In the field of academic entrepreneurship: how scientists and commerce can better act in a spin-off's best interest

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Master’s thesis

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Summary

Academia do not only lack the skills to run a firm, they also show less motivation to engage commercialization activities. A literature review in the domain of academic entrepreneurship on university spin-offs, scientists’ characteristics and the role of funding provided clarity that scientists are not the better entrepreneurs.

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1 Problem analysis

1.1 Introduction

Expert Decisions Inc. (ED) offers a business intelligence solution for optimizing portfolio planning, product development road-mapping and HR allocation planning; this product is named ReleasePlanner (RP). RP is a so-called ‘university spin-off’ (USO) what basically means that this product is developed by a research team of a university; in this case it concerns the University of Calgary in Canada. ED would like to dominate their targeted niche with RP. ED’s emphasis is to help customers better understanding their own customers by fulfilling their needs. In total, the team of ED has 80 years of experience.

The product RP provides a web based solution for integrating the needs of different stakeholders by articulating their wishes. RP creates and optimizes customer portfolio’s into roadmaps and helps them streamlining their road maps of products. RP utilizes internal resources in the best way by optimizing and making better use of collected data. This is used as input for generating plans that help their customers to better align a strategy. This allows them to save time and effort, bring stakeholders together and consolidate conflicts.1

It can be assumed that RP is a process management tool because it is a method for managing internal processes and actions. These improve a firm’s responsiveness to customers and markets. (Golann, 2006)

During a consultation between researcher Dr. C.K. Streb - who provides this

assignment - and Prof. Dr. G. Ruhe (leader of ED), it became clear that growing is not a real big issue. More importantly, in this conversation Prof. Dr. G. Ruhe said he sees ED rather as an extension of research efforts, once also the term ‘hobby’ was used. ED didn’t see the need of a business plan and just started developing their product RP; only an executive summary of a business plan has been prepared.

This is remarkable since a business plan is not only an external tool to communicate with investors to attract outside capital or key advisors in order to grow faster, it is also an internal tool for the team to use as a road map which keep you on track (Zhang, 2009).

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Returning to the Canadian example, why didn’t they develop an extensive business plan? Is it because they didn’t see the necessity of it, or is it because they are not interested in commerce? Is a business plan really necessary?

Almost every (business) university see it as thé educational tool in support for new ventures, mainly in order to raise money because external capitalists demand it. Even business plan competitions are held at e.g. Harvard. Globally, it seems that millions of business plans are written every year. (Karlsson & Honig, 2009)

What is it's added value? Karlsson and Honig (2009) conclude in their paper that much of these statements are based on presumptions instead of empirical support. Their study showed that many new ventures which developed a business plan, this often not follow or implement it. Karlsson and Honig (2009) also conclude that capital providers' pressures are often weaker than previously thought.

Although ED didn’t develop a business plan, it should have - given the previous statements - no impact on their future, no business plan is not directly an obstacle.

1.2 Initial problem

Back to the starting point: why is it a hobby; are they really sure growing is not an issue? It seems they don’t want to grow, or could it be these scientists have difficulties in handling growth? Do they actually have the capabilities to manage entrepreneurial growth?

Suppose, ED is an example for an average USO, how do USOs pursue growth? According to Nosella & Grimaldi (2009) scientists have lack of experience in managing a business, on the other hand a USO is worthless without scientists.

It has our general interest how USOs deal with growth, why is the example in Calgary not successful? Are they an exception, or an example for other USOs? How is the tension and balance between management and science organized in a USO? How to make a business with university results?

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to ‘fuel’ growth. And suppose, when this process fails then you can better be a North American than an Italian, because failure is - from a psychological perspective - for the latter one a lot more worse (Chiesa & Piccaluga, 2000).

Returning to mechanisms, the quality of a university’s research output has a negative effect on their own patent production (Fernández Lopez et al., 2009). So, is it a good idea to involve scientists in this process because of their obligations for the university?

1.3 Research gap

The purpose of this chapter is to find out the main issue, in order to highlight a proper research gap.

A quick scan in spinoff-literature suggests that scientists are not the most suitable people to start a business. Lindelöf & Löfsten (2006) argue that scientists lack the knowledge to transfer research into a commercial venture and start an organization. Patzelt & Shepherd (2009) state that founders of USO’s lack the skills of attracting venture capital by not writing a business plan, something what is also missing by ED. According to them it is also a motivation issue, academic entrepreneurs show less commitment to achieve good business results.

Chang & Yang (2008) say that the main motive of scientists is recognition in the scientific community by publishing in top journals, receiving research subsidiaries and be part of reputable conferences.

According to Fernández Lopez et al. (2009) academia are more focused on scientific publications than on the production of patents, what indicates that scientists are not interested in commerce.

Nosella & Grimaldi (2009) adds to this that academic inventors often lack experience in running a business and lack the skills to manage a venture.

Now the research gap begins to take shape, it can be assumed that scientists not only lack the skills to run a firm but it is also a motivation issue, it seems they do not actually want to manage a firm. This question provides the point of departure for this study. In order to strengthen the research gap, six propositions are developed to test if scientists really lack the commercial skills of managing a USO.

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In this work, spin-off literature as described by Brereton et al. (2007) is reviewed in order to present in the end a clear and sense making research question. This process of systematically reviewing spin-off literature is elaborated in Appendix 1. In social studies the systemic review process has become a widely used method (Alasuutari, 2010).

First, an overview of USO definitions will be presented and in the next chapter their contribution to economic growth in a USO’s region.

Second, literature about the importance of funding related to USO’s is reviewed. In the third step the relation between SME’s and USO’s will be explained, since this paper is part of a Small Business & Entrepreneurship course. Also some interesting USO examples are presented.

Fourth, it is explained why scientists are not the most suitable people to run a USO. In the fifth step interesting mechanisms and strategies in order to commercialize scientific work are presented. It starts with the role of competitive advantage, tacit knowledge, absorptive capacity and the importance of incubators.

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2 Literature review

2.1 The university spin-off

The product RP is founded by ED, a USO of the University of Calgary in Canada. In this chapter characteristics of similar spin-offs are presented and compared, to show the benefits and problems these ventures bring to their environment. First, an overview of USO definitions is presented.

Lindelöf & Löfsten (2006) make a distinction between corporate spin-offs and university spin-offs. The difference between these spin-offs is their background and their different need of resources. The first one derives from corporations, the latter one from higher-education centers.

Tsukagoshi (2008) describes a USO as an entity which focus on the commercializing of intellectual property rights arising from university research activities.

