Academic journal article Entrepreneurship: Theory and Practice

Does One Size Fit All? the Multiple Organizational Forms Leading to Successful Academic Entrepreneurship

Academic journal article Entrepreneurship: Theory and Practice

Does One Size Fit All? the Multiple Organizational Forms Leading to Successful Academic Entrepreneurship

Article excerpt

This paper offers an integrative theory, through the use of transaction cost theory principles, that attempts to match the attributes of university-held innovations with the specific organizational form that best supports the identified attributes in innovation commercialization efforts. Two commonly utilized organizational forms are considered: the spin-off and the technology license agreement. Additionally, innovation transfer is conceptualized as a transaction and each of the organizational forms is considered an alternate governance mechanism for the management of the commercialization transaction. It is further conceptualized that by minimizing transaction costs, through the proper selection of the organizational form, universities may increase the odds of successful revenue generation from their entrepreneurial efforts. The overall goal of the paper is to enhance our understanding of proper organizational form-innovation attribute alignment as a key driver of innovation commercialization success, so that universities and their industry partners can increase their effectiveness in commercialization activities.

Introduction

Universities in many regions around the world are being pushed to find alternative sources of funding to finance daily operations and research activities. One of the more promising sources for alternative funding is the commercialization of the university's research discoveries. As such, the role of the university is undergoing a transformation as their missions are being extended to incorporate a greater commercial orientation. The dual role of the modern academic mission now requires universities to not only serve society by educating students, but also to foster research that can be developed into commercially viable products and technologies (Kirby, 2005). Not surprisingly, the entrepreneurial movement within universities has been met with both enthusiasm and resentment as the scholarly community struggles with the ethical implications of such activities (Mowery, Nelson, Sampat, & Ziedonis, 1998). Despite philosophical objections, the entrepreneurial focus on innovation commercialization within research universities is an ongoing and growing reality as universities in the United States, Europe, Australia, and other developed nations face competitive funding pressures (Cano, 2007). This trend is highlighted by a recent report in The Chronicle of Higher Education, which informs that at least two dozen universities each earned more than $10 million in fiscal year 2005 from licensing their rights to innovations developed through university research (Blumenstyk, 2007).

It would seem that the potential financial and economic benefits of university commercialization activities would be quite enticing to university and public policy administrators; however, university produced research is not currently flowing as quickly as it could to entrepreneurs and innovative companies who are eager to exploit new innovations. In fact, only a handful of universities consistently produce a steady stream of commercially viable innovations, and fewer still have a successful track record of working well with the business community in commercialization efforts (Schramm, 2006). Entrepreneurship researchers have recognized this trend, and as a result, have explored several issues related to the most commonly used commercialization avenues: the university spin-off and the technology license agreement (e.g., Agrawal, 2006; Shane & Stuart, 2002). A spin-off firm is an entirely new venture created solely for the purpose of commercializing the university's innovation, while a technology license agreement is a contract that gives outside entities the right to commercialize the university's innovation (Etzkowitz, 2000). In this paper, the term innovation is used to refer to any invention, new technology, idea, product, or process that has been discovered through university research that has the potential to be put to commercial use. …

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