University Startup Intensity and Faculty Quality

21 Pages Posted: 27 Feb 2019

See all articles by Dean Showalter

Dean Showalter

Texas State University

Richard A. Jensen

University of Notre Dame - Department of Economics

Date Written: April 2019

Abstract

Using a theoretical model of university technology transfer and licensing survey data from 1991 to 2013, we show that greater faculty quality and venture capital availability is positively associated with licenses to startups. We employ a two‐stage game of licensing terms (royalty rate and fixed fee) and development efforts to show that under reasonable conditions, licensing to a startup rather than an established firm will be more attractive to a technology transfer office (TTO) because the inventor's ownership share in a startup firm will increase total development efforts by the inventor and licensee. TTOs will be more likely to target startup licensees when the marginal effect of the faculty inventor's additional development effort on the probability of success is large relative to that of the venture capitalist or established firm. Empirical evidence supports the results of the model; using Associated University Technology Data licensing survey data and employing panel and cross‐sectional analyses, we show that an increase in the quality of engineering faculty has roughly twice the positive impact on startup licenses than on established firm licenses. Startup licensing is also strongly impacted by venture capital availability within institutions over time.

JEL Classification: L24, L26, D86

Suggested Citation

Showalter, Dean and Jensen, Richard A., University Startup Intensity and Faculty Quality (April 2019). Economic Inquiry, Vol. 57, Issue 2, pp. 855-875, 2019, Available at SSRN: https://ssrn.com/abstract=3342660 or http://dx.doi.org/10.1111/ecin.12752

Dean Showalter (Contact Author)

Texas State University

Richard A. Jensen

University of Notre Dame - Department of Economics ( email )

Notre Dame, IN 46556
United States

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