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University Science Faculty Ventures into Entrepreneurship

Editor: 

Full Report

Research Summary

April 2013                                                          No. 409

University Science Faculty Ventures into Entrepreneurship

David B. Audretsch, Taylor Aldridge and Venkata K. Nadella,
Audretsch Economic Research, Bloomington, IN [115] pages.
Under contract number SBAHQ-11-M-0212.


Purpose

How is university research effectively transformed
into technological innovations, businesses, employment,
and economic growth? One approach to this
public policy question is to examine the entrepreneurial
activities of university science faculty who
have benefited from federally funded research.
This study surveys university scientists about their
entrepreneurial activities, employing a database of
scientists funded by grants from the National Science
Foundation (NSF).

Background/History

The Bayh-Dole Act of 1980 was instrumental in
making federally funded research at universities a
center of the innovation process. Simply put, the
Bayh-Dole Act allowed universities or inventors to
take ownership of inventions developed with federal
funding. Most of the previous research measuring
technology transfer from universities has been based
on databases from the universities’ offices of technology
transfer. One limitation of this research is its
inability to measure business startup activity by university
scientists.

In this study, data from the National Science
Foundation are used as the source for identifying
technology start-ups by university scientists. Rather
than relying on information from university offices
of technology transfer, this research uses the NSF
database to conduct a direct survey of university scientists
on their entrepreneurial activities.

Overall Findings

Entrepreneurship by university scientists is much
more prevalent than information from university
technology transfer offices tends to indicate. About
13 percent of scientists receiving NSF grants started
a new firm.

Not all academic scientists create start-ups, but of
those that do, 30 percent start with a patent. Factors
that are even more important in the propensity of a
scientist with an NSF grant to start a business are
the size of the grant, whether the scientist is tied into
the business community, and whether the scientist
had other outside funding. Compared with scientists
who do not start a business, twice as many of the
scientists who do start businesses have served on the
boards of directors of other businesses. The research
also finds that scientists are more likely to start a
business if the head of their academic department
has an entrepreneurial orientation.

Outside funding and years as a tenured professor
are major factors correlated with the survival of
businesses started by scientists who have received
NSF grants.

Policy Recommendations

Policymakers seeking to support innovation through
startups by university scientists should consider
encouraging activity that is more likely to lead to
scientific start-ups, such as scientists serving on
boards of other firms and having matching funds
from other sources.

Encouraging university department heads to be
more entrepreneurial may also pay dividends.

Scope and Methodology

The report surveys scientists that received NSF funding
from 2005 to mid-2012 in the fields of civil,
mechanical, and manufacturing innovation; environmental
biology; computer and network systems;
physical oceanography; particle and nuclear astrophysics;
and biological infrastructure. The researchers
used email addresses from NSF’s database, and
received survey responses from 1,899 scientists (a
20.75 percent response rate). The average age of the
scientists sampled was 50.3 years old. The online
adaptive survey collected information about the scientist
and the business venture.

Econometric models using the survey results were
used to find the determinants for scientists starting
businesses and leading to surviving businesses.

This report was peer-reviewed consistent with
Advocacy’s data quality guidelines. More information
on this process can be obtained by contacting
the director of economic research by email at
advocacy@sba.gov or by phone at (202) 205-6533.

Additional Information

The full text of this report and summaries of other
studies of the U.S. Small Business Administration’s
Office of Advocacy are available at www.sba.gov/
advocacy/7540
.

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research, press releases, regulatory communications,
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This document is a summary of the report identified above,
developed under contract for the Small Business Administration,
Office of Advocacy. As stated in the report, the final conclusions of
the full report do not necessarily reflect the views of the Office of
Advocacy. This summary may contain additional information,
analysis, and policy recommendations from the Office of Advocacy.