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DePaul University
Kathryn Ibata-Arens, Ph.D
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※本章の著作権は,本章の著者に帰属する.本章は「研究開発型ベンチャーと支
援専門家との戦略提携」研究事業の一環として作成したものであり,今後,論文等
で広く公開する方針である.本章は,こうした今後の公開のための中間成果物とし
ての位置づけであり,転載・無断引用を禁じる.
IBATA-ARENS
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summary
(science) university-based new business creation. Major factors underlying the United
States capacity for innovative new science and technology based new business
similarities and differences with the entrepreneurial environment for new business in
Japan are highlighted. The paper concludes with comments on current policy
initiatives in Japan and the lessons that can be drawn from the policy history in the
U.S. Supplementary materials include a brief summary (and sample survey) of a 2006
survey to R&D type university start-ups in the U.S., based on a similar survey to
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1 Introduction
One way of thinking about the potential and ability of countries, regions and
firms for innovation and new business formation is in terms of “push” (e.g. national
intellectual property, tax policy) “pull” (market), “drag” (hindering progress) and
“jump” (targeted strategies to speed up the trajectory of growth) factors. Table: Life
Science National Innovation Systems in the US and Japan: National Level Push, Pull,
Drag and Jump Factors outlines the components of the national innovation systems in
the United States and Japan for entrepreneurship and new business formation.
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science, the U.S. leads, with over 400 new university start-ups in 2004 alone.
University start-ups have a very high success rate in the United States. To date, over
two-thirds of all university start-ups remain in business. In Japan, the total number of
university start-ups rose from 1132 in 2003 to 1364 in 2004 (232 new) and 1503 in
2 Daigakuhatsuvencha, p. 5.
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2 Market
The market acts as a pull factor in both economies, the baby boomer
generation in the US and the aging population in Japan have increased demand for
the size of the biotech market in terms of sales and employment has been growing at a
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3 Scientific Seeds
quality research generating patentable science and technology. This research and
development is found primarily in quality graduate level research programs and their
funded by large corporate giants (such as pharmaceutical and chemical firms) as well
as top tier government research labs provide other sources of scientific seeds. The
number of patents and scientific papers generated by universities are indicators of this
Harvard University and Tokyo University top the list, followed by UCLA, Michigan
and Toronto Universities. The United States dominates 12 of the top 20 spots, with
Hopkins University. Japan is also represented in the top 20, with Kyoto University
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図表 1-1 世界の自然科学発表論文数にしめる各国主要大学のシェア
the US and Japan. The University of California system (424), California Tech (135)
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and University of Michigan (132) occupy the top 3 slots in the United States. In Japan,
Osaka University (22) tops the list, followed by Keio University (13) and Tohoku
University (11).
Large firms, especially pharmaceutical and chemical firms also play a role in
generating scientific seeds in the U.S. For example, Monsanto, developer of a wide
generate as many patents as American firms, in emerging sectors such as bio, they lag
behind. Many of these start-ups are led by former executives and research staff.
American firms generate many more patents than Japanese firms (leading Japanese
syndrome).
Number of Start-Ups
Patents in
Rank in 2004 2004 U.S. University (Rank)
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Source: Compiled from United States Patent and Trademark Office (2004 data) and
2004 年国内大学別特許登録
件数/総合ランキング
ベンチャー企
順
出願人 件数 業累積設立 論文被引用数
位
数
1 大阪大学 22 71 10.37
2 慶應義塾大学 13 50 7.39
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3 東北大学 11 48 7.3
3 東海大学 11
5 東京大学 10 92 10.49
6 名古屋大学 8 8.7
7 金沢工業大学 7
8 広島大学 6 7.14
8 新潟大学 6 8.49
8 東京工業大学 6 39 6.93
11 九州大学 5 44 7.85
20 早稲田大学 3 75
20 京都大学 3 59 10.21
*特許庁技術調査課、価値総合研究所のデータを基にイバタ・アレンズが作成。
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4 Commercialization
obtain patents does not automatically translate into new firm start-ups, however.
Universities, for example, a major source of new technology, must have the will and
faculty new firm start-ups, or via licensing the technology to existing firms. This
technology licensing organization (TLO). In the United States the quality of TLOs in
developed and marketed) varies widely. There are approximately 232 university TLOs
No national TLO model exists, though several top universities have model
TLOs. The epitome of best practice in this regard is the WARF (Wisconsin Alumni
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which has been donated to the University of Wisconsin system. It should be noted
that WARF was established after university administrators refused to fund the patent
application for the vitamin D technology. The WARF model goes one better than a
standard TLO, through funding frontier research that might have commercial
the isolation of human embryonic stem cells in 1998 by Dr. James A. Thompson at
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University licensing offices are often controlled by legal staff, and prolonged licensing
deal negotiations often sap the life out of potential private sector deals. In sum,
UW-Madison has a TLO that works, while many other top universities have TLOs
that don’t.
Japan began to acknowledge the role of TLOs in the late 1990s, and by the
early 2000s had established a number of TLOs, though success so far has been spotty.
TLOs, in the late 1990s, the number of TLOs shot up from less than 5 in 1998 to 35
in 2003. 5
start-ups. University start-ups are defined here as a new business established using
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an equity stake in the new business, and even be a founder of the new company. In the
and Stanford University a growing proportion of all new start-ups in recent years have
been bio. Likewise, in Japan, about 1/3 of all new university start-ups are in bio, with
the number increasing each year. At universities such as Osaka, Tokyo and Kyoto,
6 More than three thousand university start-ups were in existence by 2004, according
to the AUTM Survey. AUTM Survey 2004; Djokovic, Djordje and Vangelis Soultaris.
