Incentives and invention in universities

Abstract

Using data on U.S. universities, we show that universities that give higher royalty shares to faculty scientists generate greater license income, controlling for university size, academic quality, research funding and other factors. We use pre-sample data on university patenting to control for the potential endogeneity of royalty shares. We find that scientists respond both to cash royalties and to royalties used to support their research labs, suggesting both pecuniary and intrinsic (research) motivations. The incentive effects appear to be larger in private universities than in public ones, and we provide survey evidence indicating this may be related to differences in the use of performance pay, government constraints, and local development objectives of technology license offices. Royalty incentives work both by raising faculty effort and sorting scientists across universities. The effect of incentives works primarily by increasing the quality (value) rather than the quantity of inventions.

Governance typology of universities’ technology transfer processes

“…The following determinants of TTO productivity have been identified: organizational structure and practices, other characteristics of the TTO (e.g., age), quality and type of the technology produced by the academic institution, quality of the research institution, and regional demand for technology (Van Looy et al 2011;Belenzon and Schankerman 2009;Sellenthin 2009;Lach and Schankerman 2008;Chapple et al 2005;Di Gregorio and Shane 2003;O'Shea et al 2005;Friedman and Silberman 2003;Siegel et al 2003a;Thursby and Kemp 2002). 3 In line with the focus of this study, we address the organizational structure in detail.…”

“…Empirical studies evaluating the productivity of TTOs, are based on measuring the 'outputs' and 'inputs' of technology transfer and use a production-function framework (e.g., Chapple et al 2005;Link and Siegel 2005;Siegel et al 2003a;Thursby and Kemp 2002;Van Looy et al 2011). TTO characteristics, the technological knowledge produced by the university, characteristics of the university itself, and the demand for technology are identified as important determinants of the number of licensing agreements and royalties generated (Conti and Gaulé 2009;Lach and Schankerman 2008;Link and Siegel 2005;Friedman and Silberman 2003).…”

Organizational and individual determinants of patent production of academic scientists and engineers in the United States

“…Additionally, universities have set internal incentives (e.g. share of royalty income) to encourage faculty to engage in more patentable research that might result in economic profits (Lach and Schankerman, 2008) and have established technology transfer offices (TTOs) to assist faculty with research commercialization (Feldman et al, 2002).…”

Industry-University Collaborations in Canada, Japan, the UK and USA – With Emphasis on Publication Freedom and Managing the Intellectual Property Lock-Up Problem

“…Another line of research indicates that universities that allocate a greater proportion of license revenues to their faculty/student inventors have higher total license revenues, suggesting that academic researchers are motivated by monetary rewards to make commercially valuable inventions [27].…”