Founders’ human capital and the growth of new technology-based firms: A competence-based view

In this paper, we analyze empirically the relation between the growth of new technology-based firms and the human capital of founders, with the aim of teasing out the “wealth” and “capability” effects of human capital. For this purpose, we take advantage of a new data set relating to a sample composed of 506 Italian young firms that operate in high-tech industries in both manufacturing and services. In accordance with competence-based theories, the econometric estimates show that the nature of the education and of the prior work experience of founders exerts a key influence on growth. In fact, founders’ years of university education in economic and managerial fields and to a lesser extent in scientific and technical fields positively affect growth while education in other fields does not. Similarly prior work experience in the same industry of the new firm is positively associated with growth while prior work experience in other industries is not. Furthermore, it is the technical work experience of founders as opposed to their commercial work experience that determines growth. The fact that within the founding team there are individuals with prior entrepreneurial experiences also results in superior growth. Lastly, we provide evidence that there are synergistic gains from the combination of the complementary capabilities of founders relating to (i) economic-managerial and scientific-technical education and (ii) technical and commercial industry-specific work experiences. We conclude that the human capital of founders of new technology-based firms is not just a proxy for personal wealth.     

Resolving the knowledge paradox: Knowledge-spillover entrepreneurship and economic growth

The knowledge paradox suggests that high levels of investment in new knowledge do not necessarily and automatically generate the anticipated levels of competitiveness of growth. In particular, knowledge investments do not automatically translate into balanced growth and competitiveness. The purpose of this paper is to explain why knowledge investments are inherently unbalanced, so that the competitiveness and growth ensuing from knowledge are not equally spread across individuals, firms, and spatial units of observation, such as regions and countries. Based on a data set linking entrepreneurial activity to growth within the context of German regions, this paper shows that entrepreneurship serves a conduit of knowledge spillovers.     

A comparative study of new venture top management team composition, dynamics and performance between university-based and independent start-ups

The current study tests for differences in top management team (TMT) composition (education, functional expertise, industry experience, and skill), dynamics (shared strategic cognition, potency, cohesion, and conflict) and performance (net cash flow and revenue growth) between a sample of 102 high-technology university-based start-ups and an otherwise equivalently matched sample of 154 independent high-technology new ventures. The results find university-based start-ups to be comprised of more homogenous TMTs with less developed dynamics than their independent counterparts. Further, university-based start-ups are found to be significantly lower performing in terms of net cash flow and revenue growth than independent new ventures.     

Performance of Spanish universities in technology transfer: An empirical analysis

This paper investigates the performance of universities in the transfer of technology using a unique university-level dataset for Spain. The results suggest that universities with established policies and procedures for the management of technology transfer perform better. Universities with large and experienced technology transfer offices (TTOs) generate higher volumes of contract research, but the TTO characteristics appear to matter less for university performance in terms of licensing and creation of spin-offs. Furthermore, universities with a science park perform better than those without, which suggests that the agglomeration of knowledge close to universities has a positive effect on universities’ technology transfer performance.     

Commercialization of patents and external financing during the R&D phase

Using a unique database on Swedish patents owned by small firms and individuals, survival models estimate how different factors influence the decision to commercialize the patents. Such an analysis has seemingly never previously been undertaken. Since the owners know more about the patents than potential external financiers, problems related to asymmetrical information are present. To overcome these problems when inventors and small technology-based firms need financing, Sweden has for a long time relied on government support rather than private venture capital firms. The empirical results show that the larger is the share of patent-owners’ costs covered by government financial support during the R&D phase, the lower is the probability of patents being commercialized. This lower degree of commercialization is likely to depend on (1) the soft terms of the government loans, where the patent owner can avoid paying back the loan if the patent is never commercialized and/or (2) that the government is not able to select promising projects. The first explanation is related to moral hazard and the second one to adverse selection. The policy suggestion is for government to change the design of the loans, to base them on firms rather than projects.     

In search of a useful theory of the productive potential of intellectual property rights

Mainstream theory, which has informed the belief systems regarding the operation as well as the predicted social and economic effects of IPR systems, cannot explain why the IPR system generates different performance results and varying potential for growth across the firms, sectors and nations participating in the IPR system. This paper sketches a theory of the ‘productive potential of intellectual property rights’ which is able to do just that. Focusing on the ‘rules of the game’ embedded in the institutional IPR environment and the ‘play of the game’ within the alternative institutions of IPR governance, the paper emphasizes the importance of the nature or quality of the relationships among IPR stakeholders and the contribution of such relationships to the processes of financial and non-financial value creation and distribution from IPRs. The central role of cooperation, asymmetric relationships, and the effective resolution of conflicting interests amongst stakeholders is addressed. It is suggested that the proposed framework provides a better starting point for the design of IPR policy and management.     

