Electronic copy available at: http://ssrn.com/abstract=2482184 University Spin-Offs and their impact: Longitudinal evidence from Italy Bolzani D. * , Fini R. * , Grimaldi, R. * and Sobrero, M. * * Department of Management, University of Bologna ABSTRACT The creation of University Spin-Off companies (USOs) is one of the most visible form of commercialization of university research. To date, there is scant and mixed evidence about USOs and their performance, thus producing a debate about their impact on the economy and society and about the legitimization of policies to support their development. In this paper, we address this gap by providing evidence about the growth strategies and performances of USOs in the Italian context. We analyze the population of 935 USOs spun-off from Italian public universities since 2000, highlighting potential avenues for future research on this important topic. Keywords: University Spin-Offs; USOs; academic entrepreneurship; growth strategies; performance Short running title: University Spin-Offs and their impact * Department of Management, University of Bologna
Transcript
Electronic copy available at: http://ssrn.com/abstract=2482184
University Spin-Offs and their impact:
Longitudinal evidence from Italy
Bolzani D.*, Fini R.*, Grimaldi, R.* and Sobrero, M.*
* Department of Management, University of Bologna
ABSTRACT
The creation of University Spin-Off companies (USOs) is one of the most visible form
of commercialization of university research. To date, there is scant and mixed evidence
about USOs and their performance, thus producing a debate about their impact on the
economy and society and about the legitimization of policies to support their
development. In this paper, we address this gap by providing evidence about the growth
strategies and performances of USOs in the Italian context. We analyze the population
of 935 USOs spun-off from Italian public universities since 2000, highlighting potential
avenues for future research on this important topic.
Keywords: University Spin-Offs; USOs; academic entrepreneurship;
growth strategies; performance
Short running title: University Spin-Offs and their impact
* Department of Management, University of Bologna
Electronic copy available at: http://ssrn.com/abstract=2482184
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Introduction
There is widespread recognition that knowledge produced by academic research can provide a
significant number of opportunities to develop new or improved products and services (Landry et
al., 2006). Knowledge transfer has therefore emerged as an important activity that enhances
economic and technological growth; this has led policymakers and universities to implement
mechanisms that support the commercialization of research results. The activities undertaken by
universities to commercialize their research, which we call “academic entrepreneurship” (Grimaldi
et al., 2011), include both formal mechanisms (e.g., academic spin-off creation, patenting,
licensing, industry-university collaborations), and informal mechanisms (e.g., consulting,
networking, personnel-related activities with industrial partners) (Baldini et al., 2014)†.
Within academic entrepreneurship, university spin-off companies (USOs) “are the most
visible form of commercialization of university research” (Landry et al., 2006, 1599). USOs are
new firms created to exploit knowledge, technology, or research results that originated within a
university in the commercial market (Pirnay et al., 2003; Shane, 2004); some firms are founded
from patented inventions or other forms of intellectual property (Di Gregorio and Shane, 2003;
Lockett et al., 2005), but they may also start on “a body of unpatented expertise” (Perkmann et al.,
2013, 2). In this study, we consider an academic spin-off to be affiliated with a university when the
institution appears among the equity shareholders of the company, or when one of the employees
(either faculty or technicians), or research collaborators of the institution is a shareholder of the
company (Fini et al., 2009).
To date, there is ongoing debate about the managerial and policy implications of university
involvement in the creation of spin-offs and, more generally, on their impact on society (e.g.,
Verspagen, 2006; Litan et al., 2007; Siegel et al., 2007; Kenney and Patton, 2009). On the one
hand, USOs contribute to technology transfer through their commercial ties to industrial customers
and partners, introducing innovation and science-based technologies in industry and thus facilitating
economic growth (Fini and Lacetera, 2010). In these cases, their creation should be highly
supported. On the other hand, there is mixed evidence about USOs’ performances, especially
compared to those of other innovative start-up companies (e.g., Rothaermel and Thursby, 2005;
Ensley and Hmieleski, 2005; Wennberg et al., 2011). This last aspect calls for further investigation
into the specific support that USOs should receive and on the legitimation of ad-hoc policies
implemented by universities to support their growth. There is scant and mixed research about
† For reviews of university technology commercialization see Lockett et al., 2005; Phan and Siegel, 2006; Siegel et al., 2007; Perkmann et al., 2013; for a review on academic entrepreneurship see Rothaermel et al., 2007; Djokovic and Souitaris, 2008).
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USOs’ performance following a multidimensional framework including the analysis of survival
rates, profitability and growth rates (Djokovic and Souitaris, 2008).
To help address this gap, in this paper, we provide evidence of the growth strategies employed
by USOs and their performances in the Italian context. The study draws on data available from the
TASTE project (Taking Stock: External engagement by academics (http://www.project-taste.eu)),
which includes information on the population of 935 Italian USOs established since 2000 (i.e., after
the introduction of national regulation for commercialization of research through academic spin-
offs) and spun-off from the 95 Italian public universities (64 of which conduct research in Science,
Technology, Engineering and Mathematical–STEM–fields) (for further details see Methodological
Note in Appendix).
The paper is organized as follows. First, a brief literature review about the main findings
related to USOs growth strategies and performances is presented. Second, details about the Italian
context and the empirical setting where the study takes place are provided. Third, empirical data
that reports descriptive information about the population of Italian USOs and details the main
empirical findings about their growth and performance strategies is presented. Finally, the
conclusion highlights the main points of discussion for policymakers and academics.
1. University spin-offs and their performance
Because USO creation is consolidating and becoming more transparent all around the world,
researchers should be encouraged to focus on issues related to USOs’ impact and to legitimize the
study of academic spin-offs as a “phenomenon on its own” (Djokovic and Souitaris, 2008: 242).