Zhang (2009) uses the term academic entrepreneurs and defines them as founders of start-up firms who worked at universities before when starting these firms. The

ventures founded by academic entrepreneurs are from his point of view USO’s. Davenport et al. (2002) focus on the academic roots of USO’s and the close relation between the founders and their invented product. They state that the invented technology has to arise at a parent organization, which in most cases include a university.

In the case study of Van Burg et al. (2008) a university spin-off is defined as a new enterprise started up to exploit intellectual property developed in an academic institution.

Mets et al. (2007) use a smaller definition: a USO is a venture derived by scientists. According to Egeln et al. (2004) a public research spin-off is a start-up firm which has at least one scientist from a research organization or university among their founders. Macho-Stadler et al. (2008) explain spinning off as commercializing research by an entrepreneurial route.

Debroux (2008) define USO’s as new founded ventures that have an advantage from knowledge, management, human resource, capital and technology from a university at the time of foundation.

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Now several USO’s definitions are presented a certain triangle emerges: it can be assumed that a USO is 1) a new firm which focuses on 2) commercializing scientific work from 3) a parent institution, which is often a university. But which definition is relevant for this paper?

The relation with an academic institution is made in almost every definition, so this is important. Most of the mentioned USO definitions focus on the type of organization in their statement, which in this case is a venture or firm and thus emphasizes

commercial activities. About three of the ten presented definitions focus on the input (resources) or output (scientific work) of a USO. Eventually, 2 definitions focus on the process of commercializing scientific work.

First, it can be concluded that the role of a university cannot be ignored in describing a USO. Second, in most of the other definitions there is an element which focuses on commerce.

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2.2 University spin-offs and regional economies

The level of R&D expenditures of a university towards new university ventures can lead to economic growth in the new firm’s region (Fried, 2003; Nosella & Grimaldi, 2009). This is confirmed by Zhang (2009) who gives examples of USO’s developed by

universities such as Stanford and MIT, which in turn is an example for other universities in the development of academic entrepreneurship.

Huggins (2008) sees the commercialization of scientific knowledge as an important source of economic growth. From his point of view it develops the capabilities and economic performance of a region when universities act more ‘entrepreneurial’. Breznitz et al. (2008) find that universities have several ways to positive influence a local and national economy by the creation of new ventures from academic research. They make a comparison between two universities, MIT and Yale. Interesting in this case is the organizational change Yale made. Seventeen years ago Yale changed their attitude towards technology transfer and developed a new entrepreneurial

environment. The number of biotechnology companies in the region rose from 6 to 49 with 35.857 employees in the industry. This positively changed the relationships between the pharmaceutical industry and the academic base.

Ambos et al. (2008) speak of an academic revolution when universities become more entrepreneurial. They see the commercialization process of scientific work as a key driver of competitiveness nationwide by creating new entrepreneurial structures. It pushes universities to create more financial value out of their scientific work. It is not the quality or number of publications what counts anymore, but the level of commercial outputs.

However, the best results of commercializing scientific work appears in regions where similar spin-off success already has been achieved, like Silicon Valley (Benneworth & Charles, 2005).

Berggren & Lindholm Dahlstrand (2009) argue that spin-offs from universities have a higher degree of innovativeness than other new firms in the technology field. They say that 25 percent of innovative companies in Sweden cooperate with universities, which has an immense impact on their innovative behavior. The effect of USO’s in Sweden regarding the regional development is also positive, because knowledge can spillover between complementary sectors and bring therefore additional economic growth. Patzelt & Shepherd (2009) focus on the role of governments and how they can support the formation of USO’s by creating new policies. Governments should support

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by not reaching their strategic goals; policy programs can also contribute here. They furthermore state that academic entrepreneurship is an important source of wealth creation and economic growth.

Debackere (2000) confirms to that last sentence but state also that academic research becomes more endogenous to the economy instead of exogenous. Universities

become more aware of the economic potential of their scientific work. Which results in budgetary pressures: should universities do what yield the most money or should public research institutes be more driven by curiosity? Definitely, this can put the continuity of research programs in danger.

According to Chiesa & Piccaluga (2000) scientific work is ‘raw material’ for economic growth. They see companies as the best exploiters of scientific results through patents and licensing, but their research activity is often short term. The opposite are

universities, their activities in research are long term but they are less interested in the exploitation of it. Combining these two organizations should then be a winning

combination, and USO’s will arise.

It is found that USO’s bring economic development and wealth creation to the region they are located in, but which region fits the best for a USO?

Egeln et al. (2004) studied location decisions of USO’s in Germany in relation to their parent institution (university). Urbanization economies are key in location decisions of USO’s. When these are less attractive in relation to the university, USO’s will move away to suburban districts. Only when a USO heavily depends on qualified staff they tend to stay in a university’s region.

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2.3 University spin-offs and funding

In spinoff-literature many scientific publications - 17% of the group A articles, see Appendix 1 - focus on the role of funding. Especially on USOs in the seed stage in relation to venture capital. Therefore this subtopic will be elaborated more in depth in this chapter.

Venture capital firms are specialized ventures outside the financial markets which offer risk capital for other (new) ventures. Examples of their shareholders are banks,

insurance companies, pension funds, government and private persons. It is their mission to get insights into the risks related to specific firms, e.g. firms in high-tech sectors, starters and young firms in order to receive an internal rate of return for their shareholders. Venture capital is often provided as a subordinated loan or equity. A close relationship between a firm and a venture capitalist is essential in order to raise finance. During 1988-1994 only 7.8 percent of the total venture capital investments in Europe were intended for firms at the early stage. (Scholtens, 1999)

Wonglimpiyarat (2006) defines venture capital as a high risk investment with a

potentially high return on investment. It is a professionally managed pool of money for making equity investments in growing private enterprises at the early/seed phase

(Figure 1). It finances rapidly growing firms or new enterprises often through equity

participation. (Wonglimpiyarat, 2006)

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Tsukagoshi (2008) focuses in his paper on the importance of business angels which is defined as informal venture capital investors. As also mentioned in the introduction of this work, attracting early funding is vital for a venture in order to create growth (Tsukagoshi, 2008; Wonglimpiyarat, 2006; Chiesa & Piccaluga, 2000).

Spin-off enterprises lack creating competitive advantage due to limited financial resources (Mets et al., 2007).

