Professional Documents
Culture Documents
SPIN-OFFS
Mario Benassi
Mario.Benassi@Unimi.it
Matteo Landoni
matteo.landoni@unicatt.it
Francesco Rentocchini
francesco.rentocchini@unimi.it
&
f.rentocchini@soton.ac.uk
Abstract
Building upon the recent literature on the empirical economics of management, we posit that
entrepreneurship affect how well spin-offs get created, supported and evaluated and,
790 Italian University spin-offs founded by 42 different Italian Universities and observed
over the period 2006-2014. Our results suggest that management practices contribute to
explain the growth of academic spin-offs and that this effect varies across management
practices (e.g. support operations management vs target management) and spin-offs’ growth
patterns (e.g. high-growth vs low-growth spin-offs). Drawing on these results, the adoption of
serve different purposes. Their appropriateness can vary and, not surprisingly, some
management practices seem to be more effective than others in driving spin-offs’ growth.
processes
2
1. Introduction
and technological research of Universities (Shane, 2004) – have recently gained increasing
attention from scholars (Rasmussen, Moosey and Wright, 2011). Academic spin-offs are
intriguing, as they have a double facet. On the one hand, they originate from organisations
whose primary goals are far from profit-oriented activities (Merton, 1973; Dasgupta and
David, 1994). On the other hand, academic spin-offs seem an appropriate vehicle to extract
value from scientific research in line with the recent interest on the third mission of
Until now, research on academic spin-offs has overwhelmingly focused on two main areas. A
first stream of the literature has focused on the antecedents of academic entrepreneurship,
trying to address the main drivers leading to the creation of academic spin-offs at different
levels of analysis (e.g. firm, TTO). Along this line of reasoning, scholars have investigated
the role of Universities and local context in supporting the creation of academic spin-offs
(Fini et al., 2011); the mechanisms supporting the creation of new companies at University
level (Nosella and Grimaldi, 2009) and the specific features that make Universities and
researchers more active in promoting spin-offs (Landry, Amara and Rherrad, 2006; Bigliardi,
Galati and Verbano, 2013). A second stream of research has concentrated on the outcome of
Notably, scholars have analysed the effect of academic affiliation on Initial Public Offering
(IPO) valuation (Bonardo, Paleari and Vismara, 2010); the conditions leading to the survival
of academic patent-backed companies (Nerkar and Shane, 2003); the antecedents of the
number of spin-offs founded by Universities (Di Gregorio and Shane, 2003) and the drivers
3
Although these two streams of research have advanced greatly our understanding of the
academic spin-off phenomenon, they both fall short in controlling for the internal processes
by which Universities create, support and evaluate academic spin-offs since their inception.
With the exception of some illustrative case-studies (Lechner and Delanoë-Gueguen, 2014),
these internal processes have been mainly treated as a ‘black box’ by the current literature. A
possible explanation for this inaccuracy refers to the lack of autonomy and competition of
especially in Europe - Universities must comply with a knitted web of laws and guidelines,
regulating several aspects of academic life (for example on Italy, Muscio et al. 2015).
However, when it comes to spin-offs, some degree of autonomy exists: each University is
solely responsible for deciding whether or not to spin-off and which criteria to adopt (Lach
and Schankerman, 2008; Rasmussen and Borch, 2010). Universities may exhibit marked
differences in their attitude towards spin-offs (Benassi, 2014). Some Universities can have a
credible commitment towards spin-offs’ creation, while others can have only a ceremonial
engagement due to external pressure. Similarly, some Universities can set up specific
structures to serve spin-offs, while others can re-use existing departments/offices to assist
them. Finally, some Universities can internally adopt new rules that make the creation of
spin-offs more efficient, whilst others can stick to existing routines and regulations.
observe that Universities’ spin-offs are functional to the extraction of value from research.
However, to accomplish this task, academic spin-offs must face the liability of newness issue
contrary, were set, designed and equipped to produce basic research and to foster education,
two missions quite apart from the Third Mission. Accomplishing both tasks (research and
teaching on the one side and third mission on the other) is not simple, as it requires adopting
4
internal procedures and practices, which call for different, and often conflicting,
requirements. For example, decisions in education should follow a specific, often highly
regulated path, whereas in business timely and fast decisions are often needed.
We posit that internal procedures and practices can make a difference for academic spin-offs.
Specifically, we explore the role of management practices for the growth of academic
spinoffs. Management practices can be conceived as routines, rules and processes which
relate to the deep-seated structure of organisations (Bloom et al., 2014). The nature and
impact of management practices has been at the centre of the recent literature on the
empirical economics of management (Bloom et al., 2014). For example, Bloom et al. (2012)
show how management practices contribute to explain the variation of productivity across
countries and firms. Management practices have also been shown to improve the
Evidently, universities can vary in the adoption of management practices functional to the
creation and growth of academic spin-offs. Not only, we also posit that different forms of
we expect management practices to affect how well spin-offs get created, supported and
To investigate this, we rely on a longitudinal dataset comprising 790 Italian University spin-
off companies observed over the period 2006-2014. The data come from a combination of
three distinct data sources: a survey on a sample of 42 Italian Public Universities which
University spin-offs comprising information about more than 1200 academic spin-offs based
5
in Italy, and balance sheet data from the Bureau van Dijk AIDA database over the period
2006-2014.
