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Abstract:
This paper examines the use of options contracts by firms acquiring rights to commercialize university technologies. By combining information about the sequence of licensing decisions with characteristics of the firms and technologies involved, I explore factors that shape decisions to purchase and exercise option contracts for these technologies. Decisions by firms that considered but did not purchase an option or a license are included in the sample. Consistent with the basic premise of real options theory, I find that firms are more likely to purchase option contracts for more uncertain technologies. Also in line with theoretical predictions, I find that firms better able to evaluate an external technology are less likely to purchase options before licensing. The results also highlight more complex motives for exercising options in technology licensing. On the one hand, firms appear to benefit from their ability to learn about the technology during the option period. On the other hand, firms better able to "absorb" the technology during the contract period may have reduced incentives to subsequently license the invention.

real options, licensing, university-industry technology transfer, knowledge transfer

Abstract:
This paper examines the application of real option theory to sequential investment decision-making. We address the apparent conflict between applications that suggest that early investments provide growth option value and those that suggest that delayed investment may provide deferral option value. In an effort to contribute to the development of criteria that discriminate between investments that confer growth options from those that confer deferral options, we introduce a conceptual model that explains technological adoption as a sequence of embedded options. Upon the introduction of each generation of a technology, a firm may either defer investment and wait for the arrival of a future generation or invest now and obtain experience that provides a preferred claim on adoption of subsequent generations. The paper considers four potential technology migration strategies; compulsive, buy-and-hold, leapfrogging, and laggard. We propose that these four technology migration strategies are dependent on the magnitude of inter-generational technological change, the frequency of inter-generational technological change, the uncertainty of inter-generational technological change, and the nature of rivalry.

Real Options, Technology Adoption, Leapfrogging

Abstract:
U.S. universities and academic medical centers long have been important performers of research in the life sciences, but their role as a source of patented intellectual property in this field has changed significantly in the late 20th and early 21st centuries. The expanded presence of formal intellectual property rights within the academic biomedical research enterprise has occasioned numerous expressions of concern from scholars, policymakers, and participants. One widely expressed fear involves the effects of patenting on the conduct of the scientific research enterprise. There is also considerable concern over the possible role of Material Transfer Agreements "MTAs" in raising research "transaction costs." On the other hand, others suggest that the contractual structure provided by MTAs may reduce transaction costs and facilitate exchange. This paper undertakes a preliminary analysis of the role of MTAs in the biomedical research enterprise at the University of Michigan, a significant patenter and licensor of biomedical intellectual property. We examine the relationship among invention disclosures, patenting, licensing, and the presence or absence of an MTA. Although data limitations make any conclusions tentative, our analysis suggests that the increased assertion of property rights by universities through MTAs does not appear to impede the commercialization of university research through patenting and licensing.

Materials Transfer Agreements, University Technology Transfer, Patenting, Licensing

Abstract:
The growth of high-technology clusters in the United States suggests the presence of strong regional agglomeration effects that reflect proximity to universities or other research institutions. Using data on licensed patents from the University of California, Stanford University, and Columbia University, this paper compares the geographic 'reach' of knowledge flows from university inventions through two important channels: non-market 'spillovers' exemplified by patent citations and market contracts (licenses). We find that knowledge flows through market transactions to be more geographically localized than those operating through non-market 'spillovers.' Moreover, the differential effects of distance on licenses and citations are most pronounced for exclusively licensed university patents. We interpret these findings as reflecting the incomplete nature of licensing contracts and the need for licensees to maintain access to inventor know-how for many university inventions. Such access appears to be less important for inventions that are non-exclusively licensed (e.g. 'research tools').