Huggins (2008) states that venture capitalists are the only party who are prepared to invest in very early stage ventures regarding the high risks these ventures deal with. According to Tsukagoshi (2008) business angels play a critical role in creating economic growth because they provide more than just investing money. Their entrepreneurial experience can help early stage ventures by providing strategic and commercial advice, introducing new contacts by networking and providing specific business know-how (Tsukagoshi, 2008; Zhang, 2009; Pinch & Sunley, 2009; O'Shea et

al., 2007). Huggins (2008) defines this management knowledge as human capital.

Tsukagoshi (2008) states that twenty-five percent of all the start-ups in U.S. receive the support of business angels and they see non-financial support just as important as financial support when a venture is in the seed stage.

In addition, support in the early stage is important because this phase is often clouded with uncertainties (Wonglimpiyarat, 2006).

Lindelöf & Löfsten (2006) argue that the success of Silicon Valley, where many successful USO’s arose, depends on the high availability of venture capital in this region. Pinch & Sunley (2009) state that the growth of high-technology firms is related to the availability of venture capital. They give the example of San Francisco Bay Area that venture capitalists were crucial to the development of this region. O'Shea et al. (2007) see also a positive relation between the availability of venture capital and the formation of firms in regions.

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Earlier in this chapter Scholtens (1999) state that a close relationship between the venture capitalist and a firm’s founder is essential in order to raise finance. Scholtens (1999) focuses here on the information asymmetry problem between the investor and the business owner. Entrepreneurs have often more detailed information and better understanding of the strength and weaknesses of their start-up while venture capitalists have more knowledge about financing opportunities (Pinch & Sunley, 2009; Patzelt & Shepherd, 2009). This asymmetry can lead to opportunistic behavior of an

entrepreneur and explains why start-ups are characterized as high risk ventures in Figure 1 (Pinch & Sunley, 2009). Information asymmetry could also lead to a mismatch between demand and supply of venture capital (Huggins, 2008).

It is suggested that scientists are not the ideal business managers; Pinch & Sunley (2009) agree with this conclusion by arguing that academics are more focused on the technical superiority of their invention than their commercial potential of their product. Compared to ‘normal’ startups, why are USO’s interesting to invest in?

Universities with star scientists generate more venture-backed entrepreneurs than other universities. An explanation for this fact is that venture capitalists need a strong reputation in scientific work as a selling point to receive an interesting rate of return. They are more willing to invest in spinoffs established by scientists from top

universities. In turn, when these star scientists see commercial value of their scientific work they can get more motivated. (Zhang, 2009)

It can be assumed that the venture capitalist need a USO’s founder because scientific work is an interesting selling point, surely when scientific work is developed at a top university.

On the other hand, a USO’s founder need the venture capitalist: in order to create economic growth by financial capital, to receive human capital and to remove

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2.4 University spin-offs and SMEs

In defining small and medium sized enterprises (SMEs) three core characteristics can be highlighted: managed in a personal manner, independence and relatively small share of the market. Managed in a personal manner means the SME has a simple hierarchical structure. Independence clarifies the entrepreneur is the single owner. Small share of the market means that the SME is rather a price taker than a price maker and have, compared to LFs, often a limited product portfolio. (Carter & Jones-Evans, 2006)

Combining the USO definitions with the SME definition of Carter & Jones-Evans (2006), it can be assumed that USOs are not completely SMEs. There is often a close relation with a parent institution what explains that USOs are not always independent. A SO’s organizational structure and share of the market is often vague, there is no special standard for SOs in this situation. This partly depends on the growth phase, which is for many SOs the seed phase.

Benneworth & Charles (2005) emphasize on the benefit of working in a USO: it makes university knowledge more accessible to other small firms.

2.5 University spin-offs examples

The Internet company Lycos is an example of a USO, established by the Carnegie Mellon University (Benneworth & Charles, 2005). Another USO example is the support of professor Terman in Silicon Valley, who convinced the students Hewlett and

Packard to start an own venture in printers and computer peripherals (Chiesa & Piccaluga, 2000; Pinch & Sunley, 2009).

The most examples of academic entrepreneurship can be found in the field of

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2.6 Academic entrepreneurship and scientists

Back to the research gap, in the problem statement it became clear that scientists are not the ideal people for managing a business. To determine this correctly, this chapter focuses on literature that provides an answer to the question: why are scientists not the better entrepreneurs?

Before describing how scientists pursue entrepreneurial activities, what is actually an entrepreneur? According to Carland et al. (1984) an entrepreneur has two goals: managing a venture in order to create economic growth and profit. An entrepreneur is a manager who focuses on strategic issues of a venture and is an innovator (Carland et

al., 1984).

Returning to the academic world, scientific researchers are not the only cause of their own moderate business competences, the involved university must also stimulate the commercialization process. A problem in the process of commercializing scientific results is the lack of time that scientists have to contribute to such activities (Huggins, 2008). This is often followed by a lack of management skills, difficulties in accessing funding towards the product, a worse infrastructure to establish new USO’s and difficulties in performing market research (Huggins, 2008). So, it is also the university which should be motivated to pursue commercial activity.

This is confirmed by Ambos et al. (2008) who state that the better commercial outputs are generated by universities which believe that commercial activity does not harm the careers of scientists.

On the other hand, a successful scientific career requires investments in the style of research, paper-writing and networking (Ambos et al., 2008). Academics tend to focus on research and at the majority of universities, the key is focusing on publications (Van Burg et al., 2008; Chang & Yang, 2008; Fernández Lopez et al., 2009; Shane, 2002). Many scientific researchers from traditional universities lack the competences to undertake commercial activities because it require different skills (Ambos et al., 2008; Nosella & Grimaldi, 2009). Referring to age, spin-off projects with younger researchers create the highest proportion of commercial outputs (Ambos et al., 2008).

According to Debackere (2000), academic entrepreneurs should be influenced by ambition, because it attracts future business partners and potential investors. Ambition is related to the creation of a network and develops strategic intent that can positively contribute to the growth of a spinning-off venture (Debackere, 2000).

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and recognition within the scientific community which will disappear when focusing on academic entrepreneurship (Chiesa & Piccaluga, 2000; Macho-Stadler et al. 2008). On the other hand, Agrawal (2001) suggest that USO’s with founders who have direct relations with venture capitalists are more likely to receive finance and are less likely to fail; this is explained in the previous chapter.

Summarized, it can be assumed that the university’s role has to change to towards promoting the commercialization process of scientific work. On the one hand a

university can facilitate the process by creating a good infrastructure, on the other hand a university has to believe it doesn’t harm the career of their researchers.