Our results show that management practices contribute to explain the performance of
academic spin-offs and that this effect varies across management practices (e.g. support
operations management vs target management) and spin-offs’ growth patterns (e.g. high-
growth vs low-growth spin-offs), even after controlling for a rich set of firm- and university-
level characteristics. Notably, while ‘lean’ operations for the support of academic spin-offs
and incentives management are positively related to spin-off performance, target and
considered as they seem to serve different purposes. Their appropriateness can vary and, not
surprisingly, some management practices seem to be more effective than others in driving
spin-offs’ growth.
Our study contributes to the recent debate in the academic entrepreneurship literature by
academic spin-offs. In its current form, this paper provides a bridge between the two streams
functional to the third mission of universities provides important insight on policy and
systems of incentives to spur the ‘third mission’ of universities and the role of education
6
The remaining of this article is organized as follows. Section 2 offers a review of most recent
research on academic spin-offs and management practices and put forward our key research
questions. Section 3 presents data and methodology, Section 4 introduces and discusses the
In the age of the entrepreneurial society (Audretsch, 2014), Universities – besides the primary
goal of producing and disseminating new knowledge – are focusing on the so-called third
mission. Third mission activities in Universities stimulate and direct the application and
exploitation of knowledge to the benefit of the social, cultural and economic development of
the society. Third mission aims at extracting value from knowledge Universities produce and
requires them to adopt an entrepreneurial model (Etzkowitz and Leydesdorff, 1997, 2000;
Scholars have been debating in depth whether Universities can play an entrepreneurial role.
Not surprisingly, opinions differ. Several scholars suggest Universities are a perfect setting
academic spin-offs occurrence varies significantly among universities (Di Gregorio and
Shane, 2003). Universities produce innovative knowledge bases for new processes and new
be leveraged from an economic perspective. According to this view, Universities should add
business expertise to fully exploit their scientific breakthroughs. Academic spin-offs are a
7
possible vehicle to extract value from innovative knowledge Universities produce, alongside
with patents’ licensing and reassignment (Di Gregorio and Shane, 2003). The academic
technology transfer practices, contractual arrangements and other issues (Clarysse et al.,
2005). Besides offering the knowledge basis for a new company, Universities can support
spin-offs in various ways. They can provide supporting institutions such as technology-
transfer offices (TTO) (Grimaldi et al., 2011), offer favourable contractual agreements
(Clarysse et al., 2005), and channel financial resources to the entrepreneurs, for example by
Other scholars point out that institutional rules and cultural barriers can make
2008; Chiesa and Piccaluga, 2000; Kenney and Goe, 2004; Markman et al., 2004; Slaughter
and Rhoades, 2004; Siegel et al., 2003). Universities are a source of constraint for spin-offs:
their policies and their general institutional setting can seriously limit entrepreneurial
autonomy and negatively affect spin-offs’ decision-making. Furthermore, norms and believes
shared among faculties might significantly limit the entrepreneurial behaviour (Louis et al.,
1989). These limits make some scholars sceptical of Universities’ contribution in fostering
The debate between supporters and opponents of the entrepreneurial role of Universities
parallels the emergence and the increased diffusion of academic spin-offs (Perkmann et al.,
2013). For example, in US only 35 academic spin-offs started in 1980; in 2003 the number
rose more than ten times, peaking 462 spin-offs. Altogether, between 1980 and 2003 4,543
new academic spin-offs started in US (AUTM, 2005; Siegel and Wright, 2015). Europe
8
(1984-2005), 320 in Belgium (1980-2003), and 300 in the Netherlands (1980-1999) (Wright,
2007).
al., 2007; Djokovic and Souitaris, 2008), it has been growing in dispersed directions (Gilsing
et al., 2010, 12), and has not produced a convergent conceptual definition so far (Bathelt et
al., 2010). Most scholars agree that an academic spin-off is a new company founded to
or application. This new knowledge might take the form of intellectual property - typically
patents - thus requiring a specific contractual agreement for the spin-off (Shane, 2004; Wright
an academic spin-off, but scholars disagree about a more precise and operational definition of
IP for initiation, but this is not always the case (Wright, 2007). Same disagreement exists for
the equity stake directly owned by Universities. Depending on the institutional context,
In this paper we follow Nicolaou and Birley (2003) definition: an academic spin-off involves
the transfer of knowledge from an academic institution, where either one of the founders is
affiliated with the university or the University itself holds a share in the company. We adopt
this last definition in accordance with the report of Netval, the Italian association for the
role of Universities agree that assessing the effectiveness of the third mission is crucial.
Curiously enough, so far the research on spin-offs is split between two separate streams. The
first stream focuses on the antecedents. Antecedents are factors and conditions that affect
9
spin-offs’ creation and pertain to different levels of investigation (Di Gregorio and Shane,
2003). At micro level scholars have investigated individual attributes affecting spinoffs
formation. For instance, Landry et al. (2006) found that the likelihood of launching university
spin-offs increases as the researchers have knowledge assets in the fields of computer
sciences and engineering rather than in the other natural sciences, have knowledge expertise
in consulting, have higher social capital assets, have access to the resources of large research
universities, have access to the resources of large laboratories, and have many years of
experience in research. Grandi and Grimaldi (2003) explored the relational setting of the
founding teams associated with success. They found that the articulation of roles of the spin-
off positively affects the intention to set up relations with external agents. Relations and
frequency of interaction with external agents positively affect spin-offs’ success. At macro
level scholars explored the impact of policy changes on academic spin-offs creation (Mowery
and Sampat, 2005; Damsgaard and Thursby, 2013). Fini et al. (2011) examined the role of
universities and local context in supporting the creation of academic spin-offs. They found
that universities’ support mechanisms have a significant impact on universities’ rates of spin-
offs creation productivity. Conversely, their results show that the local context influences
spin-off creation and productivity, but curiously, government R&D expenses do not have a
complementary of supporting mechanism at university and local level to foster the creation of
academic spin-offs.