“Spinouts from academic institutions: a literature review with suggestions for further
research.” Cass Business School (June 2004); Di Gregorio, Dante and Scott
Shane. "Why do some universities generate more start-ups than others?" Research
Policy (2004).
7 METI HS 18 Daigaku bencha ni kan suru kiso chosa hokoku sho pp. 10, 18
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5 University of Michigan 13
6 Duke University 10
7 University of Pittsburgh 10
8 Stanford University 9
9 University of Colorado 9
10 University of Florida 8
Source: AUTM U.S. Licensing Survey, FY 2004 Survey Summary, The Association of
University Technology Managers, 2005.
incubator facilities. In the US, incubators are of three kinds: university, private sector
and government. According to the National Business Incubator Association there are
1114 business incubators in the US. Of the 1400 in all of North America (U.S.,
8
Canada, Mexico), 25% are university sponsored. It is estimated that between 75% to
http://www.nbia.org/resource_center/bus_inc_facts/index.php.
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focus. Most American incubators provide a variety of services above and beyond
merely offering firms low cost rental space, including introductions to the local VC
manager whose job it is to support tenant firms and help them grow and eventually
“graduate” out of the incubator and continue on their own. Leading incubators also
coordinate community building social events as well, adding to the potential for a
creative, innovative milieu within incubators, comprised of member firms and the
service and other networks to which the incubator is connected.9 Studies have found
that these quality value-added services have a positive impact on tenant firm
performance. According to the NBIA, of all start-ups, those that benefit from being in
incubators are most likely to survive (87% of incubator tenants are said to have
survived). The Small Business Administration (SBA) in the United States was
9 Wiggins, Joel and David V. Gibson. "Overview of US incubators and the case of the
Austin Technology Incubator". Int. J. Entrepreneurship and Innovation Management
(2003) 3, 56-66.
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had only 12 incubators nationwide. Studies have also shown that incubators also
In Japan, the number of incubators is smaller, with the bulk of them being
that there were 325 incubation facilities in Japan. The vast majority of them were
established after 1999, after a variety of incentives (e.g. subsidies) were put in place
JANBO in 2002 of 113 incubators, nearly 80% of incubators were non-profit. In both
types of incubators, more than a third of tenant firms were software start-ups.11 One
of the major weaknesses in Japanese incubators is the lack of managerial expertise and
other support services provided to tenant firms. In fact, many incubators do not have
incubators surveyed offered tenants support services. “Support” in this case was
10 Link, Albert N. and John T. Scott. "US University Research Parks." J Prod Anal
(2006) 25: 43-55.
11 Inkyubeshon shisetsu no jittai chosa 2002 nigatsu.
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usually limited to providing firms with information. The few incubators that have
a 2005 survey by METI to 371 university related start-up firms, few respondents
found incubators to be helpful in any service other than providing the firm space.12
In the US, over 74% of new ventures are formed near the universities where
States, biotechnology has become the leading source of growth in employment, and
second only to software in sales growth. As the American software industry continues
to move offshore, it is expected that the bio industry will become the primary engine
types, comprising nearly 38% of all university start-ups (total 1,112 in 2005),
12 METI 2005 Daigaku hatsu bencha chosa, Heisei 17, roku gatsu, Keizaisangyosho.
13 METI Daigaku hatsu bencha ni kan suru kiso chosa hokoku sho Heisei 17 nen 6
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Retailing/media 20% 9%
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5 Venture Capital
One of the biggest hurdles for a new business start-up is amassing the capital
to grow and build the business. For science-based start-ups, the initial capital
requirements are often much higher than in other sectors such as software, due to the
need for laboratory and testing equipment, and often wet-lab space.
The term venture capital or “VC” describes funds invested in new, unproven
record in sales revenue and profit (in fact, it could merely exist as an idea in the mind
equity stake in a firm is taken in exchange for cash investment. In Europe, VC is often
the part of the venture capitalist. The venture capitalist not only provides money, but
also relevant know-how and expertise (primarily management, but could also be
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personal networks, which has benefits for new firms including introducing new board of
advisor members and qualified service providers. For this reason, individual venture
capitalists and venture firms tend to invest mainly in firms in their immediate locales
(i.e. they tend to be region-specific). Surveys by the NVCA confirm that VC firms
tend to invest primarily in their immediate locales, and invest in other places as part
of a “syndicate” of investors, where another firm takes the lead investment position
There are generally six stages in VC investment, from the first idea (scientific,
technological seeds, initial business model concept) to exit (when investors cash out):
industries, new entrepreneurs seek financial support to flesh out the idea into a
product prototype design, or to demonstrate that their new product idea has market
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appeal. This pre-seed stage is often described as the one in which the concept for the
Once a new entrepreneur has decided (in the best case scenario, after
consulting with qualified experts in the area and evaluating the potential market
impact and competition in that product space) to go ahead and start a business – he
or she starts to put together the people and material resources (infrastructure) of the
new firm. This seed or start-up process usually takes up to 18 months (shorter for
software, longer for bio). In the next, early stage after formation, the firm might be
producing prototypes or beta versions of its product, and introducing its product to
market. The firm is usually 1 – 3 years along since inception. By the expansion stage,
the firm has begun generating sales revenue, though not necessarily profit and also
receiving critical market feedback, helping it to improve its product and expand sales.