The difference between the daily activities scientists and entrepreneurs is large: where the latter act innovative and focus on strategic issues is the former busy with scientific research. And when a scientist focuses on enhancing commercial activities, it prevents the number of publications and can lose his reputation; a scientist’s job just requires proper investment in research. It can be concluded that these activities go not hand in hand.

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2.7 University spin-offs and commercialization mechanisms

In this part several mechanisms and strategies will be reviewed in order to highlight the best manner to commercialize scientific work. First, the role of competitive advantage, tacit knowledge, absorptive capacity and the support of incubators will be elaborated.

2.7.1 Introductory theory on commercialization mechanisms

Mets et al. (2007) state that spin-off companies often lack creating competitive

advantage because of their limited financial sources. Because competitive advantage is connected with this in economic theory, first the resource based view is explained (Rangone, 1999).

According to Todorovic & Suntornpithug (2008) in the resource based view firms are considered to be a combination of unique resources, competencies and capabilities. When a firm’s competencies are difficult to copy this source can become a unique advantage for the firm over their competitors (Todorovic & Suntornpithug, 2008). Rangone (1999) adds to this that the resource based view does not consider a firm’s all resources but focuses only on the strategic resources, because those are the basis of sustainable competitive advantage.

Besanko et al. (2007) say a firm has a competitive advantage when they earn a higher rate of profit than the average profit of other firms within the same market.

To summarize, it can be concluded that a SO should be difficult to copy for their competitors, in order to receive a higher rate of economic profit than other firms in the market. A stronger competitive advantage gives a better position in the market to commercialize SOs at best (Shane, 2002).

Earlier in this work it is assumed that scientists are not capable for running a USO. However, solely transferring the technology or service is not a good alternative. Davenport et al. (2002) focus on the importance of human capital which should be involved in transfer, because it embodies tacit knowledge which is important for the development of the technology in the new venture. Besides, firms learn more from working with pure research teams (Benneworth, 2001).

Tacit knowledge are capabilities which are difficult to articulate (Besanko et al. (2007); e.g. like Michael Schumacher driving his Ferrari, with enough practice one could learn how he drives his car, but it is difficult to describe how one should do it.

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The involvement of academics in the commercialization process is confirmed by Fernández Lopez et al. (2009), who argue that it is necessary to implicate academic workers in the commercialization of their scientific results.

During the literature review process the term absorptive capacity emerged a few times in papers about the process of transferring university knowledge, which is therefore reason to elaborate more on this in this part.

The scientists Cohen & Levinthal introduced a few decades ago the concept of absorptive capacity. This concept describes how characteristics of ventures influence its ability to absorb external scientific work. It is a function of firm’s investment in research and development by applying scientific results for a firm’s own commercial use. (Agrawal, 2001)

Also in knowledge management theory often the term absorptive capacity emerges; according to Hutchinson & Quintas (2008) absorptive capacity is the ability to absorb knowledge from external sources.

McAdam et al. (2009) define it as a framework for exploring the development of new technologies by analyzing research efforts. It helps organizations to visualize how knowledge can be acquired and use it for strategic gains.

Absorptive capacity is closely related to a region’s variety and is an important factor in the distribution of knowledge and learning. The dependence of absorptive capacity on the stock of human capital is often high. Since public research institutes are

responsible for the creation of new knowledge, lower absorptive capacity can negatively affect the economic development of a region. (Berggren & Lindholm Dahlstrand, 2009)

The relationship between USO’s and absorptive capacity is clear: in a region where absorptive capacity is low, less USO’s will arise because the quality of (external) scientific work is below average. Why is this important for this paper?

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It can be concluded that ED probably should relocate to a region where the demand for scientific work is at best, in order to maximize the commercialization of RP.

For launching new ventures and encouraging technology transfer university incubators can contribute positively to this. When incubators are located close to a USO it makes it easier to withdraw knowledge from the university to the industry. For instance MIT and Harvard have established the Yankee Tek incubation fund to supply venture capital to their spin-offs in the telecommunications industry and the University of Boston has established the Photonics Center to bring academia and business closer together for commercial exploitation. They bridge the culture gap between academics and the industry. (Wonglimpiyarat, 2006)

Todorovic & Suntornpithug (2008) see a university incubator’s mission as nursing of new and small businesses by providing support in the early stages of development. They contribute by providing specialized capabilities which are otherwise not available to the firm. It seems that the incubation stage is more important than the facility itself. There is scientific evidence from US, Ukraine & Finland that an incubator should be settled at a university to optimize networking, have a full time manager and insist on close relations between the university and incubator to create growth in the

commercialization process. (Todorovic & Suntornpithug, 2008)

In addition, Nosella & Grimaldi (2009) explain that the most successful startup companies are those which used the facilities of incubators and have benefited from their networks. Also the access to student labor and libraries is an advantage for new ventures which receive the support of university incubators (Nosella & Grimaldi, 2009). Van Burg et al. (2003) suggests that the incubator network can help starters by

creating their own network just as the obtaining of financial resources.

2.7.2 Commercialization mechanisms

Shane (2002) identifies the conditions for successfully commercializing university technology, drawing on the theory of transaction costs economics. Shane (2002) argues that patents are effective when it ‘increases the likelihood of invention

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The moral hazard problem arises when, one has an information advantage over a principal and his performance is therefore hard to evaluate and, second when one pursue objectives which are different from the principal’s (Jones, 2001).

The hold-up problem occurs when a trading partner of a firm ‘hold-ups’ by renegotiating a deal and generate a part of the deal for itself when the difference in profits a firm receives by using an asset in its best alternative and the next best alternative is large (Besanko et al., 2007).

The adverse selection problem arises when sellers of low quality products present their product as high quality and a buyer cannot easily assess the value of this product (Shane, 2002).

According to Shane (2002), the use of patents reduce all these problems. Patents minimize moral hazard because knowledge transfer is verified by a third party. When patents are codified it can be made less vague by the use of complete contracts which govern the transfer of knowledge and therefore reduce this problem. Patents illuminate the adverse selection problem by minimizing the disclosure problem. (Shane, 2002)

Now some pure economic concepts in patent theory are described, in the next paragraph the advantages and disadvantages of patents are elaborated.

First, what is a patent? According to Mets et al. (2007), the goal of a patent is to protect against imitation, it prevents people other than the inventor from making, offering for sale and using the invention in a certain country for the period of protection of maximum 20 years. SMEs can benefit less by patents as LFs do because they can earn by using economies of scale (Mets et al., 2007).