A second stream of research focuses on outcome. The general idea here is assessing how well
Universities are doing the entrepreneurial role as part of the third mission. Assessing the
entrepreneurial role of universities is not an easy task for at least two reasons. First,
and indirectly. Universities can indirectly support entrepreneurship in different ways. For
10
example, they can foster an entrepreneurial attitude among students and researchers; they can
promote contacts and favour relationships with external companies; they can provide
reputational support to the founding team, and the like. Second, assessing the performance of
framework. Such framework should set main cause-effect chains in order to factor
large; can have little or abundant resources; can be specialized or not specialized; can be
Scholars equalize the entrepreneurial role of Universities and the performance of academic
spin-offs. Performance is measured before and after spin-offs went out of the universities’
door. Sheer number of spin-offs a University produces is the first, most popular measure
(O’Shea et al., 2005). The underlying idea is that “the more spin-offs, the better”. The
underlying assumption is that a high number of spin-offs offer more chances against
environmental selection. However, according to the sceptics, “the more spin-offs the better“
approach paves the way to fragile, ultra-small, low value and not scalable new ventures. The
number of spin-offs says nothing about their ‘quality’ and can produce controversial effects.
Universities might support spinoffs that should not be, from a business perspective,
supported. Survival rate of spin-offs is the second measure. Here the idea is that market
or being selected out after some years is a positive sign. Staying in business might say little
about performances, however. Scholars report that several academic spin-offs simply survive.
According to Lerner (2005), the net number of spin-offs is small and their size, growth rates,
revenues, and product generation are modest, at least in the first decade of their existence. On
the other hand, Vincett (2010) shows that academic spin-offs have a positive economic
impact. Estimating the lifetime impacts of companies spun-off to directly exploit university
11
created IP and comparing the impacts with all government funding, direct and indirect he
found that spin-offs’ incremental contributions to GDP is much larger than the government
funding.
At a business level, other typical measures can be used to assess academic spin-offs’
measure of productivity, three years return on assets as a measure of profitability and the
annual rate of revenue growth. To measure the performance of Oxford University, Oxford
Brookes University and the government laboratories’ spin-off companies, Lawton Smith and
Ho (2006) used employment, turnover, market capitalisation and patent and licencing activity
as main variables. Also Wennberg et al. (2011) focussed on employment and sale growth to
Besides these common economic indicators, Czarnitzki et al. (2014) argued for a socially
valuable outcome, or ‘performance premium’ indicator, i.e. the creation of new jobs.
Measures and metrics examine academic spin-offs from different perspectives and offer
useful insights about their performances. For example, they make a comparison of academic
and corporate spin-offs possible (Wennberg, Wiklund and Wright, 2011). They also allow for
Measures and metrics of academic spin-offs have a dark side, however, for two reasons. First,
using the performance of academic spin-offs after they went out of the door as a proxy
academic spin-offs can depend about variables over which universities have a modest – if
null -- control. Second, and more relevant for our argument, measures and metrics developed
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2.2 Management practices and Universities’ internal processes
In this paper, we explore the relationship between management practices and the performance
of academic spin-offs. We argue that managerial practices shed light on how internal
The literature on management practices is gaining momentum in recent years (Bloom et al.,
2012, 2014, 2017). This stream of research investigates and explains differences in
management practices across organizations and countries in different sectors (Bloom et al.,
2016). The authors show how practices put in place by managers contribute to explain a large
be conceived as routines, rules and processes which relate to the deep-seated structure of
organisations and that become rooted into the organisational structure and culture (Bloom et
al., 2014). 1 The former literature has grouped management practices into three broad areas:
monitoring (how well organisations monitor what goes on inside and use this for continuous
improvement), targets (whether organisations set the right targets, track the right outcomes,
and take appropriate action if the two are inconsistent) and incentives (how well
organisations promote and reward employees based on performance, and try to hire and keep
their best employees) (Bloom and van Reenen, 2006). Management practices have been
found to explain variation among organisations’ performance. Bloom and Van Reenen (2010)
found that management practices are associated with firms’ performance in terms of
productivity, sales and growth rate. Similarly, Bloom (2010) concluded that firms with better
well-managed organization is defined as one that continuously monitors and tries to improve
1
According to this definition, management practices should not be confused with managerial capital which
refers mainly to the talent and skills of individuals (such as a manager) and it comes as the aggregation of
individual contributions but lacks an organisational dimension (Bertrand and Schoar, 2003).
13
its processes, sets comprehensive and stretching targets, and promotes high-performing
employees.
Management practices are useful also for explaining variations among different kinds of
organizations, be private or public such as hospitals and schools (Bloom et al., 2010 and
Propper, and Smith (2014) explored management practices in British universities. They found
that better management practices are associated with better performance for both research and
teaching assessments.
Building upon the former literature, we contend that actions to foster the internal process of
spin-offs creation and support can be represented in terms of management practices adopted
Universities are public and get financial support from the States. Although Universities must
comply with rules and regulations, they enjoy some degrees of freedom. They can and do
make decisions on several issues. For example, Universities can decide to launch new
initiatives (e.g. new courses), allocate financial resources to internal units in different ways
(e.g. give more to department A than B), hire specific human resources (e.g. secretaries or
professors), and so on. Universities can set specific structures and organize their internal
processes in different ways. They can set informal committees to discuss internal problems,
assign specific responsibilities to internal units and new roles to their members and the like.