Patent trolls on markets for technology - An empirical analysis of NPEs’ patent acquisitions

Patent trolls, or NPEs, appropriate profits from innovation solely by enforcing patents against infringers. They are often characterized as relying on low-quality patents, an assessment that, if correct, would imply that eradicating such patents would effectively terminate the NPE business. In this paper, we shed light on this issue by empirically analyzing NPEs’ patent acquisitions. We draw on a unique dataset of 392 U.S. patents acquired by known NPEs between 1997 and 2006, which we compare to three control groups of 784 U.S. patents each acquired by practicing firms. We find that the probability that a traded patent is acquired by an NPE rather than a practicing entity increases in the scope of the patent, in the patent density of its technology field and, contrary to common belief, in the patent's technological quality. Our findings thus support recent theoretical propositions about the NPE business model, showing that NPEs procure patents that are more likely to be infringed, harder to substitute for, and robust to legal challenges. The fact that NPE-acquired patents are of significantly higher quality than those in the control group implies that elevating minimum patent quality will not put an end to the NPE business, and suggests that this business is sustainable in the long run. We furthermore discuss the fact that NPEs are peculiar players on markets for technology insofar as they are solely interested in the exclusion right, not in the underlying knowledge. We posit that transactions involving NPEs may only be the tip of the iceberg of “patent-only” transactions, a conjecture with strong implications for the efficiency and the study of markets for technologies. Managerial and policy implications are discussed.     

First adoption of consumer innovations: Exploring market failure and alleviating factors

Consumers innovate usually for non-commercial motives. They generally lack incentives to diffuse, and this is expected to hamper first adoption – even if consumer innovations are valuable to many other people. We confirm this market failure with survey data of 164 German consumer innovators. First adoption by others is unrelated with general use value, unless the innovator is highly willing to commercialize. Next, as classical diffusion theory does not explain when consumer innovations become available to others, we propose an individual-object-process (I-O-P) framework to study factors alleviating the market failure. The viability of the framework is explored by studying the moderating role of entrepreneurial experience (I), product newness (O) and community engagement during the innovation process (P). First adoption of generally valuable consumer innovations is enhanced when a community was involved. We also find tentative evidence for a moderating role of entrepreneurial experience and product newness.     

The creation of spin-off firms at public research institutions: Managerial and policy implications

We consider the managerial and policy implications of the rise of spin-offs at public research institutions (PRIs), based on a knowledge-based view (KBV) of the firm. This framework highlights the importance of knowledge in the creation and development of spin-offs. We argue that in order to understand the development of spin-offs, researchers should focus on “knowledge gaps” these new ventures encounter. Knowledge gaps can occur at different levels of aggregation, including the PRI, spin-off, team, individual, incubator, and at different stages of spin-off development. Based on this framework, we synthesize findings from previous studies and papers in the special issue and offer some suggestions for additional research on spin-offs from PRIs.     

Managing external knowledge flows: The moderating role of absorptive capacity

In this paper, we argue that those firms with higher levels of absorptive capacity can manage external knowledge flows more efficiently, and stimulate innovative outcomes. We test this contention with a sample of 2265 Spanish firms, drawn from the Community Innovation Surveys (CIS) for 2000 and 2002, produced by the Spanish National Statistics Institute (INE). We find that absorptive capacity is indeed an important source of competitive advantage, especially in sectors characterized by turbulent knowledge and strong intellectual property rights protection. The implications for management practice and policy are also discussed.     

Entrepreneurial orientation, technology transfer and spinoff performance of U.S. universities

This paper adopts a resource-based perspective to understand why some universities are more successful than others at generating technology-based spinoff companies. In this respect, we derive eight hypotheses that link attributes of resources and capabilities, institutional, financial, commercial and human capital, to university spinoff outcomes. Using panel data from 1980 to 2001, our econometric estimators reveal evidence of history dependence for successful technology transfer to occur although faculty quality, size and orientation of science and engineering funding and commercial capability were also found to be predictors of university spinoff activity. We conclude by drawing implications for policy makers and university heads.     

Resources, capabilities, risk capital and the creation of university spin-out companies

The commercialization of university research has become an increasingly important issue, given concerns regarding licensing and the university's desire to maximize the returns to intellectual property (IP). In this paper, we assess the impact of university resources and routines/capabilities on the creation of spin-out companies. We find that both the number of spin-out companies created and the number of spin-out companies created with equity investment are significantly positively associated with expenditure on intellectual property protection, the business development capabilities of technology transfer offices and the royalty regime of the university. These results highlight the importance not just of resource stocks, but also of developing appropriate capabilities of technology transfer officers in spinning-out companies. The results suggest that universities and policy-makers need to devote attention to the training and recruitment of technology officers with the broad base of commercial skills.     

Assessing the relative performance of U.K. university technology transfer offices: parametric and non-parametric evidence

We present evidence on the relative performance of U.K. university technology transfer offices (TTOs) using data envelopment analysis (DEA) and stochastic frontier estimation (SFE). U.K. TTOs are found to exhibit low-levels of absolute efficiency. There also appear to be decreasing returns to scale, implying that TTOs may need to be reconfigured into smaller units. The development of regionally-based sector focused TTOs is also advised. Consistent with qualitative evidence from U.S. TTOs, we find that there is a need to upgrade the business skills and capabilities of U.K. TTO managers and licensing officers.