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Figure 2: When to use patents? (Mets et al., 2007)

Figure 2 shows that protection by patents depends only on the variable enforceability. An invention should be published (instead of protected) when market value is low and enforceability is low. Trade secret is an option when less outsiders have the ability to enforce the patent but when market value is high; patenting then has not much meaning. (Mets et al., 2007)

A patent is only interesting when both enforceability and market value is high, plus the invention should have a strong competitive advantage in a market. (Mets et al., 2007) This is earlier in this paper also confirmed by Shane (2002).

It can be worthwhile to use patents when market value is low but enforceability is high to block potential competitors in certain situations (Mets et al., 2007).

Once an invention is patented it can gain extra market value through licensing. This allows a university to cover the costs of the initial investment by receiving fees or royalties. (Chang & Yang, 2008; Feldman et al., 2002)

However, Feldman et al. (2002) claim the opposite and focus on the importance of equity which will be explained in the following chapter.

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According to Feldman et al. (2002), equity can give a signal to outsiders that a

university is entrepreneurial. It provides more legitimacy and prestige for both the firm and university, they share the company’s success (Feldman et al., 2002).

In their paper, Pries & Guild (2007) make a remarkable distinction in USO

commercialization strategies: they distinguish between new ventures which operate through product markets and new venture which operate through markets for technology.

Operating through product markets is competing in a product market by creating and selling goods based on a certain technology. Operating through markets for technology is transferring the rights to their developed technology to established firms which sell products based on the technology. The latter is the most viable and common option to commercialize new scientific work because 1) the demand for new technologies is high and 2) USOs represent an opportunity to demanding firms to acquire access to new technologies. (Pries & Guild, 2007)

It became clear that, patenting is a common used mechanism. Patenting is interesting when a product has a strong competitive advantage in the market, it gives a better position to commercialize.

Returning to the Canadian example, for convenience it can be assumed that it has a (potential) high market value. However, the level of enforceability is unknown. This means there are for ED two options: use a patent in order to protect RP or keep it as a trade secret.

Traditional licensing does not give the maximum financial returns. In addition, there is some resistance from the industry regarding licensing.

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(O'Shea et al., 2007)

2.8 Conceptual model

tacit knowledge

commercializing scientific work

+ + / -

+

- USO’s performance + Region’s economy

Scientists’ capabilities

Venture capitalists

Incubators’ assistance Level of absorptive capacity

access to capital human & financial capital

motivation

internal rate of return

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2.9 Research Focus

Now all the relevant theory is explained, visualized and structured into a conceptual model, the research gap is clear.

2.9.1 Propositions on scientists and academic entrepreneurship

In paragraph 2.6 of this work it is concluded that entrepreneurial activities and daily activities of a scientist not go hand in hand.

Researchers do not have the skills to engage commercial activities (Shane, 2002; Nosella & Grimaldi, 2009; Ambos et al., 2008).

Chang & Yang (2008) say that their main motive is recognition in the scientific community by publishing in top journals and be part of interesting conferences.

Fernández Lopez et al. (2009) add to this that scientific researchers are more focused on publications than on patent production. In their work Van Burg et al. (2008) see the same pattern at the University of Technology in Eindhoven.

According to Ambos et al. (2008) an academic career needs proper investments in a specific style of research and there is little time for other – commercial – activities. Chiesa & Piccaluga (2000) say that commercial activities can prevent the publication of scientific work. Macho-Stadler et al. (2008) say that scientists direct benefit from

research and then especially in the form of recognition and publications.

Summarized, it can be concluded that scientific researchers do not have the skills to engage commercialization activities, this is negatively affected by academia’s need to publish articles in the field for recognition in the scientific world.

Becoming more specific, the red line in the conceptual model visualizes the (negative) relation between scientists’ capabilities and USO’s performance.

The following three propositions are developed by explaining this relation, which will be tested in this paper.

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2) Commercialization activities by scientists cannot be combined with daily

academic work, because academia lack entrepreneurial skills. (Shane 2002; Ambos et

al., 2008; Nosella & Grimaldi, 2009)

3) Commercialization activities by scientists cannot be combined with daily academic work, because academia have less time to develop commercialization practices because the university often doesn’t allow it. (Huggins, 2008)

The following three propositions argue also that academic research and engaging commercialization activities cannot co-exist, however these are more focused on daily scientific work.

academic work, because academia publish articles because of prestige and recognition in the scientific world. (Chiesa & Piccaluga, 2000; Macho-Stadler et al., 2008)

academic work, because academics' main focus is on the publication of scientific work, and not on patent production. (Van Burg et al., 2008; Chang & Yang, 2008; Fernández Lopez et al., 2009; Shane, 2002)

6) Commercialization activities by scientists cannot be combined with daily academic work, because a successful academic career depends on proper investments in the style of research and paper-writing. (Ambos et al., 2008)

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2.9.2 Propositions on the MIT case-study

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should receive therefore training in entrepreneurship (O’Shea et al., 2007). This is related to the Leadership & Policies topic in their spin-off performance model. This statement from practice is in contradiction with the aforementioned scientific theory.

The practical phenomenon of MIT will be the unit of analysis for this work; the large yellow arrow visualizes this antithesis in the conceptual model. Why is the literature not in line with the case study of MIT - what is the truth now? The MIT case study show that a university’s twin objectives of 1) contribution to economic growth and 2) scientific research can be achieved.

For future work O’Shea et al. (2007) suggest that a faculty should share the benefits with an inventor’s own academic work when this is commercialized successfully; only then commercialization activities and academic research could co-exist.

It is also stated that an interesting sharing of financial returns with a faculty is a

potential driver for scientists in supporting spin-off activity. This case will be the heart of this study.

The underlying four propositions are developed by following MIT’s case study which will be tested in this paper.

These propositions argue that academic research and engaging commercialization activities cán co-exist.

7) Commercialization activities by scientists can be combined with daily academic work, when a university believes it does not harm a scientist's career. (Ambos et al., 2008)

8) Commercialization activities by scientists can be combined with daily academic work, when a university incubator support these activities both. (Wonglimpiyarat, 2006)

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10) Commercialization activities by scientists can be combined with daily academic work, when a scientist can participate in an attractive sharing of financial returns and is therefore more motivated. (O’Shea et al., 2007)

Perhaps remarkable, but during the literature review it is already showed (see

conceptual model) that better commercial outputs can influence a scientist’s motivation positively (Zhang, 2009).

2.9.3 Research Question

Now the literature review is complete, it can be assumed the presented research gap in the introduction is strengthened with more theory.