The impact of USOs can be examined by looking at either their direct economic impact (e.g., firm
performance and job creation), or their scientific and technological impact (e.g., technology
transfer, dissemination of scientific knowledge) (Rasmussen et al., 2012). In this paper, we are
interested in discussing the economic impact of USOs, contributing to a small but growing recent
wave of studies focused on the development of USOs and their performances (O’Shea et al., 2008),
also analyzing the phenomenon outside the US context (Mustar et al., 2008).
There are several measures of performance that have been considered in the available studies.
Some of them looked at survival rates of USOs. Researchers have mostly found that USOs’ failure
rates are below those of other companies, and below national failure rates in the USA and European
countries (e.g., AUTM, 2002; Degroof and Roberts, 2004; UNICO, 2001; Zhang, 2009; for an
exception, see Buenstorf, 2007). Some studies have qualified the conditions under which these
results hold. For example, Nerkar and Shane (2003) found that survival rates of IPR-based
university spin-offs depend on the degree of industry concentration. Shane and Stuart (2002)
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concluded that founders’ social capital endowments decrease hazards associated with USO
mortality. Overall, evidence does not adequately explain differences in survival rates between USOs
and other start-up companies (e.g., explaining whether they might be attributed to support from the
parent organization, to a higher ability to perform in markets, or to a lower risk propensity of
USOs). For example, spin-offs with strong ties to their parent organizations have been found less
likely to fail but also less likely to successfully graduate within a timely manner (Rothaermel and
Thursby, 2005).
Other studies have considered how resources available to companies and the external
environment can facilitate or hinder USOs’ growth (e.g., sales or personnel growth). In this regard,
a line of studies has focused on the effects of internal and external resources available to companies.
For example, growth of USOs can be influenced by their technological or patent-related knowledge
(Wallmark, 1997; Clarysse et al., 2011), and relationships with customers, research partners, the
parent-university, and investors (Mustar, 1997; Shane and Stuart, 2002; Walter et al., 2006). Van
Geenhuizen and Soetano (2008) identified market-, management-, financial- and physical-related
obstacles to growth and how they impacted USOs’ development over time. Visintin and Pittino
(2014) analyzed the relationship between founding teams’ profiles and USOs’ growth. Another line
of studies examined how environmental conditions, such as policies of universities, TTOs, or
government (e.g. Degroof and Roberts, 2004; Moray and Clarysse, 2005; van Geenhuizen and
Soetano, 2008; Colombo et al., 2010) can influence USOs’ growth.
A few other studies have focused on revenues and other financial measures of performance,
such as turnover (e.g. Garnsey and Heffernan, 2005; Smith and Ho, 2006; Harrison and Leitch,
2010), cash flows and growth revenues (e.g. Ensley and Hmieleski, 2005; Zahra et al., 2007), and
sales growth and profitability (e.g. Lindelof and Lofsten, 2005). Some of these compared USOs and
other companies. For example, Ensley and Hmieleski (2005) found that, when compared with non-
academic spin-outs, USOs perform worse in terms of cash flows and growth revenue. Zahra et al.
(2007) used productivity and revenue growth to compare corporate and academic spin-offs.
Wennberg et al. (2011) followed this line of research and compared USOs and non-academic spin-
outs in light of founders’ prior work experience.
Overall, researchers have identified a number of factors as influencing the performance of
spin-offs, in the US as well as in other countries (Bigliardi et al., 2013; Mustar et al., 2008).
However, performance analysis should also take into account USOs’ life cycles and diverse
endowment of resources, skills, and networks in the different phases of a venture development. In
this regard, Mustar et al. (2006), while assessing various typologies of university spin-offs, call for
greater attention to factors that affect firm development. Specifically, they suggest further exploring
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spin-offs’ success in different stages as related to the variety in resource endowments, business
models, and institutional linkages. It is worth noticing that some studies have taken steps in this
direction: assessing the development process of USOs and their ability to reach critical junctures
(e.g., Vohora et al., 2004; Wright et al., 2004) and achieve milestones like generating a business
idea (e.g., Grandi and Grimaldi, 2005), commercializing the first product (e.g., Heirman and
Clarysse, 2007), and obtaining external equity investments (Rasmussen et al., 2011) or external
financing (e.g., Shane and Stuart, 2002; Clarysse et al., 2007; Toole and Czarnitzki, 2009; Munari
and Toschi, 2011).
However, notwithstanding the aforementioned notable research, we still lack longitudinal,
population-based evidence on USOs’ growth strategies and performance. In the next sections, we
will tackle this issue, shedding lights on the phenomenon.
2. The Italian context
In Italy, the commercialization of research results through academic spin-offs was formalized with a
national law in 1999 (D.Lgs. 297/1999 and subsequent regulation by the Ministerial Decree
593/2000). This law constituted the reference framework for supporting scientific and technological
research, knowledge transfer, and researchers’ mobility, such as research spin-offs and technology
transfer offices. The law permitted public researchers to create a spin-off company or to formally
participate in other technology transfer projects between a university and a firm while keeping, for
up to eight years, their teaching duties, their position, and their wage.
Since the early 1990s, public universities in Italy have been autonomous, functioning separate
from the Ministry of Education, University and Research (MIUR) for budget management, design
of teaching programs, and introduction of statues and regulations to manage organizational and
scientific activities. Following the introduction of Law 297/1999, each university therefore created
internal mechanisms to support the exploitation of university-owned IPR, the creation of academic
spin-off companies, and consulting activity with the private sector. These internal regulations had
two primary goals (Baldini et al., 2014). First, they defined the rights and the remuneration of all
parties involved in university-industry transactions (e.g., whether and how academics can get
involved in spin-off roles). Second, they ruled university’s involvement in technology-transfer
activities and the legal, financial, and marketing support for the parties involved in the process.