By later stages, the firm has been around (on average) for at least 3 years and has
earned a steady stream of revenue. It may even be profitable. Once a venture firm has
entered the later stage of its development, its investors often seek an exit – cashing
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out on their investment. This happens through initial public offering (IPO), an
acquisition of the firm by another firm, re-sale of firm stock to a third party, or
buy-back of equity by the firm’s principals. In most cases, the exit stage (particularly
if the firm is going public) requires a cash infusion, for example for the services of
Venture capital has played a major role in the United States in supporting new
business creation and growth. In life science, VC has fueled rapid growth in some of
of the role of VC in the US attributes the greatest credit to venture capital firms, also
referred to as “classic VC”. This is a misnomer really, since the bulk of venture
capital for new firm start-ups is actually of the “angel” variety. That is, most seed to
early stage venture funding comes from high net-worth individuals, often successful
entrepreneurs themselves. Further, after the collapse of the tech bubble in 2000,
classic VC in the US became risk averse. That is, while in biotech the amount of funds
per investment has risen dramatically, the number of deals has dropped considerably.
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expansion or later stage firms. At the peak of the VC boom (1999-2000) in the United
States, nearly $95 billion dollars was invested in over 6000 investments (or “deals”).
After the tech collapse of the “dot.coms” in the U.S., investments were down to $22
billion by 2002 and the number of investments also experienced a precipitous decline
– to just over 2300 deals. 2006 has shown some recovery, but the United States has
This description of the activities of venture capital firms only paints a very
small part of the picture of the process of getting a new business from
firms, represents a tiny proportion of the funds that it takes to get a firm up and
put together in 25 GEM countries. In other words, the bulk of start-up capital for new
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firms comes from informal sources, including the traditional “4 Fs”: Founders,
i.e. non-contractual, in nature) that the 250,000 angels in the U.S. invest in 90% of
new firms at their earliest stages of conception. The amounts are not huge – $2 million
or less per investment – but the number of firms impacted by angel investors is
In contrast, the 1417 “active” (measured by Dow Jones as the number of firms with at
least one investment between 2000 and 2006, See 2006 VC Industry Report), the
bulk of which (942, or 66%) invested in 4 or fewer firms. In 2005, there were a total of
only 2239 “deals” or investments. Further, the angel market is estimated at twice the
size of the classic VC market, $100 billion (angel) versus less than $50 billion
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Some alarming differences can be seen when comparing the state of VC in the
States, that is venture capital investment that has yet to exit, remains the worlds top,
the United States and Trends in VC Investment in Europe, Japan and the United
States.
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日米 欧VC 投資残高の推移
(100億円)
3,000
2,729 2,747 2,789
2,692
2,387
2,500
2,170
1,932
2,000
1,719
1,485
1,500
1,307
1,000
500
82 102 100 97 88
-
2000 2001 2002 2003 2004
米国 欧州 日本
Source: 平成 17 年度ベンチャーキャピタル等投資動向調査報告、Venture
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(100億円)
日米欧 VC 投資額の推移
1,200
1,132
1,000
800
653
600
513
486
438 338 404
384
400
23 28 17 16 15 20
-
2000 2001 2002 2003 2004 2005
(資料)(財)ベンチャーエンタープライズセンター 平成17年度ベンチャーキャピタル等投資動向調査報告
および 2005年の米国はNVCA Money Tree (1$=107円換算)、2005年の欧州はEVCA Final Activity
米国 欧州 日本 Figures 2005 (1ユーロ=139円換算)による。
Japan remains at the lowest rankings of all the 27 OECD countries plus the European
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6 Policy
have played an important role in facilitating growth in new industries. Apart from
measures have provided incentives and impetus for new business formation. In the
United States, for example, the role of SBIRs and STTRs in the earliest stages of
growth in high technology and science-based new firm start-ups has been critical in
supporting new businesses.17 Other key policies have included Bayh-Dole (1980), the
Small Business Innovation Development Act (1982) (SBIRs), Orphan Drug Act (1983),
the Small Business Tech Transfer Act (1992) (STTRs), and the FDA Critical Path
Initiative (2004).
that would encourage patent holders to collaborate with the private sector.
17 The Advanced Technology Program (ATP), created in 1990, has also had a positive
impact on technology commercialization. Fogarty, Michael S., Amit K. Sinha and Adam
B. Jaffe. “ATP and the Innovation System. A Methodology for Identifying Enabling
R&D Spillover Networks.” National Institute of Standards and Technology (October
2006) GCR 06-895.
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funding would remain with the inventor under certain conditions. The conditions
Since Bayh-Dole was enacted, university patents and start-ups have both
over the long term. For example, Stanford University’s $400 million in royalty income
between 1991 and 2000 (compared to $4 million for the period 1981 - 1990) can be
for example by arguing that while the number of patents increased after Bayh-Dole,
the quality of patents declined. Sampat et. al. re-examine this thesis using longer-term
patent data in Bhaven N. Sampat, David C. Mowery and Arvids A. Ziedonis, “ Changes
in university patent quality after the Bayh-Dole act: a re-exmination,” International
Journal of Industrial Organization, 21 (2003) 1371-1390, Elsvier. See also David C.
