A new study by the Kauffman Foundation - The Knowledge Filter and Economic Growth: The Role of Scientist Entrepreneurship - shows that Federal spending on cancer research has a higher payoff that previously estimated (from the press release):
Federally funded university cancer researchers are contributing more to the nation's economy by commercializing their research at rates much higher than is currently being measured by federal and university officials.. . .
The study shows that the current reliance on publicly available modes for measuring the commercialization of university innovation -- patents and Small Business Innovation Research (SBIR) grants, along with figures provided by university Technology Transfer Offices -- is failing to capture the true number of business start-ups in which scientists are engaged.
As we suspected, the current data tracking system is bias toward old-industrial styles of knowledge transfer -- namely codification of the knowledge into a patent and the transfer of that codified knowledge to an outside party via sale or license (traditional technology transfer).
What I find more important in the study is its critique of the existing technology transfer system. The conclusions speak for themselves:
A consequence of globalization in the most developed countries, such as the United States, has been to shift the comparative advantage away from traditional manufacturing industries and towards new knowledge-based economic activity. But where is this knowledge to come from? At this point, the answer is uncertain, but along with education and human capital, as well as critical research and development (R&D) by private industry and government agencies, research undertaken by universities is sure to play a prominent role. As research and knowledge become perhaps the most crucial component to generating economic growth and competitive jobs in globally-linked markets, universities emerge as a key factor in determining the future well-being of the country. After all, it ranks among the most important tasks of universities to create new scientific knowledge. In addition, the magnitude of resources being invested in university research, including some of the most capable and creative scientists in the country, is the envy of the world.
The massive investment in university research can impact economic growth only if knowledge can be transformed into actual innovations and new and better products through the commercialization process. That is, the extent to which university research becomes commercialized. It matters for economic growth, for jobs and for global competitiveness.
Thus, a large literature has emerged trying to gauge and analyze the extent to which university research spills over into commercial activity. Much, if not most, of this previous research has been restricted to focusing on the activities emanating from Technology Transfer Offices, which have provided systematic and consistent documentation of their efforts over a fairly long period of time. Analyses of these data have typically led to conclusions suggesting that while patents and licenses from university research have increased over time, the typical TTO does not generate significant commercialization of university research. However, an important qualification is that, by restricting themselves to TTO generated data, such studies are not able to consider any commercialization activities not emanating from the TTOs.
This study has taken a different approach. Rather than focus on what the TTOs do, it instead focuses on what university scientists do. Thus, the findings about the commercialization of university research are based on actual university scientists and not the TTOs. The results are revealing. In particular, while all modes of commercialization are important, scientist entrepreneurship emerges as an important and prevalent mode of commercialization of university research. More than one in four patenting NCI scientists has started a new firm. This is a remarkably high rate of entrepreneurship for any group of people, let alone university scientists. Thus, the extent to which university research is being commercialized and entering the market may be significantly greater than might have been inferred from studies restricted only to the commercialization activities of the TTO. Scientist entrepreneurship may prove to be the sleeping giant of university commercialization.
Second, the mode of commercialization is apparently not independent of the commercialization route. Nearly one-third of patenting NCI scientists rely on the entrepreneurial commercialization route, in that they do not assign all of their patents to the university. These scientists exhibit a higher likelihood of starting a new firm but a lower propensity to license. By contrast, scientists choosing the TTO commercialization route exhibit a higher propensity to license but a lower likelihood to start a new firm. These findings in no way provide any evaluation or judgment about the efficacy of the TTO office. Rather, they do suggest that the extent of commercialization of scientist research has been greater and more vigorous than previously had been measured.
Third, we find that the determinants of scientist commercialization vary considerably according to the specific mode of commercialization. Social capital, measured in terms of co-patenting with other NCI scientists, co-publishing with industry scientists, and sitting on a scientific advisory board (SAB) or board of directors, generally promotes all modes of commercialization, although the impact seems to be the strongest for scientist entrepreneurship. However, the role of the TTO is sharply divided depending upon the commercialization mode. Having a TTO that is perceived to be helpful for commercialization seems to increase the likelihood of a scientist licensing but decrease the propensity of the scientist to start a new firm. By contrast, having a TTO that is perceived not to be helpful reduces the licensing activity of scientists but increases their likelihood of becoming entrepreneurs.
How are scientists able to start a business without TTO support? There is at least some evidence indicating that social capital can serve as a mechanism to compensate for lack of TTO help when starting a new firm. This would suggest that university governance and public policy facilitating participation in scientific networks may be a valuable investment accruing positive returns in terms of knowledge spillovers and technology transfer, ultimately leading to commercialization, innovation and economic growth.
Future research needs to further probe why and how scientists choose to commercialize their research, what commercialization route they select, what mode of commercialization is most effective, and how university governance and public policy can best promote such commercialization efforts. A host of pressing questions remain. For example, are all social networks equivalent, that is are they homogeneous, or do some facilitate scientist commercialization more than others? Similarly, do non-patenting scientists engage in commercialization activities, particularly entrepreneurship, or does their lack of patented intellectual propensity preclude commercialization of their research? Whatever answers to these and other crucial questions future research can uncover, the sleeping giant of scientist entrepreneurship may prove to be one giant that is worth waking up.
In addition to research, we need to think long and hard about our public policies. Two decades ago, we created a series of mechanisms to help facilitate the movement of knowledge and technology out of universities and national laboratories: SBIR, Stevenson- Wilder, Bayh-Dole, CRADA's, Semitech etc. We need a new generation of mechanisms if we are to need to unleash that sleeping giant.
This is a very interesting study since it shows that the principles that hold in silicon Valley are not so different from academia. Knowledge travels best when contained in people :-)