The first academic spin-offs in Italy were established during the ‘70s. As highlighted by
Balderi et al. (2011), until the first half of the ‘80s, they were a result of “pioneer” initiatives of
individual researchers and with no or very low involvement of their universities. From the second
half of the ‘80s until the end of the ‘90s, universities started to acknowledge and become familiar
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with the phenomenon, offering increasing support to the process of spin-off establishment. With the
introduction of Law 297/1999, the establishment of USOs received an institutional framework,
pushing universities towards processes of organization of dedicated services. We can therefore take
the introduction of this new regulatory framework as an ideal starting point for observing the
population of USOs subject to the same regulatory arrangements. Therefore, although we have data
for USOs established before 2000 (n = 75), in this paper, we analyze only those companies founded
in or after 2000 (i.e., after the introduction of the new regulatory framework‡).
3. Empirical analyses
3.1. General descriptives
As of today, there are 935 Italian USOs that were established in or after 2000, with an average time
since inception of 6 years. As we will analyze in greater depth later, because 122 of these
companies closed for several reasons during this period, in 2013 there were 813 active companies.
In Table 1, we report information about the number of established companies per year, further
distinguishing between companies established within the same year that survived vs. closed; the
number of closed companies per year, and the number of active companies at the end of each
considered year. The number of established companies increased, especially starting in 2003,
following the adoption process of Law 297/1999 by each university (e.g., Algieri et al., 2013). Our
data can be considered reliable up until the end of 2012, since the last wave of data collection was
carried out in September 2013. This explains the drop in the number of firms established in year
2013, as compared to previous years.
As reported by other studies (e.g., Shane, 2004; Wright et al., 2007), academic spin-offs are
rare entities in the Italian context. In fact, only 1.3 for every 10,000 registered active companies are
USOs.
In Table 2, we disclose the geographical location of Italian USOs at foundation, following the
NUTS 2 classification of territories. For firms with more than one office, we used the location of
the headquarters. As we can see, the majority of companies (52.6%) were established in the north of
the country, where there is a larger presence of universities and other institutions offering support to
business start-up, such as investors, incubators, and accelerators; science and technology parks; co-
working spaces; and startup competitions (Italia Startup, 2013). The number of USOs established in
the south of Italy is greater than the number of innovative or high-tech start-ups reported by other
studies (e.g., Italia Startup, 2013; Colombo et al., 2012), denoting the importance of the action ‡ For a description of the entire population of 1,010 USOs established between 1978-2013, please refer to the Technical Report of the TASTE project (June 2014) by Bolzani et al. – available for download at http://www.project-taste.eu.
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taken by universities for the creation of companies in those territories. We find, in our data, that
during this period (especially since 2003), the south of Italy has tended to close the gap with the
north in terms of number of established USOs. This was also confirmed by the NetVal Report 2014
(Bax et al., 2014).
Connected to the analysis above, we detailed the number of spin-off companies that
originated at each public university. The spin-offs originated from 55 universities. As shown in
Table 3, the most active ones were Università di Bologna, Università di Padova, Politecnico di
Torino and Politecnico di Milano (similarly to Bax et al., 2014).
As shown in Table 4, the majority of established spin-offs have a legal form characterized by
limited liability (97%), rather than unlimited liability§.
Regarding the sector of activity, companies were more concentrated on service-related
activities (82%), as opposed to manufacturing (17%), or commerce (1%). Firms active in
manufacturing worked mostly in the area of computers, electronics, and optical products (ATECO
code 26) and in the production of machinery (ATECO code 28). In the service field, the majority
offered professional, scientific, and technical services (70%), such as scientific research and
development (ATECO code 72)**, architectural and engineering activities (ATECO code 71), and
management consultancy (ATECO code 70). Of the companies, 22% offered information and
communication services: specifically, computer programming, consultancy, and related services
(ATECO code 62).
3.2. Growth strategies
3.2.1. Innovation
As seen above, researchers have often defined USOs as based on knowledge that originates at the
university and is sometimes assigned to it through patents or other forms of intellectual property
rights (e.g., Di Gregorio and Shane, 2003; Lockett et al., 2005). In this regard, we consider
innovation and technology commercialization as key for USOs’ growth. We therefore analyze the
extent of innovation undertaken by companies in our population by considering three aspects that
we have identified as indicative of the tacit and explicit knowledge available at each company.
§ For aggregation purposes, taking into account the peculiarities of the Italian legislation about companies and the population of examined spin-offs, we distinguish between limited and unlimited liability legal forms. The following types of companies are characterized by shareholders’ limited liability: s.p.a. (società per azioni), s.r.l. (società a responsabilità limitata), soc.coop. (società cooperativa), and consorzio or società consortile. Within the unlimited liability types, we find the following: s.s. (società semplice) or impresa individuale, s.n.c. (società in nome collettivo), and s.a.s. (società in accomandita semplice). ** In this category, we find about half of the companies developing services in the field of biotechnology and pharmaceutics; i.e., mainly those not carrying out manufacturing or ICT-related activities.
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First, we analyze whether USOs were founded using IP-based knowledge that originated at a
university. Second, we consider whether companies were assignees of patents. Third, we analyze
the extent of university–USOs collaboration.
To analyze whether spin-offs were established based on IP-based knowledge that originated at
a university, we use secondary data from the PATIRIS database†† regarding the patents assigned to
Italian universities. We matched, through a dedicated manual cleaning and disambiguation, the
names of the inventors contained in the PATIRIS database with the names of the TASTE academic
entrepreneurs. In this way, we obtained a list of academic entrepreneurs who were also inventors of
patent families assigned to any Italian university. These academic entrepreneurs established 262
USOs (equal to 28% of established companies), which were mainly affiliated with the Politecnico
di Milano, Università di Padova, Scuola Superiore di Studi e Perfezionamento (SSSUP) Sant’Anna
in Pisa, Università di Genova, and Università di Milano (see Table 5).