Mowery, Richard R. Nelson, Bhaven N. Sampat and Arvids A. Ziedonis, “The growth of
patenting and licensing by U.S. universities: an assessment of the effects of the
Bayh-Dole act of 1980”, Research Policy 30 2001 99-119; David C. Mowery and Bhaven
N. Sampat, “Universities in national innovation systems” chapter draft;
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12,000.00
2,000.00
-
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Time Series
SBIRs (1982) – The Small Business Innovation Research Program (SBIR) was
eleven major federal departments and agencies to allocate a small percentage of their
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agencies include the Department of Defense (DoD), the National Science Foundation
(NSF) and the Department of Health and Human Services (DHHS, within which the
National Institutes of Health, NIH, resides). Awards are granted in two phases:
start-up (up to USD 100,000) and phase two (up to USD 750,000). In 2005, for
example, the Department of Defense provided over USD 1 billion to small businesses
granted for about 6 months to test the merit or feasibility of the technology. Phase
two awards support further R&D and testing, at this stage aiming for
firms receiving only phase one support have been more successful in
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commercialization than those seeking and obtaining phase two awards. One might
interpret this as the government supporting firms in later stages that do not otherwise
similar to the SBIR program in that the goal has been to promote the
commercialization of technology that has been developed with federal funds.22 The
main differences are twofold. First, unlike the SBIR, scientists and faculty
Secondly, the phase two awards under STTR are currently capped at a lower amount:
USD 500,000. Also, the number of granting agencies are fewer (only five):
and Human Services (DHHS), National Aeronautics and Space Agency (NASA), and
the National Science Foundation (NSF). The NSF tracks public investment in the
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Orphan Drug Act (1983) – The Orphan Drug Act when first enacted, put the
onus on firms to demonstrate how prohibitive the R&D costs of developing drugs that
could only be marketed to those with rare diseases would be.23 Start-up firms,
however, lack the resources to prepare such time-intensive paperwork and not
surprisingly, few firms applied for orphan drug status. It was not until the Act was
revised to allow firms “orphan drug” status if they could demonstrate that they were
developing a drug for ailments that affected less than 200,000 Americans. While
23Rohde, David Duffield. “The Orphan Drug Act: An Engine of Innovation? At What
Cost?” Food and Drug Law Journal 55 (2000) 125-148.
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“orphan drug” status does not grant developing firms a patent, it does allow them a
seven year monopoly on the sales of the product. Since its enactment in 1983, a
number of drugs have been developed to treat ailments such as tuberculosis. Further,
a report by the Department of Health and Human Services noted that orphan drug
orphan drugs.24
FDA Critical Path Initiative (2004) – In response to the slowdown in the early
2000s of new submissions to the FDA for drugs, therapies and medical device
approvals, the FDA published a white paper in 2004 outlining a national strategy to
speed-up and improve the quality of evaluations of new technologies in the approval
pipeline. To date, there is a high failure rate among new potential products while at
the same time the cost of developing new prescription drugs in particular has risen
dramatically – to more than USD 800 million by 2000. Further, more potential new
24The Orphan Drug Act: Implementation and Impact, Department of Health and
Human Services, Office of Inspector General, May 2001, OEI-09-00-00380.
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products fail in the 2000s than failed in the 1980s, despite major advances in basic
evaluation process in terms of the ability to better gage the likelihood of success in a
universities after 2000 are expected to fund a significant portion of their own budgets
with the intent of having universities act more independently of government, and
ideally more innovative. The result has been to encourage more private sector
significant national policy initiative to-date - apart from a reform of SME policy in
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(Ministry of Economy Trade and Industry) launched its “Cluster Initiative” and
“Cluster Plan” in 2000 and 2001 respectively. The Plan intends to promote
start-ups via two main measures: establishing TLOs and expanding graduate MBA
industry, particularly in the Kinki and Hokkaido regions. By fiscal year 2002, the
national life science budget had grown to 440 billion yen. Other initiatives include the
establishment of and SBIR program, modeled on the SBIR program in the U.S., as well
as measures targeting the jinzai (personnel skills) problem such as the NEDO Fellow
program that places young scientists and other professionals in small businesses,
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7 Patent System
Though reforms began in late 1990s, essentially the Japanese patent system
was designed to diffuse foreign technologies into large Japanese corporations. Until
the 2000s, the Japanese patent system was geared toward technology diffusion as
“laying open” the details of all patent applications after filing – a patent yet-to-be
granted. This has generally resulted in large firms, with the financial and legal
In Japan’s “first-to-file” model, a shuuhen strategy is used, whereby the larger firm
the original patent. This is in marked contrast to the patent system in the US, which
property of the inventor has precedence over any later attempts to exploit the
invention.27
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8 Socio-Political Culture
Debates over the use of stem cells, fueled by religious concerns over the use
of embryonic stem cells in particular have put a drag on growth in life science capacity
groups, the Bush administration imposed national restrictions on federal funding for
stem cell research in 2001, limiting federal funds to existing cell lines, meaning those
cells that had already been isolated. Further, emboldened by these national signals,
local Christian groups have targeted particular states as test cases, aiming for a
constitutional amendment forbidding stem cell research. One of these test states is
researchers’ rights to use stem cells) was narrowly passed via state-wide referendum
in November 2006. 29 million dollars of the 30 was funded by the Stowers, two cancer
survivors who established the Stowers Institute in Kansas City, Missouri. It has been
28 Stem cells are of two types: adult and embryonic. The debate over stem cell research
is over the use of embryonic though in public discourse the two have often been
conflated.
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estimated that several hundred million dollars in research dollars has been lost to
that could have been invested in the local economy of Kansas City. Worse,
neighboring states have tried to capitalize on the troubles of Missouri. In 2005, the
Missouri, inviting them to “come on over”. Rod Blagojevich backed this offer with a
California, already the nation’s leading high tech state, announced a USD 10 billion
stem cell initiative, to be invested over the next ten years. Competition has come
traveling to China to obtain stem-cell based treatments for spinal cord injuries.
biotechnology companies are reportedly forging ties with forward thinking others
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around the world.29 What we have in the US in the early 2000s is a mixed message
from the national government, signaling on the one-hand support for fast tracking of
new drug discoveries, but on the other, indicating that new developments in stem cell
29“Stem-Cell Refugees: Yanks are flocking to China for therapy”, Business Week,
February 12, 2007.