Decisions about specialization of structures and coordination modes affect kind and quality of
create and sustain spin-offs (Ambos et al., 2008; Rasmussen et al., 2011). To fill this gap
Universities are setting up specific structures — like technology transfer offices and
14
incubators — and adopting new organizational practices to facilitate academic
entrepreneurship (Hisrich et al., 1988; Mian, 1997; Siegel et al., 2003; Wright et al, 2007).
Universities are clearly not all alike when it comes to internal processes. Our assumption is
that internal processes, in the form of management practices, have a significant impact on the
Existing studies on how different internal processes affect spin-offs suffer from two main
limitations. First and foremost, the role and impact of internal processes is normally left in
the background. For example, O’Shea et al. (2005) argued that knowledge accumulation
ability to produce university spin-off companies. They hypothesized that Universities with a
generators of spin-off activity. In a similar way, Pazos and colleagues (2012) show that the
tradition of the university’s spin-offs activity and the existence of incubation services
positively influence spin-offs. Vinig and Van Rijsbergen (2012) found that the stock of
positive impact of on the number of spin-offs. Second, when internal processes are taken into
creation – that is to antecedents (see Lockett et al, 2003, on university spin-offs in the UK;
We argue that the universities’ internal processes are crucial to spin-off performance.
Universities can introduce entrepreneurship courses, which are likely to stimulate students’
entrepreneurial attitudes (Åstebro, Bazzazian and Braguinsky, 2012), Universities can set up
and manage TTO and incubators, which can offer specific services to prospect entrepreneurs.
Universities can also adopt special compensation systems for staff and faculties’ member, to
15
make their involvement in spin-offs possible. Internal processes do also have an impact on
spin-offs performance over time. Internal processes may select out fragile initiatives, and
provide most promising initiatives services like coaching, proof of concept definition, support
in the patenting process, and fund-raising. Internal processes can affect spin-offs even after
they were launched. Universities can set challenging targets for spin-offs in terms of growth,
value extraction, scientific and technological excellence. Universities can monitor spin-offs
results over time, set incentives and take proper actions if needed. Accordingly, specific
actions to foster the internal process of spin-offs can be represented in terms of management
In this paper, we explore the relationship between management practices and the performance
of academic spin-offs. On one hand, there are reasons to believe management practices do
have a positive impact: a rigorous selection process, a correct monitoring and reward system
should in principle produce better outcome. On the other hand, impact of management
Either way, controlling for the impact of management practices on academic spin-offs is a
The empirical analysis is based on a longitudinal dataset comprising 790 Italian University
spin-off companies observed over the period 2006-2014. It combines data from three main
sources.
16
Our starting point is the list of Italian University spin-offs provided by Spinoff Italia
academic spin-offs based in Italy. 2 Spinoff Italia reports the following information for these
We match this information with balance sheet data from the Bureau van Dijk AIDA database
over the period 2006-2014. 3 In this way, we are able to retrieve information on the companies
on a yearly basis. Notably, we collect information on turnover, capital stock (tangible and
intangible), industrial sector (2-digit NACE rev.2 industrial classification) and geographical
process inside Italian Universities (mostly the head of the technology transfer office and/or
their designate). The population of reference consists of 64 Public Universities who were
invited to participate to a telephone interview. The survey was conducted between July 2015
and March 2016. We obtained 42 valid responses, totalling a 65.6% response rate.5 These
2
Building upon the definition provided by NETVAL (Muscio et al., 2016) and adopted by the Italian National
Agency for the Evaluation of the University (ANVUR), Spinoff Italia defines a company an academic spin-off if
it satisfies one of the following conditions: (i) Italian University holds a share of the company; (ii) At least one
member of the founding team is a tenured member of staff of a University.
3
We were not able to match information from Spinoff Italia and AIDA for 146 companies for two main reasons:
(i) we lacked information on a unique company identifier from Spinoff Italia or (ii) the unique identifier was not
found in AIDA.
4
We also retrieve information on foundation year and year of exit to cross-check and complement information
from Spinoff Italia. As information on foundation year differs considerably between the two databases (Spinoff
Italia and AIDA) for the period preceding 2000, we decided to keep only spin-offs created after 2000 where the
concordance between the two databases is nearly perfect. This amounted to drop 35 firms from our sample.
5
We did not obtain responses for 22 Universities which generated 255 spinoffs over the period under
consideration. For this reason, we were forced to drop information for these companies.
17
size (t=1.19, p-value=0.24), patenting activity (t=1.203, p-value=0.23), research funding
Since we combine three different data sources, potential problems of common method bias
(CMV) are largely controlled for (Podsakoff et al., 2003). As a further check on the presence
of a common method bias, we applied Harman’s one-factor test. We loaded all items that
have been measured adopting a Likert scales into a factor analysis without rotation. Results
show that the first and most important factor explains 14.48% of the total variance, lower
than the threshold of 50% (Podsakoff et al., 2003), which points to the absence of any
common method bias. To minimize the possibility of social desirability bias (SDB)
(Moorman and Podsakoff, 1992), respondents were guaranteed anonymity. In addition, our
think it is unlikely therefore that we have biases in responses to the questionnaire, and
particularly to the questions on the management practices relating to spin-off activity, which
Our final sample comprises full information for the variables of interest for 790 companies.