We then analyzed whether USOs were assignees of patents, using PATSTAT secondary data,
manually retrieving information from the EPO (Espacenet) database‡‡. A total of 206 USOs (22.3%
of established companies) were registered as assignees of 458 published patents in any patent office
of the world§§. They filed patents at a single country’s patent offices in Europe (48%, mainly in
Italy), followed by the World Patent Office (18%), the European Patent Office (16%), the U.S.
Patent Office (12%), or at other countries’ patent offices (5%). On average, each company
published 2.2 patents. The USOs that were registered as assignees of any patent were mainly
affiliated with the Università di Padova, Università di Milano, and Politecnico di Milano (see Table
5).
To summarize the findings presented above, we identified USOs as based on patented
knowledge if responding to one of the two following criteria: (a) one or more of the USO’s
entrepreneurs were inventors of patents assigned to a university; and (b) the USO was the assignee
of a patent. In Table 5, we highlight in which cases these two conditions were contemporarily met
by any USOs. We can therefore observe that around 50% of established USOs were based on
patent-related knowledge, as determined by the occurrence of either of the two described criteria.
As a last indicator of innovation strategies pursued by USOs, we have analyzed the extent of
their collaborations with universities and public research centers (PRCs). This is an important
source of innovation because universities are considered “engines of growth” in knowledge-based
economies (Etzkowitz et al., 2000), and the relationships between university and industry constitute
†† See website http://patiris.uibm.gov.it/home ‡‡ See website http://epo.org §§ We therefore refer to single patent documents and not to families of patents.
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a “two-way” exchange in terms of both theoretical and applied knowledge (Meyer-Frahmer and
Schmoch, 1998).
We use primary data obtained from 120 USOs that responded to the TASTE survey
administered in 2013***. Of respondent companies, 59% reported that they collaborated with either
only a university or both a university and a PRC since establishment. In particular, USOs privileged
collaborations with their parent university (83% of cases) rather than with other “external”
institutions. Companies were asked to describe up to three of the most important collaborations.
They reported information about 121 collaborations (108 with universities and 13 with PRCs). On
average, they started to collaborate with universities and PRCs 4 years after foundation. A minority
of these collaborations were regulated with legal agreements or formal procedures between the
USO and the university (44% of cases), whereas slightly more were with PRCs (50% of cases).
From this, together with the fact that the majority of collaborations were carried out with the parent
university, we can infer that relationships between USOs and universities are characterized by
informality. Looking at the types of collaborations, we distinguished between research-based
collaborations (e.g., producing new scientific evidence, prototyping/experimentation, attendance at
and organization of conferences); consultancy; training (e.g., undergraduate or postgraduate
training, training of company’s staff); creation of infrastructures; and participation in grant calls.
The 121 collaborations could involve more than one type of relationship (on average, 1.8 types of
collaborations). Whereas USOs collaborating with PRCs were mostly engaged in research activities
(59%), those collaborating with universities were mostly engaged in training activities (44%,
especially training of undergraduate or graduate/postgraduate students) and research-related
activities (38%). When comparing these data with those from other studies, such as in the UK
(Salter et al., 2010), there is a lower scientific orientation of USO-academia collaborations. This
might be explained by the fact that USOs can offer employment opportunities to scientists who do
not find a stable and certain career development track in Italian universities (ISTAT, 2008).
3.2.2. Internationalization
Internationalization is a second important growth strategy available to companies (Sapienza et al.,
2006) that we investigated. Within our data-gathering exercise, in the 2013 TASTE survey, we
collected information on how USOs approached international markets. Seventy-seven of the 120
respondents (64%) reported being involved in business activities abroad. We can define these
companies as “born-global” or “international new ventures” (Knight and Cavusgil, 1996;
McDougall et al., 2003) because 15% of firms started their business activities contemporaneously
*** See Methodological Note in Appendix
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in Italy and abroad, and 58% worked abroad within 3 years of inception. The first international
activity was either an export activity (38%), or a partnership with a foreign firm (36%). The
companies operated, on average, in two different world markets (distinguishing among Europe,
North America, Central-South America, Middle East, Asia, and Africa), catering mainly to the
European and Northern American markets.
3.3. Performances
3.3.1. Survival rates
As a first measure of performance, we analyzed whether USOs were still in operation in 2013 and
their key characteristics. In the total population (n = 935), 11.6% of the companies (n = 108) had
failed, 0.9% (n = 8) had been acquired or merged (M&A), and 0.6% (n = 6) had ceased to exist in
order to be legally transformed into another company. As reported in Table 1, most of the
companies that were founded and then ceased in the subsequent years were established between
2004 and 2007. The number of closed companies per year increased significantly since 2010. USOs
had a lower mortality rate††† compared to that of Italian companies (Unioncamere-Infocamere,
2014). This compares with other studies in the USA and other European Countries (e.g., AUTM,
2002; Degroof and Roberts, 2004; UNICO, 2001). In fact, for USOs, the mortality rate increased
from 0% in 2005 to 4% in 2013; for Italian companies, it increased from 5% in 2005 to 6% in 2013.
USOs seem to also present a lower mortality rate compared to that of Italian high-tech start-ups.
Start-ups’ mortality rate in 2010 was around 5.7% whereas, for USOs, it was around 2% (Colombo
et al., 2012).
Of companies that went out of operations, 59% were located in the north of Italy, 20.5% in
the center, and 20.5% in the south. Comparing these numbers with the number of established
companies in each area, the closing rate in the north was 14.6%, in the center 12.3%, and in the
south 10.5%. Companies in different geographical areas had different motivations for closing down.