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Supplementary Materials
Edwards
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In November 2006, a mailing was sent to 1000 start-up venture businesses across the
United States. The mailing included a cover letter requesting participation in the
survey and promising complete anonymity and confidentiality to the respondents, as
well as a complimentary copy of the Comparative Survey Report outlining the results
in the previous surveys in the UK and Japan (2005). Whenever possible, the letter
was personalized, meaning it was addressed to the personal name of the
president/CEO. The mailing included a project overview (attached), a 25 question
four page survey and a pre-addressed, stamped return envelope, requesting a reply
by November 30, 2006. By the end of December, we received 117 responses
(response rate 11.7%) representing all regions of the U.S., including Hawaii.
We are currently in the process of interpreting the survey results. However, several
preliminary comparisons are worth noting:
1) U.S. new business start-ups are aiming, in terms of exit, for merger and
acquisition – to a much higher degree than seeking IPO. This tracks with the
reality of exits for start-ups. That is, globally, about 80% of all exits are
non-IPO. Japanese start-ups, on the other hand, seem to be aiming for IPO
to a much higher degree than American start-ups, for whatever reason.
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6) In all three countries, company founders make use of their personal networks
for many business-related goals. This indicates the importance of social
capital in new business start-ups.
9) Angel investors in the US play similar roles, and are even more hands-on than
VCs in this regard. Stimulating an angel investment community in Japan might
therefore have a positive impact on new business formation and start-up
success.
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Scope of Survey
Our survey research project compares the entrepreneurial environments in the US,
UK and Japan, analyzing how – to help their firms grow and prosper – entrepreneurs
make use of various support resources including university technologies and venture
capital. Findings will be used to compare and make recommendations regarding best
practices in local, regional and national level entrepreneurship strategy and policy.
The Survey has already been implemented in the United Kingdom and Japan (2005).
Results from the current survey will be compared to best practices in the UK and
Japan.
Participants
The Survey is being sent to a total of 1000 U.S. companies, which the organizers have
selected from state, university and local incubator/business development sources.
These companies are mainly in high-growth fields, developing new technologies, or
providing high-value services. Most are less than 10 years old.
Research Team
Kathryn Ibata-Arens, PhD Northwestern University, is assistant professor in the
department of political science at DePaul University in Chicago. Her research
interests are in innovation and technology policy, particularly in the United States and
Japan. Ibata-Arens’ current research examines emerging life science (biotechnology
and medical device) regions in Japan and the United States. In 2005 and 2006, she
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DePaul University
Founded in 1898 and located in the heart of Chicago, DePaul University has grown to
become America’s largest Catholic university. DePaul has a number of award winning
programs in business and technology. Its part-time MBA Program ranks in the top 10
nationally.
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Research Support
The survey research project is supported by DePaul University’s University
Research Council (URC) and Political Science Department, NAIST’s Research
Center for Advanced Science and Technology and with grant monies from Japan’s
Ministry of Economy, Trade and Industry (METI), Management of Technology
Program (MOT). METI’s MOT Program seeks to stimulate new business ventures in
Japan, particularly those emerging out of the science and technology of Japanese
universities (http://www4.smartcampus.ne.jp/index.php?7).
Contact Information
Kathryn C. Ibata-Arens, Assistant Professor
Department of Political Science, DePaul University
990 W. Fullerton Ave., Suite 2200, Chicago, IL 60614, Phone: 773-325-4716
(direct)
http://condor.depaul.edu/~kibataar/intro.htm kibataar@depaul.edu
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Annotated Bibliography on Innovation Policy and Entrepreneurialism with Notes and Commentary
Brian T. Edwards
National Policy
with the Bayh-Dole Act of 1980, and culminating with the Advanced
universities.
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Management of Technology 2006
1982 with the passage of the Small Business Innovation Development Act
(SBIR), the SBIR program was intended to fill the gap left by disincentives,
original provisions for the second time since they were first signed into law.
Among the more significant specifications put forth in the amendments were a
requirement that the SBA create a database of all SBIR award research which
would be publicly searchable and clarify data rights for achievements during all
three phases of the program, mandates that candidate firms completing Phase
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Management of Technology 2006
potential, with awards not in the excess of $100,000. Phase II is a two year
the first two Phases are left to the mercy of the market, but participation
capitalists.
http://www.dartmouth.edu/~jtscott/Papers/01-01.pdf.
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Management of Technology 2006
basic premise the argument put forward by Baron (1998) that, "the rational
for SBIR is the same as the general argument for government R&D- positive
externalities, social benefits exceeding private ones." The paper does not
recipients regarding the impacts associated with SBIR awards, and; (3) a
research. First they try to determine whether SBIR recipients are achieving
(with 1/3 of recipients succeeding at great profit) that would not have been
R&D. Additionally, based on the case studies done, the authors conclude
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Management of Technology 2006
that most of the companies that relied on SBIR funding to further their basic
research to the Phase II level would not have undertaken such research
The second question to which the authors hope to unlock the answers is
scientists and engineers, which also has a spillover effect on the greater
http://bibserv7.bib.uni-mannheim.de/madoc/volltexte/2005/1121/pdf/dp0
547.pdf.
leading scholars tracking SBIR policy, and this is one of several studies that
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Management of Technology 2006
policy. There are two main characteristics of the program that make it
does not require them to leave their position at the research institution.
important for success. This study also focuses on tracking so called "star
SBIR firms.
The papers findings determine first that the SBIR program is effective at
promoting academic entrepreneurialism, and the firms that are associated with
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Management of Technology 2006
Toole, Andrew and Calum Turvey. “The relationship between public and
http://www.economia.uniroma2.it/conferenze/icabr2005/papers/Toole_pape
r.pdf.