Engaging commercialization activities is not only a motivation issue for scientists, according to the literature it is their mindset which is not focused on commerce. This, in combination with their moderate commercial competences doesn’t make them

entrepreneurs with the best management capabilities.

Now the aspects are defined and the boundaries are created the following main research question can be presented:

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3 Methodology

3.1 Research method

In order to close the research gap at best, the aim of this chapter is to develop a framework which answers what will be studied in this unique work, how will data be collected and how to create a grounded analysis of this data.

This chapter is in detail described, so the reader should become familiar with the process (Bansal & Corley, 2011).

For this paper a qualitative research approach is used, which means that the focus is on retrieving data in words (Eisenhardt, 1989), which can be divided in observation, documents and interviews (Miles & Huberman, 1994).

Returning back to the research question, it has our interest how scientists and commerce can better act in a spin-off's best interest, in the domain of academic entrepreneurship.

According to Bloomberg et al. (2005) this study can therefore be classified as

explanatory because theories are used in order to explain the reasons how a certain phenomenon occurs. Again, an explanatory study is grounded in theory, and theory is eventually there to answer ‘how’ and ‘why’ questions (Bloomberg et al., 2005).

This is confirmed by Miles & Huberman (1994), who state that theory is there in order to make things more understandable by showing segments fit together, according to a certain method.

Eisenhardt (1989) agrees to the theorybuilding component, and refers here to ‘why’ questions. Eisenhardt (1989) suggests that qualitative evidence can explain

relationships by providing an understanding of the related dynamics.

Alasuutari (2010) explains that qualitative research is a better tool for building theories than quantitative research.

According to Bansal & Corley (2011) qualitative research brings the reader closer to the studied event.

Finally, Gordon (2010) researched behavioural economics in relation to qualitative research by comparing commercial organizations with academic institutions. Gordon (2010) focuses on the dynamic surface on which qualitative research is built. Today’s influence of e.g. YouTube makes theories easy to understand specially for those who work in these commercial organizations, which change the qualitative landscape (Gordon, 2010).

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In the articles of Berggren & Lindholm Dahlstrand (2009), Lindelöf & Löfsten (2006), Pinch & Sunley (2009), Benneworth (2001), Nosella & Grimaldi (2009), Debackere (2000), Chiesa & Piccaluga (2000), Meyer (2003), Debroux (2008), O'Shea et al. (2007), Egeln et al. (2004), Davenport et al. (2002), Van Burg et al. (2008) and McAdam et al. (2009) case studies of USOs are used as a research strategy to develop grounded findings in order to add something new to the literature.

Starting with these aforementioned articles as an example, it was initially also the idea for this paper to use the case study strategy as research method. However, because of the highly varied used sample this method can never be described as a case study strategy.

To illustrate this, in case study strategy a distinction can be made in subject and object (Thomas, 2011). The term object can be defined as the theoretical basis or the

scientific focus of a paper, which is for this thesis how scientists and commerce can better act in a spin-off's best interest. The term subject can be defined as the case through which this scientific basis is viewed, which is for this thesis the group of different 15 specialists in the field of academic entrepreneurship, who are active in 13 different organizations and located in 4 different regions. Because the subject is not a real case, this doesn’t match with the object and therefore this cannot be qualified as a real case study strategy.

Again, according to Swanborn (1996) a case study involves the study of a phenomenon, by reflecting an example to this in their natural environment. In the example of the aforementioned group the phenomenon of how scientists and commerce can better act in a spin-off's best interest, does not always occur in their own organization. Or to speak in terms of Swanborn (1996), here they do not ‘carry’ the phenomenon. However because of their profession, and thus their knowledge and experience, they can be characterized as specialists in this field.

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data by interviewing experts in the field of academic entrepreneurship a distinction can be made in those who are active in science, and in business development.

In the beginning of the mainly open interviews, the experts are asked about the best role of a scientist in a spin-off and who is causal to the tension between management and science. Furthermore, the interviews include the role of venture capitalists in relation to spin-offs, the conceptual model and potential solutions towards the research question.

The experts are selected because of their specific experience, some also because of their successful career in the field of academic entrepreneurship.

3.2 Data collection

In this chapter the used sample of this work will be explained. A specified population of 15 experts in the field of academic entrepreneurship is drawn. These experts are active in 13 different organizations and located in 4 different regions, in order to make sure it sharpens external validity.

This data is relevant because their daily work is related to technology transfer and with this sample the developed propositions can be tested correctly.

Propositions are used very often in qualitative articles to show a theoretical connection (Bansal & Corley, 2011).

In the sample the experts are engaged in science or business development, or a combination thereof.

Data will be collected through face-to-face interviewing by the techniques of Emans (2004).

According to Yin (1994) by interviews hidden information can be retrieved. An advantage of this technique is that richer and insightful answers will occur (Gordon, 2011).

In order to retrieve data a questionnaire is used with open questions, in the interview there is space created so the interviewee could explain specific issues.

Other methods for collecting data in qualitative research like archives or observations are not used.

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3.3 Data analysis

The process of how data is analyzed qualitative data is visualized in Figure 4. The three streams data reduction, data display and conclusions will be briefly explained in this part.

Figure 4: Data analysis (Miles & Huberman, 1994)

The aim of data reduction is selecting and abstracting data from the total data collection. It is part of the analysis and sharpens data in order to develop correct conclusions.

Data display is also part of the analysis and is there to make data more

understandable, it ‘organizes’ information to make proper conclusions. A better data display contributes positively to an analysis’ validity. (Miles & Huberman, 1994)

In order to show transparent findings, rich descriptions of data will be provided (Bansal & Corley, 2011).

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According to Green et al. (2007) data analysis is the systematic process of classifying collected data; four steps in data analysis are defined: data immersion, coding, creating categories and indentifying themes. This is visualized in the following Figure 5.

Figure 5: The four step process of in depth data analysis (Green et al., 2007)

Immersion refers to reading of the prepared interviews and listening to the interview recordings, so the researcher starts to develop ideas about the analysis.

Coding is sorting and organizing the retrieved information in each interview and data collection. Codes can be described as applied labels to segments of the text. The process of linking codes is there to develop categories, in this step data is examined in order to visualize codes which are related to each other. Many scientists stop at this stage and display their findings. This is correct when a small study presents modest knowledge with limited end words; here the focus is on the dominant categories. It provides one sided meanings and partial evidence only.