In fact, 75% of M&As and 67% of transformations took place for USOs in the north of Italy. Of
companies that failed, 57% were USOs located in northern Italy and 21% were USOs from the
south of Italy.
Spin-offs that ceased operations mainly operated in professional, scientific, and technical
services (58%, mostly linked to scientific R&D and architectural/engineering activities),
information and communication technology (17%, mainly involving computer programming,
consultancy, and related services), or manufacturing of computer, electronic, and optical products
(16%).
††† Calculated as the number of closed companies over the total of active companies per year.
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3.3.2. Annual revenues
As a second measure of performance, we use companies’ yearly revenues, as reported by the Aida–
Bureau Van Dijk database. We collected and analyzed data regarding financial statements of spin-
offs established from 2000 to 2012 (n = 921)‡‡‡. During data collection, it was not possible to gather
information regarding 55 USOs (6.1% of the population), either because the companies had an
unlimited liability legal form and thus, by law, are not obliged to disclose yearly financial
statements, or because the companies did not comply with the minimum turnover considered
eligible for inclusion in the Aida database. Ninety spin-offs closed down during the considered
period. Furthermore, we consider 2.5% of spin-offs as inactive because they disclosed annual
revenues equal to zero in the last 3 years, and the data available from the Chamber of Commerce
did not contain information concerning any pending failure, M&A, or transformation.
The yearly revenues produced by the companies increased constantly during the 2000-2012
period (Figure 1). From 2008-2011, revenue growth was slower than in previous periods,
notwithstanding the growth in the number of operating companies. In line with other studies on
high-tech start-ups, we attribute this trend to the effects of the economic crisis (Colombo et al.,
2012). The same pattern can be observed in the average annual revenues per company. Although
until 2008 the average revenues produced by USOs increased, during the 2008-2011 period,
companies’ average revenues were substantially lower than in previous years, appearing then to
increase again in 2012.
We further analyzed annual revenues since USOs’ establishment (Figure 2). Companies
display increasing revenues within the first 6 years since establishment (also in line with the number
of operating companies). Regarding each USO’s average annual revenues since establishment, we
spotted differences in the revenue growth patterns of companies in the highest revenue quartile
(“best performers”), the median revenue quartile, and the lowest revenue quartile (“worst
performers”) for each year of observation.
We investigated whether some of the characteristics of ceased or active USOs were related to
the level of performance achieved. To this extent, we classified USOs established between 2000 and
2012 into best, median, and worst performers on the basis of the last year of available revenue
information (i.e., in the case of closed firms, the revenue quartile of the last year of operations; in
the case of active firms, the revenue quartile in 2012).
Looking at ceased USOs, in the majority of cases (68%), closed companies were among the
worst performers. Looking at the motivation for going out of business, 71% of companies that ‡‡‡ We excluded spin-offs established in 2013 because financial statements for 2013 will be released starting in June 2014.
12
failed were worst performers as opposed to 8% of best performers. In the same manner, 80% of
acquired or merged companies were worst performers. By contrast, firms that were transformed
were either median performers (67%) or best performers (33%).
Considering only active USOs, the chosen legal form does not differ between best and worst
performers in the case of share-based and unlimited liability companies. However, 50% of USOs
that chose to be public companies were among the best performers. Looking at the geographic
location of spin-offs, best-performers were mainly located in the north of Italy whereas companies
in the south of Italy were characterized by the worst performances. This seems in line with the
findings that the economic gap between northern and southern Italy is significant in explaining
technology transfer activities (Algieri et al., 2013). With regard to the sector of activity, best-
performing USOs tended to be more present in manufacturing whereas worst-performing USOs
were mainly present in professional and technical services, other services, and commercial
activities. There were slight differences between best and worst performers that were active in ICT-
related fields. Looking at the degree of innovation of spin-offs in terms of patent-related knowledge
(i.e., whether the spin-off had an inventor in the entrepreneurial team; the spin-off was the assignee
of a patent; or both), there seemed to be no evident link with performance measured by revenues
(e.g., 21% of patent-based USOs were best performers and 20% of non-patent-based USOs were
worst performers). Looking at the companies that responded to our 2013 survey, USOs establishing
collaborations with their parent institution were performing better than were those that did not have
collaborative ties. Companies that pursued an internationalization strategy did not have different
performances than did those that did not engage in business abroad. Finally, an analysis of any
difference in performance due to the presence of industrial, financial, or public owners in 2012
revealed no significant pattern.
3.3.3. Reaching milestones
Previous studies have considered some key steps in USOs’ growth patterns as performance
measures. Such critical milestones have been identified, for example, as growth in sales, growth in
number of employees (e.g., van Geenhuizen and Soetano, 2009), attainment of credit and financing
(e.g., Shane and Stuart, 2002), establishment of collaborations and networks (e.g., Mustar, 1997;
Walter et al., 2006), or patenting activity (e.g., Smith and Ho, 2006).
We therefore analyze which milestones USOs reach during their development and lifespan.
To do this, we rely on the 120 respondents to the 2013 TASTE survey (see Table 6), which offered
insights into whether and when they reached a set of milestones. The first step undertaken by USOs
was the commercialization of products/services in Italy, on average happening one year after
13
establishment. In this early stage, companies also accomplished their first prototyping activity. The
further development of USOs was then characterized, nearly 2 years since establishment, by the
employing personnel and managers, the obtaining institutional financing (e.g., bank loans, venture
capital, etc.), establishing collaborations with other firms in Italy, and filing the first patent
application. Between the 3rd and 4th years since inception, companies took the first steps in
international markets, such as carrying out the first export or starting the first collaboration with a
foreign company. Only 6 years after inception, some companies were able to open an office abroad.
