Growth of university-based start-ups and acquisition as an exit strategy in academic entrepreneurship: evidence from software-based ventures

Innovation activities of firms significantly depend on university-to-industry knowledge transfer. As part of this, engineers and scientists in this high-tech industry frequently leave universities to found small start-up companies, which is a specific form of academic entrepreneurship. In particular, these mechanisms enable an important option for larger firms who frequently face make-or-buy decisions where such decisions have considerable management implications. This is the possibility to acquire such start-ups which is one form of enabling the commercialising of academic discoveries. In technology-rich industries, this is an important origin of innovation, since, e.g., large firms may be hindered by organisational inertia or lack of skills which are newly taught at universities. The paper investigates these issues for a software-based industry. Based on explorative interviews and survey data the paper analyses empirically reasons for academic entrepreneurship with particular focus on the growth and exit strategies of innovative small firms in the industry.