Our resulting dataset is thus an unbalanced panel of 790 academic spin-offs affiliated with 42
different Italian Universities and observed over the period 2006-2014. Table A1 in Appendix
A shows the full list of 42 Universities with information about their spin-off generating
activity, i.e. number of spin-offs generated, average turnover growth of spin-offs and average
age. The table shows that over the period 2006-2014 Universities in our sample created, on
average, 19 spin-offs. Spin-offs are on average four years old and have experienced a
6
Data on the number of patents, the amount of research funding and contract research comes from the Italian
National Research Assessment (VQR 2004-2010) and refers to the period 2004-2010. Information on the size of
Universities comes from the Ministry of Education, Universities and Research (MIUR) and refers to period
2006-2014.
18
[Table A1 ABOUT HERE]
firm growth. We measure company growth using data on the turnover retrieved from the
Bureau van Dijk AIDA database. Specifically, our dependent variable is the turnover growth
rate and has been calculated as the difference between the logarithm of real turnover in year t
and the logarithm of real turnover in year t-1. 7 We are aware that firm growth can be
information about the number of employees is under-reported in our data, so we prefer to use
turnover growth which has the advantage of maximising the number of non-missing
information.
Building upon the approach adopted in several empirical works, which focused on the
determinants of firm growth, we employ a quantile regression approach (Coad and Rao,
2008; Goedhuys and Sleuwaegen, 2010; Kesidou and Demirel, 2012). When investigating
firms’ growth quantile analysis is preferred over standard least squares for a number of
reasons (Buchinsky, 1998). First, the quantile approach provides a more robust and efficient
alternative to OLS when the error term is non-normal, as well as in the presence of outliers.
considerably heavy-tailed (Bottazzi and Secchi, 2003). The quantile approach allows for
7
To obtain real turnover, gross turnover has been deflated by adopting the ratio of current prices to chained-
linked prices (reference year 2010) at the higher level of disaggregation, as provided by the Italian National
Institute of Statistics (ISTAT) at the NACE rev. 2 2-digit industrial level.
19
richer characterisation of the data, as it estimates the effects of the different explanatory
variables at the different quantiles of the growth distribution rather than at the conditional
mean only. Since different types of management practices might have different effects on
firms vs low-growth firms), the quantile approach can serve the purpose to uncover these
effects.
As our data have a hierarchical structure – our key explanatory variables are measured at the
university level while the dependent variable is measured at the firm level – standard errors
are likely to be clustered and this would lead to a loss of efficiency in the estimates. In an
compute robust clustered standard errors at the University level following a recent
development in the applied econometrics literature (Parente and Santos Silva, 2016).
As for our key explanatory variables, we are interested in testing the relationship between
management practices which support academic entrepreneurship and the growth of academic
methodology that has been used in manufacturing (Bloom and Van Reenen, 2007; Bloom et
al., 2012), health care (Bloom et al., 2015a), schools (Bloom et al., 2015b), and higher
McCormack et al. (2014) in their analysis of the effect of management practices on teaching
20
Our first category relates to operations aimed at supporting the creation and development of
spin-offs. The respondents to our questionnaire were asked to rate the importance of different
practices supporting the creation and development of academic spin-offs in the period 2006-
2014. The respondents were asked to rank the importance of the items on a five-point Likert
scale, ranging from ‘not important’ to ‘highly important’. The different practices were: (1)
coaching; (2) mentoring; (3) awards and internal competition; (4) training support; (5)
support in the development of a proof-of-concept; (5) support for patenting activity and (6)
help with fund raising activity. We run factor analysis on the six different items to synthesize
the information in common factors underlying ‘lean’ management practices. The three
resulting predicted factors are used as our first set of explanatory variables in the econometric
model. Previous literature assists in the interpretation of these three constructs (Bloom et al.,
2014). The first factor contains a range of items that involve support operations relating to
training, such as counselling activity for the academic spin-off founding team, but also
specific on-the-job training activities. Accordingly, this factor is labelled Support Operations
Training. The second group, Support Operations Patent, includes two items that relate to the
patenting activities which are conducive to the creation and development of the spin-offs:
support in the proof of concept and assistance in the process of filing. The third group
comprises a single item which refers to fund raising activity. The corresponding variable is
targets/objectives for the spin-off firms. We use information about the management of
from responses to the following question contained in the survey: “How would you rate the
level of importance for the following goals for the spinoffs your organization has contributed
to create?” Respondents were asked to provide a score between one and five, with a higher
21
score indicating a better performance. Four items were present: (i) growth; (ii) scientific
excellence; (iii) employment creation, and (iv) technological excellence. Similarly to our first
set of explanatory variables, we run factor analysis to reduce the information in common
factors underlying target management practices. The two resulting predicted factors are again
two factors. The first one is mainly related to growth targets - item (i) and (iii) above - and is
labelled Target Growth. The second group includes items (ii) and (iv) above and relates to
Our third key variable relates to the monitoring activities in place to track the performance of
the academic spin-offs. Respondents were asked whether the performance of the spin-offs
was regularly tracked and whether this was done using specific measures (e.g. balance sheet
information, reports from the spin-off management team, etc.). Monitoring Management is a
dummy variable which takes value one if the respondents answered positively to both
following question contained in the survey: “Do you have a reward system (e.g. rewarding or
targets/objectives set out for the spin-offs?”. Incentives Management takes the value one if
the organisation has a reward system for personnel, and zero otherwise.
