From Science to the Economic System

Der Weg von der Wissenschaft in die Wirtschaft

Seminar Paper, 2010

24 Pages, Grade: 1,0



List of Tables

1 Introduction

2 Academic Science vs. Private Sector Activity

3 Possible factors for Private Sector Activity
3.1 Connecting theory and practice approach
3.2 Internal Factors
3.2.1 Scientific Mobility and Academic Entrepreneurship
3.2.2 Experience in Research Commercialization
3.2.3 Commercial Orientation of Colleagues
3.3 External Factors
3.3.1 Research Field
3.3.2 Geographic Location

4 Entrepreneurship vs. Working in Private Firms

5 Conclusion



List of Tables

Table 3.1: The department distribution of MIT spinoffs from 1980 to 1996

1 Introduction

“The more you are willing to accept responsibility for your actions, the more credibility you will have.”

This quote of the American author and entrepreneur Brian Koslow should be in mind of every academic entrepreneur who attempts to break out from “the ivory tower of science” (Fritsch and Krabel, 2009, P. 1). There has been a conspicuous increase in patenting and licensing, which is an indicator for an aggrandisement of academic entrepreneurship at American research universities since the 1970s. The number of patents which can be issued to universities and colleges increased by more than 100 percent between 1979 and 1984, as well as between 1984 and 1989. It almost doubled once more during the 1990s. In 1980 only about 20 research universities had technology licensing and transfer offices. 10 years later that number was 200, and in 2000 just about every major research university had founded its own (Colyvas et al., 2002, P. 1). University license revenues have increased from $220 million to $698 million from 1991 to 1997 (Association of University Technology Managers, 1998).

Private sector activity is always associated with the risk of failure because of the responsibility which is connected with it. This leads us to the discussion why academics should escape from a “safe world” of their publicly financed institution to either become entrepreneurs or to work in private companies. What are the major reasons for the risk of entrepreneurial and private sector activity? The following paper tries to find an answer on this question by blending theoretical backgrounds and empirical elements.

The second chapter serves as an introduction to the subject where the issue of the paper is narrowed further down and the key questions of it are defined. The main characteristics and concepts will also be distinguished in the second chapter, as much as it will be presented which aspects are not discussed in the paper. The third chapter of this paper concentrates on how internal and external factors influence the decision of scientists to show entrepreneurial behaviour. There are different theories and surveys which try to find an answer to the question how important different elements are. The fourth chapter works out the details in differences of the factors leading either to academic spinoffs or private firm participations. The conclusion gives the final answer on how the theory and the empiricism correspond with each other and which reasons are responsible for academics to break out from the ivory tower of science.

2 Academic Science vs. Private Sector Activity

The main question of this paper is what motivates academics to work in the private sector instead of focussing their activity on scientific research in academic institutions. Many universities specialized on scientific research have transformed themselves from that shielded ivory tower to a university with a strong bond to the private sector and a university that strongly supports the entrepreneurial activities of its scientists. Since new technologies are extremely specialized and diversified the market for high quality research as a basis for entrepreneurial activity grows steadily. Scientific research is the first step to new innovative ideas. Those ideas may lead to new products or help develop new and improved processes. Accordingly the advantage for firms of cooperation with academic scientists lies in the potential of generating innovative ideas and increasing R&D output (Herrara et al., 2009).

Academic scientists are getting more willing to commercialize their research results through possible channels such as patenting, licensing, consulting and firm founding. Even though the commercialization of scientific discoveries caused discomposure within the scientific community at the beginning, the distribution of academic inventions has led to an opening of the boundaries for academics to commercialize their scientific research results and convert them into for-profit science (Owen-Smith and Powell, 2001). Especially growing industries, for instance biotechnology or nanotechnology show the importance of science-based entrepreneurship in modern economies (Krabel and Mueller, 2009, P. 1). Stuart and Ding (2002) declare that since the 1970s, many university scientists in the discipline of life sciences have sought to capitalize their research results by affiliating with private biotechnology firms. Today’s biotech industry leaders such as Genentech, Amgen, Biogen Idec and Chiron were all founded or co-founded by university professors.

