Recent Research: Does Localizing University Tech Transfer Come at a Price?

It’s a question that many policymakers and researchers across the world are attempting to answer. A recent paper by Sharon Belenzon and Mark Schankerman, Harnessing Success: Determinants of University Technology Licensing Performance, adds to the growing body of knowledge on the topic, exploring how the differences between universities may impact the income generated by licensing technology. Universities with a strong commitment to local development objectives compared to other objectives, such as revenue generation, for example, produced on average 30 percent less income per license, the authors found. Additionally, on average, 30 to 40 percent more income per license was generated for universities that provided performance incentives for their efforts.

 

Universities with strong local development commitments, however, are more likely to license to local firms. Belenzon and Schankerman conclude, “Stronger government constraints are ‘costly’ in terms of foregone license income and start-up activity.” But, it appears these same constraints localize the impact of university research – the very reason the constraints or objectives even exist.

 

As a result, SSTI sees the paper’s findings raising questions for policymakers and university officials to consider:

• What is the appropriate balance between tech transfer revenues for universities and local economic development?
• Should universities with strong local economic development objectives be reimbursed for foregone revenues by government and civic organizations in much the same way large firms are paid inducements to remain in their current locations?

By combining their original survey data with data provided by the Association of University Technology Managers (AUTM), the authors further explored how additional factors, such as the technology composition of the faculty, the density of regional high-tech industry, and the existence of constraints by state government affected the licensing productivity of universities. The variable measuring the “constraints by state government” was assessed by asking universities if researchers were able to choose licensees, if provisions existed regarding confidentiality, and if license contract terms were adaptable, among others. The size of performance incentives was not used by the authors as a variable, but instead only if universities offered bonuses and merit pay.

 

Universities that incorporated performance incentives were more likely to be private institutions than public universities, were less likely to have constraints by state government, and were less likely to mention local economic development as their most important performance strategy. In addition to reviewing the income generation by licenses, Belenzon and Schankerman explored if all of these variables contributed to the total number of licenses. The possibly of a university being private, the university’s usage of incentives, and the measured existence of government constraints all had no effect on the number of licenses granted, they found.

 

Once controlled for the existence of incentive payments, whether a university is a private or public institution had no effect on the university’s licensing performance. Thus, the overriding factor on examining the productivity of licensing has less to do with the type of university and more to do with each university’s incorporation of incentives for its researchers.

 

Harnessing Success: Determinants of University Technology Licensing Performance is available at: http://cep.lse.ac.uk/pubs/download/dp0779.pdf