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The economic impacts of academic spin-off companies, and their implications for public policy

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  • Vincett, P.S.
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    Abstract

    The importance of academic research ("AR") to economic growth is widely accepted but quantification of incremental impacts, and their attribution to any one country's expenditures, is difficult. Yet quantitative justification of government AR funding is highly desirable. We therefore attempt to quantify one impact which can be directly and causally attributed to one country's funding: spin-off companies. We focus on AR in the non-medical natural sciences and engineering (NSExm) in a whole country, Canada. 'Applied' disciplines are sometimes assumed to be the most commercializable, so we also separately investigate an especially 'basic' science, physics. Using a novel methodology, we estimate the lifetime impacts of companies spun-off directly from AR performed in 1960-1998, and compare the impacts with all government funding, direct and indirect, over the same period. This picks up virtually all funding and most company-formation since WWII, up to 1998. Such long-term studies are rare but essential, since we show that successful spin-offs grow (often exponentially) over several decades. With very conservative assumptions, and allowing for the time value of money, the impacts exceed government funding by a substantial margin. Physics actually fares 30-60% better than the combined NSExm; this reflects more successful companies, rather than greater numbers, and therefore does not seem inconsistent with earlier studies on company numbers. Firm lifetimes are long, with Canadian impacts truncated primarily by some foreign acquisitions. We argue that the spin-off impacts represent incremental contributions to GDP, much larger (even on a time-discounted basis) than the government funding and directly attributable to it; governments will also receive more in additional tax than they spent. The impacts therefore provide a quantitative justification for the public investment, allowing the much more important (but less quantifiable) long-term benefits to be regarded as a 'free' bonus. The very good showing of physics also suggests that reduced emphasis on basic work or on the basic disciplines could actually weaken the commercialization of AR.

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    Bibliographic Info

    Article provided by Elsevier in its journal Research Policy.

    Volume (Year): 39 (2010)
    Issue (Month): 6 (July)
    Pages: 736-747

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    Handle: RePEc:eee:respol:v:39:y:2010:i:6:p:736-747

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    Web page: http://www.elsevier.com/locate/respol

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    Keywords: Technology transfer Economic impact Government funding Academic entrepreneurship Spin-off company;

    References

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    1. Douglas Williams & A Dennis Rank, 1998. "Measuring the economic benefits of research and development: The current state of the art," Research Evaluation, Oxford University Press, vol. 7(1), pages 17-30, April.
    2. Salter, Ammon J. & Martin, Ben R., 2001. "The economic benefits of publicly funded basic research: a critical review," Research Policy, Elsevier, vol. 30(3), pages 509-532, March.
    3. Paula E. Stephan, 1996. "The Economics of Science," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1199-1235, September.
    4. Adams, James D, 1990. "Fundamental Stocks of Knowledge and Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 673-702, August.
    5. Narin, Francis & Hamilton, Kimberly S. & Olivastro, Dominic, 1997. "The increasing linkage between U.S. technology and public science," Research Policy, Elsevier, vol. 26(3), pages 317-330, October.
    6. Mansfield, Edwin, 1991. "Academic research and industrial innovation," Research Policy, Elsevier, vol. 20(1), pages 1-12, February.
    7. Jorge Niosi, 2006. "Success Factors in Canadian Academic Spin-Offs," The Journal of Technology Transfer, Springer, vol. 31(4), pages 451-457, 07.
    8. Jaffe, Adam B, 1989. "Real Effects of Academic Research," American Economic Review, American Economic Association, vol. 79(5), pages 957-70, December.
    9. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2002. "Links and Impacts: The Influence of Public Research on Industrial R&D," Management Science, INFORMS, vol. 48(1), pages 1-23, January.
    10. Lynne G. Zucker & Michael R. Darby & Jeff S. Armstrong, 2003. "Commercializing knowledge: university science, knowledge capture and firm performance in biotechnology," Proceedings, Federal Reserve Bank of Dallas, issue Sep, pages 149-170.
    11. Maine, Elicia & Garnsey, Elizabeth, 2006. "Commercializing generic technology: The case of advanced materials ventures," Research Policy, Elsevier, vol. 35(3), pages 375-393, April.
    12. Mansfield, Edwin, 1998. "Academic research and industrial innovation: An update of empirical findings1," Research Policy, Elsevier, vol. 26(7-8), pages 773-776, April.
    13. Rosenberg, Nathan, 1992. "Scientific instrumentation and university research," Research Policy, Elsevier, vol. 21(4), pages 381-390, August.
    14. Teece, David J., 1986. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," Research Policy, Elsevier, vol. 15(6), pages 285-305, December.
    15. Landry, Rejean & Amara, Nabil & Rherrad, Imad, 2006. "Why are some university researchers more likely to create spin-offs than others? Evidence from Canadian universities," Research Policy, Elsevier, vol. 35(10), pages 1599-1615, December.
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    Cited by:
    1. James Cunningham & Paul O’Reilly & Conor O’Kane & Vincent Mangematin, 2014. "The inhibiting factors that principal investigators experience in leading publicly funded research," The Journal of Technology Transfer, Springer, vol. 39(1), pages 93-110, February.
    2. James Cunningham & Paul O'reilly & Conor O'kane & Vincent Mangematin, 2014. "The inhibiting factors that principal investigators experience in leading publicly funded research projects," Grenoble Ecole de Management (Post-Print) hal-00756228, HAL.
    3. repec:hal:wpaper:hal-00756228 is not listed on IDEAS
    4. Wipo, 2011. "World Intellectual Property Report 2011- The Changing Face of Innovation," WIPO Economics & Statistics Series, World Intellectual Property Organization - Economics and Statistics Division, number 2011:944, April.
    5. Pluvia Zuniga, 2011. "The State of Patenting at Research Institutions in Developing Countries: Policy Approaches and Practices," WIPO Economic Research Working Papers 04, World Intellectual Property Organization - Economics and Statistics Division, revised Dec 2011.
    6. repec:hal:gemwpa:hal-00756228 is not listed on IDEAS
    7. Roessner, David & Bond, Jennifer & Okubo, Sumiye & Planting, Mark, 2013. "The economic impact of licensed commercialized inventions originating in university research," Research Policy, Elsevier, vol. 42(1), pages 23-34.
    8. repec:wip:wpaper:4 is not listed on IDEAS

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