Abstract:
Compares the performance of startups with that ofestablished firms in order to investigate whether overoptimism plays a criticalrole in the entrepreneur’s decision to found a firm. Three aspects ofperformance are considered: the likelihood of achieving commercial sales, thelikelihood of terminating a development effort, and university licensingrevenues generated by a developed invention. Following a discussion of recentstudies of university technology licensing to entrepreneurial firms and theliterature on managerial cognitive bias, it is hypothesized thatentrepreneurial startups are less likely than established firms to terminatedevelopment efforts and to commercialize inventions successfully. The lasthypothesis proposes that inventions licensed by startups generate lowereconomic returns than do inventions licensed by established firms. Data on 734 inventions disclosed to the University of California from 1981to 1999 and licensed exclusively to a firm are used to test the hypotheses. Thedata indicate that startups actually generate greater levels of licensingrevenues for similar technologies than do established firms. However,entrepreneurs appear to hold on longer to technologies that do not achievecommercial success. The latter finding suggests entrepreneurs may be in denialabout the unpromising futures of these inventions. As a whole, the resultsoffer little support for the idea that excessive optimism is a driving force inthe decision to found a firm. (SAA)

Cognitive bias, Inventions, Commercialization, University-firm relations, Individual traits, Perceptions, Attitudes, Cognition, Management decisions, Optimism, Technology licenses, Startups, Firm performance

Abstract:
This study starts from the premise thatoveroptimism influences entrepreneurs' decisions to start and sustain newventures. The role of cognitive bias on entrepreneurial venture performances isstudied, using data regarding 734 inventions from the University of Californiagathered between 1981 and 1999, and licensed exclusively to a firm. The analysis considers three aspects of performance: (1) the likelihood ofachieving commercial sales; (2) the likelihood of terminating a developmenteffort; and (3) university licensing revenues from a developed invention. Theresults suggest that, in general, entrepreneurs commercializing universitytechnology do not seem overoptimistic in their decision to start a firm. Also,licenses to start-ups bring licensing revenues at least as high as revenues forlicenses to established firms. The findings also suggest that economic returns associated with thetechnologies in the sample are obtained after the start-up is acquired by anestablished firm. This, in turn, suggests that start-ups could be viewed astransitional organizational forms in the market for technologycommercialization. The evidence also suggests that the active pursuit oflicensing to university start-ups is valuable. (CBS)

Cognitive bias, Licensing revenues, Licensing strategies, Commercialization, Rates of return, Academic research, University spinouts, Colleges & universities, Optimism, Technology transfer, Cognitive models, Startups

Abstract:
The Bayh-Dole Act of 1980 facilitated the retention by universities of patent rights resulting from government funded academic research, thus encouraging university entry into patenting and licensing. Though the Act is widely recognized to be a major change in federal policy towards academic research, surprisingly little empirical analysis has been directed at assessing its impacts on the academy and on university-industry research relationships. An important exception is the work of Henderson et al. [Rev. Econ. Stat. 80 (1998) 119-127] which examined the impact of Bayh-Dole on the quality of university patents, as measured by the number of times they are cited in subsequent patents. The authors found that the quality of academic patents declined dramatically after Bayh-Dole, a finding that has potentiallyimportant policy implications. Inthis paper, we revisit this influential finding. By using a longer stream of patent citations data, we show that the results of the Henderson et al. study reflect changes in the intertemporal distribution of citations to university patents, rather than a significant change in the total number of citations these patents eventually receive. This has important implications not only for the evaluation of Bayh-Dole, but also for future research using patent citations as economic indicators.

O3

Abstract:
Recent theoretical and empirical research on cognitive bias in decision making suggests that overoptimism critically influences decisions of entrepreneurs to establish and sustain new ventures. We investigate whether such cognitive bias influences entrepreneurial venture performance using data on commercialization efforts for university inventions. In contrast to prior studies, our results suggest that entrepreneurial overoptimism does not appear to be the determining factor in the decision to found a firm. We do find that entrepreneurs continue unsuccessful development efforts for longer periods of time than do established firms, which is consistent with entrepreneurial overoptimism in the development of technologies with uncertain market prospects. This latter finding is also consistent with rationality based models of decision making behavior, however. We find that the economic returns associated with many of the technologies in our sample are realized after the start-up has been acquired by an established firm, suggesting that start-ups may serve as a transitional organizational form in the market for technology commercialization.

