Patenting or not? The dilemma of academic spin-off founders

Abstract

Purpose The purpose of this paper is to analyze the impact of patenting on the performance of academic spin-off firms (ASOs) in the post-creation stage. Specifically, our study analyses how the combination of knowledge transfer mechanisms by ASOs and patents can foster ASOs’ early growth performance. Design/methodology/approach The authors explored the relations between patenting processes and spin-off performance through econometric methods applied to a broad sample of Italian ASOs. The research adopts a deductive approach, and the hypotheses are tested using panel data models by considering the sales growth rate as the dependent variable regressed over measures of patenting activity and quality and assuming that firm-specific unobservable drivers of growth are captured by random effects. Findings The empirical analysis shows that the incorporation of knowledge transferred by the parent university and academic founders through patents affects the performance of ASOs. Specifically, the authors find that the number of patents is a positive driver of ASOs’ performance, whilst patent age does not have a significant impact on growth. Moreover, spin-offs with a larger endowment of patents obtained before foundation, surprisingly, grow less on average. Practical implications The findings have implications for ASO founders by suggesting that patenting processes reap benefits. However, in the trade-off of external knowledge access vs internal knowledge protection, it may be better to begin patenting after the foundation of ASOs. Originality/value The authors enrich the on-going debate about the connections between knowledge transfer and organizational performance. This paper combines the concepts of patents and ASOs by providing evidence on the role of patenting processes as a transfer mechanism of explicit knowledge in ASOs. Furthermore, the authors contribute to the literature on costs and benefits of patents by hinting at unexpected findings.

Knowledge transfer and organizational performance and business process: past, present and future researches

“…Findings by Ferri et al (2019) support the KT literature along three main ways and provide reflections for future research. First, the study by Ferri et al (2019) should inform the research agenda of KT scholars by suggesting the opportunity to analyze, in a combined way, two different, but also typical, mechanisms adopted by the university to transfer knowledge: patents and spin-offs. Second, the paper by Ferri et al (2019) confirms the role of patenting processes as a transfer mechanism of explicit knowledge in academic spin-offs.…”

Determinants of growth in research spin-offs: a resource-based perspective

“…The availability of IPRs at founding reveals the degree of technological endowment of research-based start-ups while, from a market perspective, IP protection allows new companies to successfully exploit new product development efforts. Empirical research has included patents among the factors influencing the likelihood of RSOs formation (Shane, 2004) and success (Shane, Stuart, 2002) and has demonstrated that RSOs' growth seems to be related to their patent portfolios (Niosi, 2006;Stephan, 2014;Ferri et al, 2019). Regarding IPRs granted to RSOs, Shane and Stuart (2002) used patents' stock at the time of founding and Grandi and Grimaldi (2003) adopted the number of patents and licences assigned to academic entrepreneurs as indicators of the 'technological excellence' of the new venture.…”

“…Despite the recent advancements in understanding RSOs' structure and main characteristics (Mustar et al, 2008;Freitas et al, 2013;Fryges, Wright, 2014;De Cleyn, Festel, 2016), and the numerous attempts to explain the influence of RSOs' structure on their early growth (Mustar, 1997;Heirman, Clarysse 2004;Chapman et al, 2011;Visintin, Pittino, 2014;Hayter, 2016;Ferri et al, 2019) their development paths are still relatively unexplored. As shown by Greiner (1972;1998), specific phases of evolution (growth) and revolution (crisis) characterise organisations' development, each connected with specific organizational practices and managerial problems.…”

Hypothetical Aspect of Crowdfunding as Alternate Finance for University Spinoffs and Quadruple Helix

“…In contrast, Etzkowitz and Klofsten, (2005) emphasize on the autonomy and legal identity of USOs by giving describing them as "new business (autonomous entity from the university) with its own legal identity". Ferri et al, (2019) and Mathisen and Rasmussen, (2019) emphasize on job creation and economic boost by defining USOs as enterprises that "boost economic growth by creating employment which is knowledge-based and also improve tax revenues, through transmission of new technology, while also improving the growth capacity of a region." Wright et al, (2006) describes USOs as enterprises that create wealth and therefore the governments should provide them finance and provide them access to venture capital.…”

“…Similarly, applying the quadruple helix we found out that the banks, which provide debt finance to USOs fall within the helix. This is a clear indication of the strong links between the stakeholders on the quadruple helix model and how they are interrelated (Ferri et al, 2019). Extant literature suggests that inadequate funding compels USOs to rely on bank debt as a major source of external funding for their business activities, (Carayannis and Campbell, 2019b;Keasey and Watson, 1994).…”