Toole and Turvey attempt in this study to further understanding how small
sources of private funding like venture capital. The most interesting concept
earn acceptance for Phase II SBIR funding. The basic premise underlying the
certification effect is that venture capital firms use SBIR and other programs
that fund small biotechnology ventures as a sort of litmus test, providing them
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Management of Technology 2006
indeed beneficial for firms to have received Phase I approval in order to earn
academic researcher, and those that do not. However, beyond the basic
137-151.
http://www.springerlink.com/content/k638316p1j5x3m83/fulltext.pdf.
This paper clarifies the needs and rationale for the SBIR program and
reviews the recent findings regarding the programs impact. Another identifies
five dimensions of the innovation capital gap and outlines a possible extension
bring small businesses into the federally funded R&D process and foster
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Management of Technology 2006
shown that while the program has succeeded in providing high quality
funded R&D remains small. In 1999, only 17% (3,334 of 19,000) of applicants
received funding.
A survey done in that same year of DoD SBIR found that average quality of
SBIR research was the same as that of other federally funded research. SBIR
and positive” impact on growth of firms. Sales and employment have been
funding versus those that do not. SBIR program also has positive effect on
may not have brought product to the market. Finally, SBIR grants support
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http://www.springerlink.com/content/h81x31q478848657/fulltext.pdf.
their findings in more detail, so this was more of a summation. The focal point
The findings of the four economists reached three primary conclusions; (1)
program evaluation is much more prevalent in the US than in the UK; (2) the
Research (SBIR) program have been successful; (3) shared costs between
government and industry and frequent assessment are the keys to ensuring
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Twentieth Century”,
http://www.econ.iastate.edu/workshops/ispw/SAMPAT-Nov-03.pdf.
The Bayh-Dole Act was first proposed when it became apparent to legislators and
bureaucrats at the federal level of government that the system for determining patent
and licensing rights for inventions derived from publicly funded research was
Critics of the Bayh-Dole Act assert that it is basically a tax on academic innovation,
and it impedes upon the traditional academic tradition of collaboration through open
discoveries from the public sphere until they have filed all necessary paperwork for
licensing, which have only been tracked nationally the early 1990’s, show that each
over the ten-year period from 1991-2000, invention disclosures grew 80% while
licenses executed grew 160%. Patents granted from 1993, the first year such stats
were recorded, grew by 137% in the seven years until the end of the decade. These
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invention disclosure to licenses executed was nearly two to one. This indicates that
entrepreneurial has achieved its goal, but it also suggests that they have been less
Fogarty, Michael S., Amit K. Sinha and Adam B. Jaffe. “ATP and the
GCR 06-895.
http://www.atp.nist.gov/eao/gcr06-895/gcr06-895_report.pdf.
Spillovers
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of the impact of the program on the national economic landscape and the
benefits derived by the taxpayers who are the shareholders in any government
established that the program has been a resounding success, with 9 out of 10
organizations reporting that ATP funding has accelerated their R&D cycle.
the ATP stresses the importance of collaboration and partnership during the
R&D process, 85% of firms that receive ATP funding report establishing
knowledge spillovers, which in turn has a significant impact on the state of the
national economy generally, and thus taxpayers are realizing the benefits of
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(http://www.sba.gov/sbir/indexsbir-sttr.html#sttr)
technological challenges of the 21st century. History has proven that the
often the risks and costs of R&D are beyond the means of these organizations
However, these advancements are often confined to the theoretical, not the
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Management of Technology 2006
and the principal researcher need not be employed by the small business
non-profit research organizations, but they too must be located in the US,
and must fall under one of three definitions established by the USSBA; (1)
their R&D funding for awards to small business and nonprofit research
and Space Agency (NASA), and the National Science Foundation (NSF).
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Management of Technology 2006
$100,000 over one-year which is used to fund the exploration of the scientific,
ending this one-year feasibility study, companies that have shown their
Phase II awards up to $750,000, for as long as two years, to expand upon the
basic research done during Phase I. This is the most R&D intensive phase of
the STTR program and upon its completion the commercial potential of the
firm then enters Phase III, which does not involve any further STTR financing,
but rather demands that the business establish alternative sources of funding
from either the private sector or another federal agency as they bring their
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At What Cost?” Food and Drug Law Journal (2000) 55: 125-148.
http://fdli.org/pubs/Journal%20Online/55_1/art8.pdf.
At the beginning of the 20th century the pharmaceutical industry was in its
nascent stage and new therapeutic treatments for many diseases were
However, by mid-century nearly all chemical discoveries and new drugs were
this time, the federal government let the market forces take control and
refocused its efforts and finances toward basic research and clinical studies.
Early pharmaceutical firms were guided by the supply and demand inherent in
another.
their R&D efforts on producing drugs that were in high demand and provided
little liability risk. However, individuals that were afflicted with a ‘rare’
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ailment were left at the mercy of the ‘invisible hand’ of the market and
because they were viewed as not worth the investment in R&D on the part of
executives more concerned with the bottom line than the bottom feeders.
