Voodoo institution or entrepreneurial university? The role of spin-out companies in the entrepreneurial system

Governments increasingly consider the higher education sector as having a significant role to play in national and regional economic development, and the formation of spin-out companies to commercialise university research and intellectual property is identified as the archtypical manifestation of commercialisation in the entrepreneurial university. However, this increased attention has been accompanied by growing concerns that the focus of universities and the policy making community has been on the number, rather than the quality and commercial viability, of these start-up ventures, with correspondingly less attention given to their wider and longer term impact. In this paper we argue that the benefits are overstated: most university spin-outs start small and remain small, in part reflecting founder aspirations, capabilities and resource endowments. We conclude that, for the most part, these companies are technology lifestyle businesses not dynamic high-growth potential start-ups, and suggest that the prominence given to spin-outs is misplaced. In this paper we develop a framework for examining the process of university spin-out creation which elaborates the idea of the entrepreneurial system as the 'complexity and diversity of actors, roles, and environmental factors that interact to determine the entrepreneurial performance of a region or locality' (Spilling, 1996: 91). Within this context we review the processes governing the origins, establishment and growth of university spin-out ventures. Specifically, we explore the growth dynamics of university spin-out companies using data gathered from in-depth semi-structured interviews with the founders and/or CEOs of a population of spin-out companies in one university within the UK.