8
We run a number of robustness checks to evaluate the robustness of results from factor analyses for the first
two sets of explanatory variables (support operations and target management). First, we adopted different
methods of factor extraction – principal components, iterated principal factors and maximum likelihood – which
yield consistent results. We further test the robustness of the factor analyses by running them with a polychoric
correlation matrix, which has been shown to be more appropriate with ordinal variables (Flora and Curran,
2004). Finally, we included in the regressions the average value of the items entering each factor instead of the
predicted factor. The results are robust to all these specifications and are available from the authors upon
request.
22
Finally, we measure talent management with the ability of the TTO/Incubator to attract
human capital from outside. As the creation and development of academic spin-offs is likely
dimensions, we expect the ability of the TTO to attract employees with business experience
to be a good proxy for professional management within the academic spin-off generating
process. Professional Management is thus computed as the share of TTO employees with at
3.4 Controls
To account for other firm- and university-level attributes that might be associated with the
First, we control for a set of variables that are often included in growth rate regression
models: the stock of investment in tangible (Tangible Capital Stock) and intangible
(Intangible Capital Stock) assets. Investments are recognised as important explanatory factors
when explaining firms’ growth (Hall, 1986). Tangible Capital Stock (Intangible Capital
Stock) is calculated as the yearly net acquisition of tangible (intangible) assets plus the
amortisation (Grazzi et al., 2015) 9. Moreover, based on Gibrat’s law and other works on
firms’ growth (e.g., Audretsch et al., 2012), we control for initial firm size measured as the
turnover of the firm (Turnover). All these variables have been lagged by one year to minimise
9
Investments are measured in millions of euros and deflated by adopting the ratio of current prices to chained-
linked prices (reference year 2010) at the higher level of disaggregation, as provided by the Italian National
Institute of Statistics (ISTAT) at the NACE rev. 2 2-digit industry level. The investments have later been
transformed into stocks. We adopt the standard approach found in the relevant literature and calculate it using
the following formula: Kt = Kt−1(1 − δ) + Pt where Kt-1 is the stock of capital at year t-1, δ is the depreciation
rate assumed at 5%, and Pt is the investment in year t.
23
Second, we included structural characteristics for the firms in our sample, such as firm age
been found to play a relevant role with respect to firms’ performance (Kaniovski and Peneder
2008) and University Size (the number of tenured professors per University) 10 . This
information was obtained from the data provided by Bureau van Dijk AIDA and the Italian
Ministry of Education, Universities and Research (MIUR). Finally, we include three different
sets of dummy variables to control for industrial (NACE rev.2 2 digit level), geographical
Table 1 presents the descriptive statistics for the variables used in this study; Table 2 reports
the correlation matrix of our variables. In general, correlation among the independent
variables is low, and variance inflation factor range between 1.2 and 7.2 (well below the
practices changes across the spin-offs’ growth distribution (for the three terciles). We also
include the values for the overall sample. Overall, Universities extensively rely on
10
HH index is the sum of the square of the turnover shares of firms operating in (NACE Rev.2) industries.
University size is measured by the number of tenured professors per university because, owing to the data
sources used, only they held relevance for spin-off establishment in our study (please refer to the definition of
academic spinoff reported in footnote 2).
24
management practices which refer to ‘lean’ operations, monitoring and target setting (more
than 50% of the spin-off benefited from these practices). Much less diffused appear to be
incentives and professional management practices (less than 50% of the spin-offs benefited
from these practices). This descriptive result is coherent with the structural features of TTOs
which focus on administrative processes rather than being designed to support fully business
activities. As for differences across the growth rate distribution, a variegated pattern emerges.
With the exception of Support Operations - Training which has a rather flat pattern across the
different terciles, all other management practices are characterised by changes across
different levels of the growth rate. Notably, monitoring and incentives management (Target -
Growth) have an increasing (decreasing) rate of adoption across the growth rate distribution.
across the different terciles of the growth rate distribution. We believe that this rich pattern,
where different management practices differ across the growth rate distribution, supports the
The main results are reported in Table 4. Model 1 presents the OLS estimates while Models 2
to 6 show results for different percentiles of the conditional growth rate distribution (10th,
As for the controls we employ in our estimates, Table 4 shows that tangible capital stock has
a positive and significant effect on spin-off’s growth. Interestingly, intangible capital stock
25
has a positive and significant effect only for high-growth spin-offs (Table 4 Model 6),
pointing to the central role for growth of investment in intangible assets (Kaplan and Norton,
2004). A similar relationship is found for the size of University. In line with the literature
which studies the relationship between age and performance (Huergo and Jaumandreu, 2004;
Coad et al., 2013), we find that firm age is negatively related to spin-off’s growth.
We now move to the core of our analysis, which is the relationship between University
management which support the creation and development of spin-offs, we observe a positive
and significant effect of Support Operations Training (β = 0.094, p < 0.1) and Support
Operations Patent (β = 0.142, p < 0.01) on spin-off’s growth. Interestingly, when we take
into consideration the effects at different points of the conditional growth rate distribution by
adopting our quantile regression approach (Columns 2 to 6 of Table 4), we still observe a
positive and significant effect of Support Operations Training (β = 0.153, p < 0.01; β =
0.023, p < 0.1 ) and Support Operations Patent (β = 0.116, p < 0.01; β = 0.074, p < 0.01), but
only for low-growth companies which belong to the 10th and 25th percentiles.
