examples of important technology companies that began as university spinoffs to show that a fair number of high technology companies can trace their origins back to university research. While this effort is by no means comprehensive (we have no systematic data on which companies are university spinoffs and which are not), the data are illustrative of the successful high technology companies that were once university spinoffs. The second section summarizes the evidence in support of several different arguments for why university spinoffs are valuable entities for the overall economy and for the universities that spawn them. EXAMPLES OF UNIVERSITY SPINOFFS Even the most casual observation of the spinoff phenomenon demonstrates that some of the most important technology companies ever created were originally university spinoffs. For example, Digital Equipment Corporation was founded by Kenneth Olson to exploit...

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