A more fine-grained analysis showed that both the ability and the timing for reaching these
milestones differed among companies on the basis of their performance. In particular, worst (vs.
best) performers required almost 1.5 years (vs. less than 1 year) to accomplish their first sale in Italy
and 3.5 years (vs. 2 years) for their first sale abroad. In the same manner, it takes close to 2.5 years
for worst performers (vs. 1 year for best) to start a collaboration with an Italian company and 6
years (vs. 2 years) to start a collaboration with a foreign company. Worst-performing USOs started
to employ personnel 2 years (vs. 1.5 year) after establishment. None of the worst-performers (vs. all
of best-performers) had opened an office abroad.
4. Conclusions
Literature about USOs has developed along several lines of research during the last decades, urging
researchers to legitimize their efforts and to support policymakers in the understanding of the
effects of their choices in the field of academic entrepreneurship. One aspect that deserves more
attention is academic spin-off performance (Djokovic and Souitaris, 2008; Mustar et al., 2006).
Aiming to contribute to this line of inquiry, this paper provides descriptive evidence of the growth
strategies employed by USOs and their performances in the Italian context, drawing on a
longitudinal dataset of the population of 935 Italian USOs established since 2000. Having such a
longitudinal sample is important because academic spin-offs, similar to innovative start-ups, might
present long development paths before they start to show positive performances, and to allow for
empirical causal analyses.
Our data highlight some key points that can be used to draw a comparison with other
international studies about academic spin-offs and, at the same time, to allow for more fine-grained
analyses in the future. As a first note, we have to underline that in Italy, as in other countries, USOs
represent a very small portion of a larger population of high-tech start-ups. Moreover, the narrow
definition of academic spin-offs used in our study and in the majority of available studies does not
account for the presence of student- or alumni-owned companies, which represent a growing
phenomenon around the world (SpinOuts, 2014). It would be advisable, in future studies, to track
14
these companies in order to have a better understanding of the real contribution of universities in
technology transfer and in the stimulation of creativity, innovation, entrepreneurship, and,
ultimately, cultural, social, and economic growth.
Our study highlights some of the growth strategies implemented by Italian USOs. Talking
about innovation, not all examined USOs (50% of total) were based on a patent, either linked to
knowledge patented for the university by any of the entrepreneurs or to patents directly assigned to
the company. Along these lines, we have not considered patents eventually filed by USOs’
entrepreneurs and not assigned either to a university or the company, but that might constitute the
source for commercially exploited knowledge. Therefore, future studies should further analyze this
issue. We have also explored the degree of collaboration between USOs and parent universities in
the form of collaborations, which seems relevant for the performance of the companies. We think
that this topic deserves future attention from researchers to understand, for example, whether and
how the timing, the type, or the intensity of these collaborations is relevant to USOs’ performances.
In the same vein, we have seen that most of the companies that we analyzed have been pursuing
internationalization strategies since the early years of their lives. Since this is a growingly important
topic for entrepreneurs, managers, and policymakers, it would be important in future studies to
understand whether and to which extent USOs differ by any means in their internationalization
processes and outcomes.
Regarding performances of Italian USOs, our study showed that they have relatively lower
failure rates than do other companies and innovative start-ups. The majority of ceased companies
also had the lowest performances in terms of revenues. Only a limited number of companies ceased
their operations following a merger or acquisition. We think that these findings, although being
similar to those in other countries, deserve particular attention and should call for further analyses
on the motivations underlying such patterns and on the possible differences when compared with
non-academic new ventures. We acknowledge that survival is a quite simple measure to account for
the economic impact of USOs. In fact, surviving firms will not necessarily grow in the future and
ceased firms might have been acquired by or transformed into other companies. Therefore,
researchers interested in survival analyses should be able to give a detailed account of these
differences.
In the case of active companies, our analyses showed that, on average, Italian USOs had
limited annual revenues (around 230/K € per company in 2012), as also confirmed by other studies
about academic spin-offs in Italy (e.g., Bax et al., 2014; Balderi et al., 2011). We further
highlighted the opportunity and the need to distinguish between different levels of performance,
reflecting different characteristics of best- and worst-performing companies. In this regard, our
15
analyses only offered descriptive evidence based on the revenue differences in the last year of
operation (2012), representing only a departing point for further analyses building on the
longitudinal nature of the dataset.
As a last take-home point, we showed that USOs were able to grow quickly during the first 6
years after establishment, reaching critical milestones such as entering Italian and international
markets, starting collaborations with Italian and foreign companies, applying for patents, and
generating job opportunities. Thus, we see numerous opportunities for future research on this topic:
for example, looking at the antecedents and outcomes of reaching these milestones or pursuing
comparative studies at the international level and with other new innovative companies.
In summary, this paper aimed to increase our understanding about USOs’ performances,
responding to calls for greater attention to this topic (e.g., Djokovic and Souitaris, 2006; Mustar et
al., 2006; Grimaldi et al., 2011). We therefore offered a description of the key growth strategies
pursued by USOs and the most relevant factors that influence their performances. We believe that
this kind of evidence can provide valuable opportunities for researchers to contribute to the quest of
legitimization of academic entrepreneurship in Italy and Europe, generating new knowledge and
critical awareness of this important phenomenon.