Nowadays it is well-known that basic science offers the potential to create both technological and economic advantages. Therefore policy more and more focuses on career changes of basic scientists to private sector companies and processes of academic entrepreneurship (Dietz and Bozeman, 2005). The high amount on patenting for example is said to be a consequence of policy changes, above all the Bayh-Dole act of 1980 (Schacht, 2000). As an achievement of Bayh-Dole a uniform patent policy across federal agencies was established in the United States. Furthermore many limitations on licensing were detached and most importantly, universities gained the allowance, “rather than the federal government, to own patents arising from federal research grants” (Link et al., 2003). The Bayh-Dole Act in the United States was followed by similar policy activities in many other countries and stimulated university spinoffs of academic scientists. Previous surveys have shown that - as mentioned before - there is a considerable variation between industries and different academic disciplines concerning the significance of participation of basic science - and consequently the demand for academic personnel (Salter and Martin, 2001, P. 515). This will be discussed more detailed in chapter three.

As adumbrated before, there are two options for academics to work in the private sector instead of remaining in academic institutions. The first option is the academic spinoff in terms of entrepreneurial activity by founding a new company, using technological and scientific innovations that have not found acceptance in the industrial sector, so far. Shane (2004, P. 4) defines an academic Spinoff as “a new company founded to exploit a piece of intellectual property created in an academic institution”. He quotes that on the one side patents, copyrights and similar legal mechanisms can be used to protect the intellectual property that could possibly lead to spinoffs, while on the other side the intellectual goods that lead to spinoffs appear as knowhow or trade secrets.

The risk for academic spinoffs often lies in the use of technologies being in an early stage of development. Those technologies seem to have only little reference to existing technologies (Jensen and Thursby, 2000). The perspective on problems of incorporators of academic spinoffs is often imprinted by their scientific work (Walter and Auer, 2009). The academic entrepreneur is an individual who is the technology originator but who also assumes the role of the entrepreneur (Franklin et al., 2001). Samson and Gurdon (1990) define an academic entrepreneur as: ‘‘an academic whose primary occupation, prior to playing a role in a venture start-up, and possibly concurrent with that process, was that of a lecturer or researcher affiliated with a Higher Education Institute.’’ The most famous academic spinoff during the last 25 years is the Internet search engine Google which was founded by Stanford University doctoral students. Considering that spinoffs are risky and the chance of success always accompanies the chance of failure it has to be discussed why spinoffs matter at all. Shane (2004, P.17) has established five ways in which university spinoffs are valuable: they enhance local economic development, they are useful for commercializing university technologies; they help universities with their major missions of research and teaching; they are disproportionately high performing companies; and they generate more income for universities than licensing to established companies.

The second option for private sector participation of academics is the possibility of working in existing private companies. There are several examples on how science can positively influence the economic development of private firms (Landes, 1998). In fact, there is no disagreement in the literature regarding the potential of firm performance by augmenting specific firm capabilities. There is disagreement about how the depth or degree of firm participation in leading-edge academic science influences performance (Toole and Czarnitzki, 2009, P.22). Actually, it has been shown by Zucker et al. (2002) that a positive relation exists between economic performance of private companies and their link to the academic sector. Even though one could imagine that higher wages in the private sector have deep impact on the attractiveness of jobs in the private sector, a study by Stern (2004) shows that the majority of scientists who were offered jobs with higher wages preferred to stay in the academic institution instead of working for private firms.

3 Possible factors for Private Sector Activity

3.1 Connecting theory and practice approach

The following chapter analyzes the determinants that motivate scientists to work in the private sector, by either starting a new business or by entering an already existing private company as an employee as they are presented in different theories. As mentioned before, basic science is an important source for industrial innovation. For that reason academic literature concentrates increasingly on the methods, in which scientific insights should be efficiently transferred to the private sector for the purpose of enhancing firms’ innovative efficiency. The following chapter is divided into internal and external factors. The internal factors describe those aspects which stimulate the motivation of a scientist to work outside academia and which influence the behaviour of scientists either in the direction of private sector activity or academic activity. The external factors are fixed by the surrounding and do not have a direct effect on academics minds.

In the end of every section I will compare the respective theory with statements of two experts who have been interviewed by me on their experiences and estimations on private sector activity. Their specific fields are on the one hand the business informatics and on the other hand the basic science and surface physics. As it will be explained later, those three fields differ in their respective attraction to private sector activity. That is why I also expect different answers on the individual appeal to work in the private sector and also on the particular reasons for private sector participation.


Excerpt out of 24 pages


From Science to the Economic System
Der Weg von der Wissenschaft in die Wirtschaft
University of Würzburg  (Betriebswirtschaft)
Academic Entrepreneurship
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ISBN (eBook)
ISBN (Book)
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From, Science, Economic, System, Wissenschaft, Wirtschaft
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Tobias Kleinmann (Author), 2010, From Science to the Economic System, Munich, GRIN Verlag,


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