The importance of University Spin-offs...

In my last two posts, I discussed the link between an entrepreneurship and economic development. Since, I found out that entrepreneurial activities lead to economic development of a country, I became interested what kind of policies could Georgian government use to encourage economic development through entrepreneurship. But, before discussing those policies I would like to stress on the importance of university spin-offs which I found very interesting.

I always wondered why so many researches are done at universities and why they were important. I knew that universities are important entities that give education to people, which in turn allow educated people to take many opportunities as good job, high salary and etc. But, I never thought about universities contributing heavily to economic development of a country. After exploring entrepreneurship literature, I found that US or European Countries’ governments long collaborated with universities to advance economic development through entrepreneurship. For example, Land grant system introduced in US is very famous in that it led to the formation of many universities and held the idea that universities should have created knowledge so that entrepreneurs could exploit to enhance local economy. This once more emphasizes on the importance of universities as contributor to economic development through entrepreneurship. How is it achieved? The process is the following: several policies were introduced to encourage company formations to use knowledge created by faculty, staff and students of research universities, which is named as university spin-offs and in my opinion, the process itself can be considered as university entrepreneurship. More importantly, even the term ´´entrepreneurial university´´ was coined by Etzkowitz (1998) to describe universities which contributed to economic development and highlight their critical role.

Nowadays, number of university spin-offs has become large and includes some best known technology companies as Hewlett Packard, Cirrus Logic, Genentech, Lycos and Yahoo! Nevertheless, ways how university spin-offs enhance economic development are: a) university spin-offs create jobs, b) they commercialize academic inventions that would otherwise go undeveloped and c) they have larger indirect economic impact since they have multiplier effects on the economy through hiring of employees and their sourcing of supply and production.

Finally, it worth mentioning that the importance of university spin-offs becomes larger when we link the issue to the process of globalization. At present, countries focus more on competitive use of knowledge to acquire comparative advantage due to the fact that economic growth is now directly linked to knowledge accumulation rather just to capital accumulation. At last, as I read more about entrepreneurship and economic development, I see that my country yet has to go through lengthy developmental processes that should definitely involve creation of research universities, formation of lasting partnership and lastly, encouragement of spin-offs.

REFERENCE:

Shane, S. (2005). Economic Development through Entrepreneurship. Great Britain: MPG Books Ltd, Bodmin, Cornwall

O’Shea R., Allen J. T., O’Gorman C., Roche F. (2004). Universities and Technology Transfer: A Review of Academic Entrepreneurship Literature. Irish Journal of Management. 25(2), 11-29.