16
Table 1 – Number of established and closed USOs per year and per yearly cohort
Table 3 – Number of established USOs, by university of affiliation
University of affiliation N. of
established USOs
Università degli Studi di BOLOGNA 55 Università degli Studi di PADOVA 54 Politecnico di TORINO 47 Politecnico di MILANO 40 Università degli Studi di UDINE 33 Università degli Studi di PERUGIA 31 Università degli Studi di GENOVA 30 Università degli Studi di TORINO 30 SSUP S.Anna di PISA 29 Università degli Studi di MILANO 28 Università Politecnica delle MARCHE 28 Università degli Studi del SALENTO 27 Università degli Studi di ROMA "La Sapienza" 26 Università degli Studi di MODENA e REGGIO EMILIA 24 Università degli Studi di PISA 24 Università della CALABRIA 23 Università degli Studi di NAPOLI "Federico II" 23 Università degli Studi di BARI 22 Università degli Studi di CAGLIARI 22 Università degli Studi di FIRENZE 22 Università degli Studi di SIENA 22 Università degli Studi di TRIESTE 21 Politecnico di BARI 20 Università degli Studi di FERRARA 19 Università degli Studi di PAVIA 17 Università degli Studi di ROMA "Tor Vergata" 17 Università degli Studi di MILANO-BICOCCA 16 Università degli Studi di PALERMO 15 Università degli Studi di PARMA 15
Università degli Studi di TRENTO 14 Università degli Studi del SANNIO di BENEVENTO 13 Università degli Studi del PIEMONTE ORIENTALE "Amedeo Avogadro"-Vercelli 12 Università degli Studi di VERONA 11 Università degli Studi del MOLISE 10 Università degli Studi di CAMERINO 10 Università degli Studi de L'AQUILA 10 Università degli Studi di SASSARI 10 Università degli Studi di BERGAMO 9 Università degli Studi di SALERNO 9 Università Cattolica del Sacro Cuore 7 Università degli Studi di MESSINA 6 Università degli Studi della TUSCIA 5 Università degli Studi "G. d'Annunzio" CHIETI-PESCARA 5 Università degli Studi di FOGGIA 5 Università "Cà Foscari" di VENEZIA 3 Università degli Studi di CATANIA 3 Università degli Studi di TERAMO 3 Università degli Studi INSUBRIA Varese-Como 2 Università degli Studi "Mediterranea" di REGGIO CALABRIA 2 Scuola Internazionale Superiore di Studi Avanzati di TRIESTE 1 Università degli Studi della BASILICATA 1 Università degli Studi "Magna Graecia" di CATANZARO 1 Università degli Studi di NAPOLI "Parthenope" 1 Università degli Studi ROMA TRE 1 Università IUAV di VENEZIA 1
Total 935
18
Table 4 – Legal form of established USOs
Legal form N. of USOs % on total Limited liability 908 97%
Share-based (a) 867 Cooperative/consortium 24
Public company (b) 17 Unlimited liability (c) 27 3% Total 935
(a) In share-based companies, equity is divided among owners on the basis of shares (s.r.l. - società a responsabilità limitata)
(b) In public companies, equity is divided among owners on the basis of stocks (s.p.a. – società per azioni). To this regard, the majority (71%) of public companies were established as share-based companies and went through a change in the legal form after foundation.
(c) Unlimited liability spin-offs are established either by single entrepreneurs (impresa individuale) or by two or more owners (s.n.c. – società in nome collettivo or s.a.s - società in accomandita semplice)
Table 5 – Cases of patent-based USOs, by university of affiliation
University of affiliation
N. of established
USOs
(a) N. USOs with inventor(s) in
entrepreneurial team
(b) N. USOs
assignee of a patent
N. USOs both with
inventor(s) and assignees
of patents
% of patent-based USOs
Università degli Studi di BOLOGNA 55 13 9 2 40%
Università degli Studi di PADOVA 54 16 13 6 54%
Politecnico di TORINO 47 8 11 1 40%
Politecnico di MILANO 40 19 12 5 78%
Università degli Studi di UDINE 33 11 5 1 48%
Università degli Studi di PERUGIA 31 6 5 1 35%
Università degli Studi di GENOVA 30 15 9 5 80%
Università degli Studi di TORINO 30 11 6 4 57%
SSUP S.Anna di PISA 29 15 11 6 90%
Università degli Studi di MILANO 28 15 13 7 100%
Università Politecnica delle MARCHE 28 3 4 2 25%
Università degli Studi del SALENTO 27 6 7 3 48% Università degli Studi di ROMA "La Sapienza" 26 6 2 0 31% Università degli Studi di MODENA e REGGIO EMILIA 24 3 8 3 46%
Università degli Studi di PISA 24 6 6 3 50% Università degli Studi di NAPOLI "Federico II" 23 4 7 2 48%
Università della CALABRIA 23 6 2 0 35%
Università degli Studi di BARI 22 8 3 1 50%
Università degli Studi di CAGLIARI 22 5 3 1 36%
Università degli Studi di FIRENZE 22 6 5 2 50%
Università degli Studi di SIENA 22 2 4 1 27%
Università degli Studi di TRIESTE 21 4 4 3 38%
Politecnico di BARI 20 4 4 2 40%
Università degli Studi di FERRARA 19 10 8 4 95%
19
Università degli Studi di PAVIA 17 4 5 2 53% Università degli Studi di ROMA "Tor Vergata" 17 8 1 0 53% Università degli Studi di MILANO-BICOCCA 16 4 4 2 50%
Università degli Studi di PALERMO 15 5 6 4 73%
Università degli Studi di PARMA 15 0 2 0 13%
Università degli Studi di TRENTO 14 3 1 1 29% Università degli Studi del SANNIO di BENEVENTO 13 4 3 0 54% Università degli Studi del PIEMONTE ORIENTALE "Amedeo Avogadro"-Vercelli 12 2 3 1 42%
Università degli Studi di VERONA 11 2 1 0 27%
Università degli Studi de L'AQUILA 10 4 1 1 50%
Università degli Studi del MOLISE 10 0 1 0 10%
Università degli Studi di CAMERINO 10 3 3 2 60%
Università degli Studi di SASSARI 10 3 2 1 50%
Università degli Studi di BERGAMO 9 4 1 0 56%
Università degli Studi di SALERNO 9 4 5 3 100%
Università Cattolica del Sacro Cuore 7 2 0 0 29%
Università degli Studi di MESSINA 6 1 0 0 17% Università degli Studi "G. d'Annunzio" CHIETI-PESCARA 5 2 1 1 60%
Università degli Studi della TUSCIA 5 1 1 1 40%
Università degli Studi di FOGGIA 5 1 0 0 20%
Università "Cà Foscari" di VENEZIA 3 1 1 1 67%
Università degli Studi di CATANIA 3 1 0 0 33%
Università degli Studi di TERAMO 3 1 0 0 33% Università degli Studi "Mediterranea" di REGGIO CALABRIA 2 0 0 0 0% Università degli Studi INSUBRIA Varese-Como 2 0 1 0 50% Scuola Internazionale Superiore di Studi Avanzati di TRIESTE 1 0 1 0 100% Università degli Studi "Magna Graecia" di CATANZARO 1 0 1 0 100%
Università degli Studi della BASILICATA 1 0 0 0 0% Università degli Studi di NAPOLI "Parthenope" 1 0 0 0 0%
Università degli Studi ROMA TRE 1 0 0 0 0%
Università IUAV di VENEZIA 1 0 0 0 0%
935 262 206 85 50%
20
Figure 1 – Total annual revenues and average revenues per spin-off by year
Note: The number of active USOs differs from the number of active USOs reported in Table 1 because data about financial statements were not available for 55 companies and considering missing values for the other firms per year.