Regarding the role of target management, Table 4 reports negative and significant
coefficients of Target Growth for OLS estimates as well as all the percentiles in the
conditional growth rate distribution. Our results seem to point to a controversial outcome:
setting a growth goal for academic spin-offs leads to a negative effect on the actual ability of
between reward systems for the achievement of specific objectives of the spin-offs and
turnover growth across all the percentiles. Model 6 indicates that the highest effect of
26
Finally, as long as professional management is concerned, we find evidence of a negative
relationship between the share of TTOs employees with at least two years of business
experience and the conditional growth rate distribution. Models 1 to 6 always report a
4.2 Discussion
Our results bear a number of implications in regards to the role of University management
practices apt at influencing academic spin-offs. First and foremost, in line with the recent
2014), we find evidence that University management practices contribute to explain the
variation in the performance of academic spin-offs. At the same time, our results suggest that
the overall picture is far from being unambiguous: while some types of management practices
(support operations and incentives) show a positive correlation with the growth of academic
spin-offs, other management practices (target and professional management) are negatively
correlated. In what follows, we argue that the specific organisational context, namely a Public
We find that, out of the five possible different typologies of management practices, the most
relevant ones are support operations and incentives management. As for the former, we show
that the extent of the adoption of management practices to support patent and training is
positively related to the growth of the spin-offs, although this positive correlation is
significant for low-growth spin-offs only. This result resonates well with the historical reason
27
that brought Public Universities to establish TTOs in the first place. TTO offices were
pooling innovations and services across research units that were subject to economies of scale
and learning, such as patenting (Macho-Stadler et al., 2007). This has been a key support for
spin-offs which bet their destiny on a patent and which invest in patenting as their main
As for incentives management, it shows a positive and significant correlation with growth,
particularly for high-growth spin-offs. This result relates well to the findings of the recent
literature on management practices, which show that incentives are an effective way, even for
public organisations (e.g. hospitals, schools, and universities), to react to external competition
or institutional pressure (Bloom et al., 2015a, 2015b; McCormack et al., 2014). Similarly,
Our result that professional management has a negative correlation with growth, with no
remarkable differences across the conditional growth distribution, points to a double faceted
selection process. On the one side, we interpret this result as evidence on the existence of an
adverse selection process where Universities are often unable to attract external talent.
Notably, the presence of a standardized contract, the lack of flexibility in offering adequate
benefits or a compensation package comparable to the private sector as well as the sometimes
opaque hiring procedure can limit the attractiveness of public job posts for candidates from
the private sector (Karl and Sutton, 1998; Buelens and Van den Broeck, 2007). On the other
side, even when Universities manage to attract excellent employees from the private sector,
28
problems can still arise. Notably, there could be a misalignment between the previous
experience of the employee hired from the private sector and the real knowledge required to
efficiently perform the job. Similarly, Universities may be unable to create the conditions
whereby the newly hired employee is able to perform, due to the limited degrees of freedom
Finally, our most controversial result pertains to the negative association between target
setting and the performance of academic spin-offs. A number of reasons can help explain the
above result. First, the selection at entrance for academic spin-offs has been historically weak
with the absence of appropriate support after the start-up phase (Siegel et al., 2007). Second,
and more importantly, there is often a lack of credibility coming from setting growth
objectives in Universities, as TTOs are often unable to enforce the achievement of these goals
with credible actions (e.g. credible threats or rewards). On top of that, growth targets usually
refer to the short-term but setting stringent goals in the short-term can actually be detrimental
to medium or long-term growth, which is probably the main interest of academic spin-offs.
This is particularly relevant in the valorisation of patents, when they form a central
intellectual asset for the spin-off (Djokovic and Souitaris, 2008). These last two points
together suggests that the existence of growth targets by Universities can be mere
systematically miss these short term targets and aim for medium or long-term growth targets
instead.
We check the stability of our results to two problems. First, there might be problems related
to the misalignment of the time-frames for firm- and university-level information. While
information referring to University management practices, which come from our survey,
29
refers to the period 2010-2014, we are able to control for firm-level characteristics (included
turnover growth) for a longer period (2006-2014). Although management practices tend to be
persistent and to take much effort and time to change, we checked the robustness of our
results to this problem by estimating our models for the reduced time period 2010-2014
which represents a perfect overlap between firm- and university-level information. 11 We also
consider the likelihood that our results are driven by a low number of high or low performing
spin-offs in some universities. This is apparent from Table A1 where universities with a
reduced number of spin-offs are characterised by an extremely high (or low) average turnover
growth over the period 2006-2010. In order to control for this, we consider the sample of
universities which have ten spin-offs or more. This amounts to drop twelve universities and
68 spin-offs from our initial sample. Table 5 and 6 provide evidence of the robustness of our
5. Conclusion
Academic spin-offs are a possible backbone of Universities’ third mission and can play a key
role in transferring knowledge to local contexts. Existing literature has focussed on reasons
that can facilitate spin-offs, on one hand, and how to interpret spin-offs outcome, on the other
(Bigliardi, Galati and Verbano, 2013; Czarnitzki, Rammer and Toole, 2014). With some
11
The persistency of management practices for academic spin-offs has also been confirmed by introductory
semi-structured interviews we had with 6 heads of TTOs and Incubators before starting with the large scale
survey. Several interviewees stressed how the Italian University system has been historically characterised by
long and painful adaptations to University systems of other European countries and that the support and
practices for academic spin-offs do not represent an exception to this general trend.
30
Our study can be instrumental in filling the gap between these two views. The analysis of
internal processes might help explain under which conditions spin-offs originate and how
they evolve over time. From this perspective, our study contributes to the research stream of
structuring internal processes about spin-offs. Universities share the same institutional
context, but their approaches can differ. We observed significant differences in how
universities structure their processes. Management practices are not all alike and their
adoption is uneven.