the marginalization of those who were without option when deciding how to
treat their rare disease. Congress was faced with the challenge of
establishing an incentive package that would provide firms with the motivation
segment of the population small enough that it could be presumed that the
company will not recover the costs incurred during development, clinical
testing, FDA approval process and marketing of the product. Once a drug is
for its development and testing was eligible for the three primary incentives
outlined in The Orphan Drug Act of 1983; (1) federal funding of grants and
contracts for clinical trials or orphan products; (2) tax credit of fifty percent of
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clinical testing costs; (3) grant of an exclusive right to market the orphan drug
It became immediately apparent that the burden placed upon firms to prove
that a drug was a drag on their value and ultimately a money pit was
benefits of the Act from reaching the patients it was designed to help. The
corporations that there was adequate consideration given to the risk they
take on when undertaking the development of an orphan drug, and in the next
two decades more than 100 new products have been developed and granted
FDA approval under the Orphan Drug Act, and they have been used to treat
and cystic fibrosis. Given the costs associated with the typical
mind-to-market pipeline through which all drugs labor for years, incurring
costs upon the firm with no guarantee of returning a profit, it can be virtually
assured that few, if any of these treatments would have ever been explored
without the incentives of the Act. Only three out of ten FDA approved
drugs recover their R&D costs, and it is the returns from this thirty-percent
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Despite the obvious benefits derived from this innovative policy, there are
still many concerns with the ambiguity of the current statute that counteract
the incentives and serve as a disincentive to firms that not among the giant
MNCs like Pfizer, Baxter or Abbott. First, orphan drugs are not patentable,
monopoly on all marketing of the orphan drug for seven years from the day of
its final FDA approval, other firms can simply bring the same drug to market
declared that the burden of proving ‘clinical superiority’ lie with the second
http://www.lib.depaul.edu/CheckURL.asp?address=http://search.ebscohos
t.com/login.aspx?direct=true&db=bsh&AN=9140957&site=ehost-live&scope
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=site.
fast-growing company but looking for other avenues in which they can pursue
these public institutions, and they have fundamentally different aims from
start-ups, and it is based upon the findings of four separate case studies which
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Management of Technology 2006
were part of a larger study of thirty firms Meyer conducted a few years prior,
three based in the US and one in Europe. All four companies chosen were
analyzing the success of these four firms, specifically (1) the companies ability
to attract partners and external talent, (2) whether or not it reached IPO, (3)
staff and turnover, (4) the background of board and supervisory board
members, (5) background of the founders, and (6) on what level the company
has maintained its ties to the university from which it was spun-off.
Knowledge Spill-Overs."
http://www.cs.jhu.edu/~mfeldman/GOVERNMENT3.pdf.
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Management of Technology 2006
author estimates the extent to which projects that received funding exhibited
with increasing the social benefit of an R&D project; (2) we use these
applied for, but were not awarded subsidies; (3) follow-up with firms one year
after the award decision and estimate the effect of government funding on the
subsidies were more likely to have attributes that provide greater pathways
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http://www.springerlink.com/content/v630751506n408j1/.
This essay summarizes the impact of Public Law 104-113, which was signed
transfer process. It focuses its analysis on the how this new legislation affects
formed in 1974 to promote rapid movement of federal R&D into the private
sector, and the improvements made in licensing practices which provide for
more direct benefits for American citizens from patents filed by researchers in
federal labs. The authors stress the importance of these new measures in
technology.
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the true value of patenting inventions, opting instead to publish their findings,
which immediately renders any potential return on investment for the federal
their ability to get beyond the difficulties of blindly interpreting the intentions
technology.
http://www.parcogeneticasalute.it/risorse/biotech/Cluster%20high%20tech%
20-%20PMI%20e%20innovazione/cooke%202001d.pdf.
Geography
idea and content of regional innovation systems. The first section of the
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the first scholar to use the term regional innovation system to describe the
US Business Incubators
early stage development for start-up companies, and a little more than a third
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affiliated with universities and another 25% are associated with government
Incubators are among the most efficient job creating organizations in the
US. For every fifty jobs created within an incubator, it is estimated that
an incubator firm is also far more stable than other businesses because 87% of
all incubator tenets graduate and are still in business. Government subsidies
http://tiger.gatech.edu/files/05aRP.pdf.
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Management of Technology 2006
how do knowledge flows from universities to incubator firms and (2) how do
the first part of the question, they identify and analyze the effects of different
university license can endow the start-up with a unique resource; and (2)
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Management of Technology 2006
over a 6-year time span, utilizing four different performance measures: total
from the incubator. Backward patent citations are cited as the best measure
which many university incubator firms encounter when they have a weak
absorptive capacity.
http://inderscience.metapress.com/index/165PYPYF3QFXHFM2.pdf.
This essay profiles the 25 year history of US incubators and provides a case
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University of Texas and whose companies have generated over $1.3 billion in
revenue and created more than 3,000 jobs since its inception in 1989. The
authors conclude that business incubators must accomplish five tasks well in
order to succeed; (1) establish clear metrics for success; (2) provide
(5) ensure that member companies gain access to necessary human and
Wiggins and Gibson credit three driving forces for the early evolution of
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the 16 years following its creation, membership in the NBIA has surged from
It has been estimated that between 75-90% of all incubators are non-profit
estimated that a new for-profit incubator was created every other day, most
of which have or are expected to fail. Regardless, the net gain in for-profit
determinant of incubator success that has emerged from the incubation mania
and which is reflected in the success-rates of these new entities has been the
Research Parks
Link, Albert N. and John T. Scott. "US University Research Parks." J Prod
http://www.springerlink.com/index/06502G6664W34167.pdf.
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develop knowledge more effectively given the association with the tenants in
development.
The authors conclude that there are currently 81 research parks in the US
that fall under the parameters they laid out in their definition, with a further
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further the parks that are managed by university staff, and conclude that such
an operating structure impedes upon park growth, which they measure using a
herein. Professors Link and Scott further delineate between research focus,
whether they are associated with a state or private university, which they see
as having direct bearing on the efficiency and accountability of the park. Their
conclusion is that the growth rate of URPs does vary by park and technology
geared toward bioscience. Additionally, they find that parks with an on-sight
Academic Entrepreneurs
http://web.mit.edu/fmurray/www/papers/Murray.2004Res.Pol.Academic.In
ventors.pdf.