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In this paper the findings are classified and explained as thematic descriptions, this method is developed by Sandelowski & Barroso (2003). In conceptual or thematic descriptions a distinction is made in concepts and themes, where concepts are explained as a researcher’s case related to scientific work and the phenomenological translation of it; both definitions convey latent patterns in data. As in this paper, a new theme is imported in order to reframe a phenomenon; the findings are displayed in line with the nominal use of themes and concepts, in order to organize and label segments data. (Sandelowski & Barroso, 2003)

It is possible to go one step further in the theory of Sandelowski & Barroso (2003), then the focus should be on interpretive explanation where findings are transformed to produce grounded theories, however this definition can’t be applied to this work. Lastly, the findings will be displayed by the data analysis techniques of Miles &

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3.4 Quality of research design

The quality of this research design can be measured by validity and reliability (Yin, 1994).

For this work the construct of validity is correct because a sample of 15 highly varied specialists in the field of academic entrepreneurship are a good reflection of the phenomenon what will be studied.

However, can our results be applicable for other spin-offs? For this work this is true because we rely on analytical generalization whereby findings are generalized to propositions.

The reliability test is there to minimize errors in a scientific work. A study is reliable when a later researcher conducts the same study as developed by the earlier researcher and then should arrive at exactly the same results and conclusions. The steps how results are generated in this work are described in detail so this work should pass the reliability test.

Bryman et al. (2007) focus in their paper on replicability and generalisability as

qualitative criteria, however in their conclusion it is stated these are more applicable to quantitative research. Bryman et al. (2007) evaluate the qualitative research criteria of Lincoln and Guba in their work, which are credibility, transferability, dependability and confirmability.

Credibility refers to if the findings are believable, confirmability means if the researcher acts objective and neutral, dependability means if the findings can be repeated and transferability means if the findings are applicable to other settings (Bryman et al., 2007).

As earlier explained the findings in this thesis are applicable to other settings, because external validity equals transferability. Again, the output in this work can be repeated, because the reliability test equals the definition of dependability.

The discussion if the findings of this work are believable and if the researcher is

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4 Findings

4.1 Introduction

As described in the data analysis section of the methodology, the key findings in this chapter are displayed as thematic descriptions, in order to show (new) patterns by labeling segments of data.

In this chapter new themes are presented which occurred during the interviews when interviewees would like to ‘reframe’ the phenomenon of how scientists and commerce could better act in a spin-off's best interest, this is coded in the contact summary forms. (Appendix 4)

Then, key findings related to the propositions which are not woven into the themes, are presented. At the end of this chapter, the comments with respect to the conceptual model are displayed.

The importance of themes can be measured by the number of times a topic occurred divided by the number of interviews, in percent. A precondition is that every main theme should be mentioned at least 4 times during the interviews, this is 27%. Six new themes could be identified because these topics did not emerge as some propositions are described: the personality of the scientist, SO’s internal organization and development, scientist’s reward structure, venture capitalists, university &

valorization and the role of tacit knowledge.

In order to show how the main themes are related and where direct quotes come from, the underlying role-ordered matrix presents an overview of the interviewed experts for this work.

Overview of expert interviewees in the domain of academic entrepreneurship

Interviewee + background Main themes Direct quotes

A, Biotech-scientist - Personality of the scientist - Universities which focuses on

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C, PhD-student in Biotech - University and valorization - Personality of the scientist - Business development / internal organization in SOs

'The problem with spin-offs is that once you are in, you cannot go back.'

D, Technology Transfer Officer - Business development / internal organization in SOs

- Personality of the scientist - Role of tacit knowledge - SOs & CSOs

- Venture capitalists

- Scientist’s reward structure

'Comparing the scientist and entrepreneur with R and D, the scientist is focused on

fundamental - basic - research (R), the entrepreneur is focused on practical or applied research, like spin-off development (D).' E, Scientist + CSO of SO - Personality of the scientist

- Business development / internal organization in SOs

- Incubators - Venture capitalists

'The scientist should know his own blind spots and know how to deal with this.'

F, former Biotech-scientist, now CEO + CSO of SO

- Personality of the scientist - SOs & CSOs

- Scientist’s reward structure - Role of tacit knowledge

'The relation between a CSO and a venture capitalist is important because of the investor’s network in order to retrieve information about the whole industry, which is not available in the public domain.'

G, former Biotech-scientist, now CEO of SO

- Commercialization practices in the field of biotech

- Scientist’s reward structure - Reasons for developing patents - Personality of the scientist - Venture capitalists

'Do not overestimate the influence of these investors, they bring capital and that’s all.'

H, former Biotech-scientist, now BD of SP

- Personality of the scientist - Venture capitalists

- Reasons for developing patents - Commercialization practices in the field of biotech

'In order to keep this knowledge in the spin-off it is necessary to keep the inventor as long as possible in spin-off.'

I, Business Developer of SO - Business development / internal organization in SOs

- Personality of the scientist - Scientist’s reward structure - Role of tacit knowledge - University and valorization

'It is positive that fundamental research turns to what is social relevant.'

J, Investor - Business development / internal

organization in SOs

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- Personality of the scientist - SOs & CSOs

- Scientist’s reward structure - University and valorization

'If a scientist would like to become an entrepreneur, I ask them one question: are you sure?'

K, Investor - Business development / internal

organization in SOs - Personality of the scientist - Venture capitalists - Role of tacit knowledge - Scientist’s reward structure

'The best role for a scientist is the role the scientist prefers himself.'

L, former MD of LF in Medical Devices

- Personality of the scientist - Business development / internal organization in SOs

'A scientist is necessary when he or she receives feedback from the market, and new markets create new questions.'

'They do not want new ideas in their idea, commerce seems to be a ‘dirty’ word for them.'

M, CEO of SO - University and valorization

- Personality of the scientist - Business development / internal organization in SOs

- Venture Capitalists

'Many shares for a scientist is good, it should feel the pain otherwise the spin-off cannot be successful.'

N, Incubator - Personality of the scientist

- Venture Capitalists - Incubators

'A business developer should be complementary to the scientist, it is important that a scientist is driven by timelines.'

O, Incubator - Incubators

- Scientist’s reward structure - Personality of the scientist - Business development / internal organization in SOs

'Real academia are more focused on state of the art innovations and forget to build up an organization.'

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4.2 Personality of the scientist

According to all the experts, it is difficult to make the transition for a researcher to become an entrepreneur. This depends on the personality of the scientist. It is the mindset which must be open towards entrepreneurship, explain multiple experts. One expert refers to spirit which necessary and cannot be learned.

