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 13: The Problems with University Spinoffs

Scott Shane


Although the first 12 chapters of this book presented a very positive view of university spinoffs, the creation of these companies is not without drawbacks. This chapter discusses some of the problems created by university spinoffs. Although previous researchers have identified several different problems that spinoffs impose, the drawbacks of university spinoffs can be divided into two broad categories: problems of integration into the traditional model of the university, and problems of earning financial returns from technology licensing to spinoff companies. The subsections of this chapter discuss each of these broad categories of problems in turn. THE PROBLEMS OF INTEGRATING FIRM FORMATION WITH THE UNIVERSITY MODEL Universities differ significantly from private firms in their goals and mode of governance. The primary mission of academic institutions is the creation and dissemination of knowledge through research and teaching. To achieve this mission, most universities are governed by faculty committees, which make collective decisions about the direction of their institutions. University spinoffs generate several problems for the achievement of the traditional academic goal of the creation and dissemination of knowledge, as well as for faculty governance. Specifically, observers of university spinoff activity have identified three central problems: the lack of widespread faculty support for spinoff activity, the adverse effect of the commercial model on traditional university goals, and conflict of interest problems. Lack of Faculty Support The committee form of university governance means that, to institute policies and procedures effectively at an academic institution, the majority of faculty members must support those policies...

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