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Murray’s research is focused on the biotech industry, and she could be a very
embed the firm in the scientific community. Second, Murray argues that an
academic inventor’s career plays a critical role in shaping his social capital,
thus scientific careers mediate the networks and potential for embeddedness
of their overall social capital, and it is from both of these sources that a firm
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http://www.nature.com/nbt/journal/v22/n1/pdf/nbt0104-21.pdf.
In this brief essay the links between US research universities and the
biotech industry are profiled. It emphasizes the transition from basic research
a possible outlet for otherwise exclusively borne R&D costs in drug discovery.
http://inderscience.metapress.com/index/165PYPYF3QFXHFM2.pdf.
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streams: (1) human relations and interactions during the spin-off formation
http://www.rhsmith.umd.edu/hcit/pdfs_docs/tlo0701.pdf
explanations are based upon (1) the availability of venture capital in the
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the date this paper was written, 70% of the 2578 TLO start-ups established
since 1980 were still in operation, and research done at MIT indicates that
across universities.
The data sample from which the authors reach their conclusions included a
from 457 individual university-years. The sample included 89 of the 100 top
start-ups generated were not available, the sample appears to represent the
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programs. Finally, patent data was found by searching the US Patent and
Lach, Saul and Mark Schankerman. “The Impact of Royalty Sharing Incentives on
http://economics.huji.ac.il/facultye/saul/Lach-Schankerman_NEW%20VERS
ION.pdf.
In this research paper the authors try to measure empirical data to determine what, if
any, effect royalty sharing policies in university technology licensing offices (TLOs)
technology-licensing activity has grown dramatically in the past two decades. The
number of licensed inventions tripled over the course of the 1990’s, and license
revenues increased from $186 million to about $1.3 billion. At the heart of
understanding what has given rise to this increase in licensing activity. Is it simply
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In the US intellectual property policies always grant universities first refusal rights
over inventions produced by their researchers, however any cash flow is shared with
inventors according to university specific policies. The authors show that there is
substantial variation in royalty sharing policy across universities, and they use this
license income.
allocate effort to start new research projects and improve the quality of each project.
Scientists value both royalty income and publications. They make two predictions
based upon these assumptions; (1) the greater the share of royalties universities allot
for scientists, the greater the effort of research scientists to innovate and thus the
greater the total income of licensing activity, and (2) variations in royalty incentives
There are three key empirical findings reached. First, royalty shares affect the level
shares appear to work both through the effort and sorting channels. Third, the
than in public ones. Regarding the differences in the results viewed between private
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and public universities, it is found that in almost all private universities, and about half
of public universities, the incentive effect is great enough to produce a Laffer effect,
where raising the share of inventors increases the total income retained by the
university. It is also found that TLOs in private universities are more productive,
licensing offices: what technology transfer in the United States can tell us”.
http://digitalcommons.libraries.columbia.edu/japan_wps/3
industrial “customer” (IBM) and from the perspective of his own consulting
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the United States, Japan and the European Union. One theme Myers is
filing for a patent in the US if there is any anticipation that the invention has
patents applied for and received. Professor Myers also emphasizes the
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Miscellaneous
http://www.springerlink.com/index/P674570227VG1403.pdf.
and the “spillover” effect of these three factors on the state GSP. Authors
industries.
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(which assume great risk to turn knowledge into commercial products) are
smaller complements of a much larger process. The role of the university lies
process.”
http://www.hhh.umn.edu/centers/slp/clusters_entrepreneurship/audretsch_
entrepreneurship_policy.pdf.
Enterprises
contingent upon the greater understanding of the nature of the global, and
occasional local economy. The stated purpose of the essay is to explain why
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and how a new type of public policy has emerged- the strategic management
of places- and the central role that entrepreneurship plays in this new policy.
Audretsch holds his own research to be the most compelling and prevalent
profitable economic opportunities but are also willing to take risks to see if
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Management of Technology 2006
at the local and regional levels can impact those markets, but its potential
organizational forms, all the way up to global, carries the greatest potential
that they viewed small and medium sized enterprise (SME) policy. In fact,
the only true difference between the two issues in the eyes of governments
around the world is that SMEs have specific agencies or committees tasked
policy over time must be set within the framework of how SMEs were
Following WWII, it was the prevailing opinion of economists that the most
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Management of Technology 2006
important factor in national economic success and growth was the large
corporation, and it was believed for a time that SMEs were a dying breed. It
was this assumption that led European policymakers to determine that the
best way for them to narrow the gap in competitiveness that had emerged with
compete with these superior MNCs in America. This led them to focus their
Europe and the strategic manipulation of firm location to best take advantage
of resources.
What had appeared to be the slow death of SMEs suddenly reversed itself
starting in the 1970’s. Audretsch hypothesizes that the impetus for this
sudden reversal of fortune for SMEs was the result of increased globalization,
which would have predicted that increased globalization would present a more
insure that foreign investment would be mainly an activity of large firms. The
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Management of Technology 2006
economy.
behind differentiating between the two is that the primary aim of technology
between the effects of public versus private sources of financing and evaluates
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employment outside the R&D domain, no evidence suggests that this is the
case. Nor is there any evidence that there is any impact on firm employment
The results have several important policy implications. First, they do not
support the view that the only effect of public R&D financing is to raise the
wages of researchers, but rather that public R&D funding does have a positive
that public R&D funding increases the labor demand of employment other
than in R&D, at least in the short term. This is important because rather
than increased innovation, the ultimate goals of economic policy are more in
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Statistics 2006,
http://www.nsf.gov/statistics/seind06/append/c5/at05-02.xls.
45,000
40,000
35,000
10,000
5,000
0
72
74
76
78
80
82
84
86
88
90
92
94
96
98
00
02
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
Years
599