This is described well by the following quote:

‘The academic world is safe, researchers have a good social status, there is much certainty; when becoming an entrepreneur all this will disappear in the background’, explained a CEO.

The quote explains that uncertainty will arise and refrain scientists from launching commercial activities.

A technology transfer officer (TTO) gives the example of the similarity between

scientists, entrepreneurs and a R&D department. A scientist is focused on fundamental - basic - research (R), an entrepreneur is focused on applied research (D).

Though, there are a few solutions. Three experts agree that experience in managing a spin-off can help to relieve the barriers of entrepreneurship. Another solution is that scientists should be more coachable explains a CEO. An investor added to this that scientists’ actions should be legitimate.

An expert summarized the solutions by the following quote:

‘If they would like to start up an entrepreneurial career they need an incredible locus of control and be fast in completing the entrepreneurial learning curve.’

The personality of researchers is influenced by the willingness to take risks, said two experts. They say that most academia do not have this drive. A solution is illustrated by the following quote:

‘The scientist should know his own blind spots and know how to deal with this.’

The quote says risks are not the main problem, it depends on identifying the risks and how to handle with these.

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concept and are stuck in their own solution, commerce seems to be a ‘dirty’ word for them, are some mentioned examples.

A scientist clarified that scientists do not want to share their knowledge within the spin-off, especially not with their commercially oriented colleagues. It is often confirmed that for scientists it is the freedom to operate what counts.

4.3 Spin-off’s internal organization

The data makes clear that - because of scientists’ negative pose towards commerce - scientists never lead a spin-off. Perhaps when the spin-off is in the startup phase, but they should not receive a special job in a spin-off when the product can enter the market, clarified an investor.

A solution is to appoint the scientist as a CSO or scientific advisor, said a TTO. A CSO should pay attention to further development of the spin-off then. The procedure is that the university will contract the CSO so that the scientist can work on his proof of concept and make the transition towards proof of principle.

An investor quoted the role of a CSO best:

‘The CSO will check if the market will agree with the product - named patent reinforcement - by visiting potential distributors and producers.’

This quote highlights a scientist’s role as a networker, which is confirmed by three experts.

A bio-tech CSO does not agree with this solution. SOs in his field have problems in making strategic choices in science. Therefore it can be important these decisions are made by CSOs. In these companies the focus is on the R&D departments because there the budgets go. A general manager can never have the specific experience and knowledge to make these choices. Besides, a CSO is one of the few who can train scientists within a SO, decided the CSO.

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The quote highlights the role of business development to focus the scientist in a SOs best interest. This means that the option a scientist becomes CEO, is excluded. An incubator suggests that it is important to start with a good team, and gives the example of A-people recruit A-people and B-people recruit C-people.

This means that A-people would rather be surrounded by people with the same intellectual level. However, B-people are afraid to be overtaken by A-people, and therefore rather recruit C-people.

The expert quoted the following solution:

‘A business developer should be complementary to the scientist, it is important that a scientist is driven by timelines.’

The quote says that business development in a SO should be designed to accommodate science. However, within a certain time frame.

A TTO has the solution that to complete an innovation project successfully, different people are necessary. Namely, some roles are difficult to combine for one person. This is not visualized well in the conceptual model because the negative red line between scientist capabilities and USO’s performance is debatable, within a spin-off everyone has his own role. The tasks in spin-offs should be assigned to those who are specialists in certain roles, explained a CSO.

An organizational scientist said the solution lies in the field of cognitive style. Here a distinction can be made between analytical and experimental people, it is either one side, or the other. It are the geniuses who can combine the analytical with the experimental, the mixed personality, finds this expert.

Several scientists conclude that one should never forget scientists develop beautiful things, no one should close their ears for these people. Namely, one reason why scientists work in a spin-off is because of the lower costs of resources.

4.4 Spin-off’s development

According to a CEO the lifecycle of a SO is incubation, competitive, maturation and then be passed by competitors. In this lifecycle there is a small window opportunity and the aim is to extend the opportunity in this window.

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When a product and market are defined other investors may be involved, here a SO is going through a growth phase, said one expert.

A CEO adds the following quote:

‘The sooner, the better, this is the proof of relevance for the spin-off, explains a CEO of a spin-off.’

This quote is interesting because it explains that at the moment shares of the SO are sold to investors this is a form of recognition. Investors believe in the concept, and they would to fuel growth by capital in exchange for shares. Time can play a confirmatory role here.

According to a TTO, in this phase other management capabilities are required, then there must come a CEO. These skills are not present by researchers.

This is illustrated by the following quote of a business developer:

‘A scientist knows so much about so little, they cannot run a firm anymore.’

This quote suggests that the job makes a scientist detached from management and business.

A solution is when scientific results are linked to an experienced serial entrepreneur, said a TTO. A business developer added that a CEO must have knowledge about IP strategies, not directly about the products. These solutions are suggested in order to keep in mind the SO is heading into the right direction. Again, for some scientists commerce is a ‘dirty’ word which disturbs the balance between management and science in a SO.

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This quote explains that a CEO should deal with a SO’s strategic issues, and should not interfere with the scientific part of the company.

According to an investor, a SO’s aim is often to have an exit strategy and maybe integrate in a large firm. During this phase the relationship between the SO’s scientist and the LF’s scientist is important because then deals will be made, said a CEO. However, those who want the expected synergy effect, need to set the scientists aside, said three experts. This is illustrated at best by the following quote:

‘In order to keep the performance and culture the same, it should be managed at arm’s length’, explains a CEO.

This quote suggests, that scientists need the environment they had in the SO. When this is totally different because of other organizational norms and values, this will decrease the SOs financial performance. This quote also explains something about their behavior regarding commerce.

According to an organizational scientist, the best solution is to integrate the commercial aspects and to separate the technological aspects. A business developer clarifies the same solution, to be effective in a strategic alliance, a spin-off should be independent and autonomous.

4.5 Scientist’s reward structure

In order to reduce the tension between management and science in a SO - and make sure a scientist act in the same interest as a venture capitalist - a solution can be found in agency theory, explained a TTO. Two instruments are often used here: contracts and shares for the scientist.

This is described in the following quote:

‘I my job as a technology transfer officer I see that venture capitalists strive for 25% percent of the shares for an inventor, however this is not always achieved.’

This quote is a good example that some investors find that every stakeholder should be well rewarded, there are no exceptions.

In the field of academic entrepreneurship: how scientists and commerce can better act in a spin-off's best interest

Summary

Table of contents

1

Problem analysis

2

Literature review

3

Methodology

4

Findings