Entrepreneurship, University Technology Transfer, Cognitive Bias

Abstract:
Links between R&D in U.S. industry and research in U.S. universities have a long history, but recent developments in this relationship, especially the growth in university patenting and licensing of technologies to private firms, have attracted considerable attention. The effects of the Bayh-Dole Act of 1980 on U.S. research universities have been the focus of several empirical studies. This paper examines "university learning" in greater detail, seeking to understand whether and why the importance (based on citations to these patents) of the post-1980 patents issuing to less experienced academic patenters has improved during the 1980s and 1990s. Our results indicate that the importance of entrant institutions' patents improved during the 1980s and 1990s, closing the gap with incumbents during a period in which the average importance of overall academic patents improved relative to nonacademic patents. We find little evidence of strong "learning curve" effects, as neither cumulative patenting nor the (relatively) early establishment of a technology transfer office explain these improvements. Links with the Research Corporation during the "pre-Bayh-Dole" era also exercise little influence over changes during the 1980s and 1990s in these characteristics of incumbent or entrant institutions' patents. Inasmuch as these observable sources of learning exercise little influence, we conclude that a broader process of learning based on spillovers among universities may account for the convergence in importance between the patents of incumbent and entrant universities.

Patents, Universities, Technology Transfer, Learning

Abstract:
This paper summarizes the results of empirical analyses of data on the characteristics of the pre- and post-1980 patents of three leading US academic patenters - the University of California, Stanford University, and Columbia University. We complement the analysis of these institutions with an analysis of the characteristics of the patents issued to all US universities before and after 1980. Our analysis suggests that the effects of the Bayh-Dole act on the content of academic research and patenting at Stanford and the University of California were modest. The most significant change in the content of research at these universities, one associated with increased patenting and licensing at both universities before and after 1980, was the rise of biomedical research and inventive activity, but Bayh-Dole had little to do with this growth. Both UC and Stanford University administrators intensified their efforts to market faculty inventions in the wake of Bayh-Dole. This enlargement of the pool of marketed inventions appears to have reduced the commercial "yield" of this population at both universities. But we find no decline in the "importance" or "generality" of the post-1980 patents of these two universities. The analysis of overall US university patenting suggests that the patents issued to institutions that entered into patenting and licensing after the effective date of the Bayh-Dole act are indeed less important and less general than the patents issued before and after 1980 to US universities with longer experience in patenting. Inexperienced academic patenters appear to have obtained patents that proved to be less significant (in terms of the rate and breadth of their subsequent citations) than those issuing to more experienced university patenters. Bayh-Dole's effects on entry therefore may be as important as any effects of the act on the internal "research culture" of US universities in explaining any decline in the importance and generality of US academic patents after 1980.

Patents, U.S. Universities, Bayh-Dole Act

Abstract:
Growth during the 1980s and 1990s in patenting and licensing by American universities is frequently asserted to be a direct consequence of the Bayh-Dole Act of 1980. However, there has been little empirical analysis of the effects of this legislation. This paper uses previously unexploited data to consider the effects of Bayh-Dole at three leading universities: the University of California, Stanford University, and Columbia University. Two of these universities (California and Stanford) were active in patenting and licensing before Bayh-Dole, and one (Columbia) became active only after its passage. The evidence suggests that Bayh-Dole was only one of several important factors behind the rise of university patenting and licensing activity. Bayh-Dole also appears to have had little effect on the content of academic research at these universities. A comparison of these three universities reveals remarkable similarities in their patent and licensing portfolios 10 years after the passage of the Bayh-Dole Act. The concluding section raises several questions about the effects of Bayh-Dole and related policy shifts that are not addressed by this analysis but that deserve attention in future research.

Bayh-Dole Act, University Research, Technology Transfer, Patenting, Licensing

Abstract:
This paper examines the role of Lawrence Livermore National Lab (LLNL), a major U.S. Department of Energy nuclear weapons research facility, in spawning spin-off firms. We provide some of the most comprehensive estimates of the number of spin-off firms associated with LLNL and find that this resarch facility appears to be at least as important a source of spin-off firms as are three defense-oriented laboratories in New Mexico with a combined budget that is substantially larger than that of LLNL. Our survey of these LLNL spin-offs suggests that fewer than one-quarter of them are directly engaged in the commercialization of LLNL-developed technologies, a finding that is broadly consistent with the results of other studies. Finally, our interviews with spin-off founders suggest that management and other policy-related impediments to the formatino os spin-off firms reduces the contributions of these firms to the commercialization of LLNL-developed technologies.

Technology Transfer, National Laboratories, Spin-Off Firms