Figure 2 – Annual revenues and average annual revenues per company since year of establishment
2 6 10 18 29
52 60
86
109 120
137 146
172
61
120 142 152 152
202 179
204 223 216 211 211
232
-‐
50
100
150
200
250
-‐ 20 40 60 80
100 120 140 160 180 200
2000 (26)
2001 (49)
2002 (71)
2003 (116)
2004 (194)
2005 (260)
2006 (336)
2007 (420)
2008 (489)
2009 (557)
2010 (648)
2011 (694)
2012 (741)
Average ann
ual reven
ue (K
/€)
Total reven
ues (M
/€)
Year (number of opera:ng USOs in paretheses)
Revenues (M/€) Average revenue per company (K/€)
22.4
73.2
88.1 99.2
109.4 108.1
94.4 84.7
74.1
57.6
39.4 27.5
22.2
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0
20
40
60
80
100
120
0 (793)
1 (737)
2 (655)
3 (554)
4 (478)
5 (403)
6 (313)
7 (256)
8 (180)
9 (107)
10 (61)
11 (45)
12 (24)
Average ann
ual reven
ues
since establishm
ent
(K/€)
Ann
ual reven
ues since establishm
ent
(M/€)
Years since establishment (number of opera:ng USOs in parentheses)
Annual revenues since establishment (M/€) Annual average revenues -‐ all firms (K/€) Average annual revenues -‐ lowest quarMle (K/€) Average annual revenues -‐ median quarMle (K/€) Average annual revenues -‐ highest quarMle (K/€)
21
Table 6 – Time (years) to reach critical milestones since establishment
Obs Mean Std. Dev. Min Max
Time to first Italian sale 102 0.92 1.50 0 7
Time to first prototyping activity 77 1.47 1.87 0 7 Time for first collaboration with Italian firm 81 1.91 2.01 0 10
Time to employment of first employee 83 1.94 1.93 0 7
Time to employment of first manager 25 2.16 2.36 0 7
Time to first institutional financing 30 2.27 2.29 0 10
Time to first application for patent 43 2.84 2.41 0 10 Time for first collaboration with foreign firm 37 3.03 2.50 0 9
Time to first international sale 59 3.24 2.90 0 13
Time to first foreign direct investment 3 6.33 2.89 3 8 Note: n = 120, respondents to the 2013 TASTE survey
22
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APPENDIX
Methodological Note The aim of the TASTE project (http://www.project-taste.eu) is to determine how knowledge transfer unfolds from academic institutions and to what extent this activity benefits individuals, firms, and public wealth. The TASTE database is one of the outcomes of the project. The TASTE database is relational and multilevel in nature and has systematically collected information on the population of 95 Italian universities, and their personnel, internal policies, departments, patenting and spinout activities, and the characteristics and entrepreneurial support mechanisms of the 20 Italian regions. The available data start in 2000 and cover up to 2013§§§. The database is updated annually. Data have been gathered from several sources, as detailed below.
Domain Level Type Description Records Timespan Data Source
University Organizational Secondary University characteristics and performance
§§§ The entity-relation diagram is downloadable from the TASTE website. The codebook is available upon request.
30
Firm Organizational Primary Business models, collaboration activities, internationalization
578 2009 and 2013
Two survey waves sent out in 2009**** and 2013†††† to the same cohort of 578 companies established between 2000 and 2008; 196 answered the first wave (response rate = 33.9%), and 120 in 2013 (n. closed companies = 111; response rate = 25.8%).
Firm Individual Secondary Gender, age, ownership, and directorship(s)
3,300 1990 – 2013 Italian Company’s House https://telemaco.infocamere.it/
Firm Individual Secondary Career path, human and social capital, education
Context Organizational Primary Business incubators 65 1988 – 2013
Web sources
**** This was a joint effort with the Department of Management Engineering at the Politecnico of Milan (for more information please refer to the RITA Observatory webpage http://www.osservatoriorita.polimi.it). †††† This was a joint effort with SHL Italy (now incorporated by CEB – http://www.ceb.shl.com)