Our results do not allow us to assess if management practices are ‘good’ or ‘bad’ for
universities per se. Notably, we do not have a solid conceptual framework about the impact
could argue that management practices are a good thing (for instance, incentive do stimulate
might infer that some practices might induce internal misalignment and produce conflict (for
instance, only members of some units might enjoy incentives, but not the large majority).
This suggests that different management practices can be best suited to different
We found that not all management practices have the same effect. Some management
practices turned out to have a counterintuitive impact. This is specifically the case of the
target ‘growth’ practice, which has a negative effect on spin-offs’ growth. This suggests that
importing practices that were ‘invented’ in other institutional settings might be difficult, if not
31
impossible. It is reasonable to assume that there is a fit issue, as Universities are special
organizations facing new challenges. Management practices might be in theory all adequate,
but some of them may be difficult to adopt, others useless or in practice harmful. We believe
that future research on different management practices and their impact on spin-offs
Our study has several limitations. First and foremost, it refers to Italy, whose institutional
context is for several reasons distinguishable from other countries. We focussed on public
universities, by far the large majority of the Italian population. Private universities might
leverage management practices for academic spin-offs with more freedom. Clearly, there is
more than the public versus private dichotomy. Academic spin-offs might differ –others
things being equal – because their parent universities have different specialization –research
versus teaching universities – and their local contexts also diverge (Fini et al., 2011).
Second, our study covers a significant time interval as far as spin-offs performances is
concerned, but does not offer comparable data and information on management practices’
adoption. We did not observe management practices from a longitudinal viewpoint. This is a
clear limitation, for at least two reasons. First, we have very limited clues about the diffusion
behaviour, and therefore get adopted for ceremonial reasons. However, management
practices could emerge locally as the outcome of key players, who patiently act as evangelists
(Lechner and Delanoë-Gueguen, 2014). The way management practices get adopted should
have a direct impact on spin-offs performances. Second, we cannot rule out the possibility of
reversed causality between observed results and specific management practices. This is the
32
case of the negative effect the variable ‘Target-growth’ has on spin-offs. This effect might
well come from the reaction of TTO’s members to a below average growth of their spin-offs.
performances, but two caveats are relevant for our purposes. First, once spin-offs get out of
the door, universities have limited say, for they hold a minority share. Second, as hierarchy is
not the usual coordination mode universities use, the enforcement of management practices
might differ widely. Some universities might simply suggest which practices spin-offs should
adopt; others might have a say and directly influence spin-offs. More evidence on the real
Despite these limitations, we hope our study could help universities to deal with spin-offs
more effectively. Producing good, valuable spin-offs is a difficult task in any environment
and nobody has the secret formula to do the job right. This is particularly true for universities,
whose classic mission has always been generating and disseminating new knowledge.
However, spin-offs are companies facing competitive selection under market conditions. A
good management of spin-offs in their infancy is therefore a necessary, tough not sufficient
condition. Academic spin-offs are a pillar of a quite different mission, requiring universities
Our study has some relevant policy implications for universities and policy makers. First,
universities should be more aware of the management practices they adopt and how these
practices fit into their internal organization. Second, universities should focus on practices
they can directly enforce: for example, support training completely depends on universities,
whereas target management practices can be more effectively enforced by the entrepreneurial
team of spin-offs. Third, launching spin-offs requires time and is not a one shot activity.
Universities can be equipped for providing services and assistance in the first stages, but too
33
much constrained in the following stages. Therefore, management practices they support in
34
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Table 1: Descriptive statistics (n=3695)
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Table 2: Correlation Table
[1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12]
[1] Turnover 1
[2] Support operations - training 0.047 1
[3] Support operations - patent -0.026 0.085 1
[4] Support operations - funding 0.017 0.171 0.296 1
[5] Monitoring management 0.031 -0.204 -0.004 0.005 1
[6] Target – growth -0.021 0.144 0.173 -0.090 -0.101 1
[7] Target – scientific excellence 0.033 0.161 -0.258 -0.035 0.007 0.169 1
[8] Incentives management -0.018 0.130 -0.073 -0.215 -0.121 -0.015 0.176 1
[9] Professional management -0.001 -0.161 -0.167 0.106 -0.265 -0.364 0.250 0.201 1
[10] Tangible capital stock 0.541 0.091 0.026 0.029 -0.062 -0.001 0.036 -0.040 -0.011 1
[11] Intangible capital stock 0.062 0.041 0.099 0.058 -0.015 0.073 -0.006 -0.047 -0.064 0.454 1
[12] Industrial concentration index -0.014 -0.048 0.037 0.042 0.013 0.028 0.016 -0.011 0.002 -0.014 0.004 1
[13] Age 0.056 0.034 0.018 0.003 -0.047 0.079 -0.006 0.063 -0.112 0.155 0.148 -0.014
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Table 3: Engagement in University management practices for the terciles of the growth
47
Table 4: The effect of management practices on the growth of academic spinoffs
48
Table 5: The effect of management practices on the growth of academic spinoffs - period 2010-2014
49
Table 6: The effect of management practices on the growth of academic spinoffs - Universities with 10 spinoffs or more
50
Appendix
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Università degli Studi di Trieste 15 3.80 5.53
Università degli Studi della Tuscia 5 3.30 -53.05
Università degli Studi di Udine 33 4.42 16.92
Università degli Studi di Verona 10 3.20 53.23
Average 18.8 4.16 18.82
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