University Invention, Entrepreneurship, and Start-Ups

34 Pages Posted: 9 Aug 2005 Last revised: 10 Nov 2021

See all articles by Celestine O. Chukumba

Celestine O. Chukumba

University of Notre Dame - Department of Economics and Econometrics

Richard A. Jensen

University of Notre Dame - Department of Economics

Date Written: July 2005

Abstract

This paper develops a game-theoretic model that predicts when a university invention is commercialized in a start-up firm rather than an established firm. The model predicts that university inventions are more likely to occur in start-ups when the technology transfer officers (TTOs) search cost is high, the cost of development or commercialization is lower for a start-up, or the inventor's effort cost in development is lower in a start-up. We test the theory using data from the Association of University Technology Managers, the National Research Council, and the National Venture Capital Association. Licensing is more likely in general, and especially so in start-ups, by universities with higher quality engineering faculty and older TTOs. Start-ups are more likely by universities in states with larger levels of venture capital. TTO size has no effect on start-ups, but does increase licenses. Conversely, universities that earn greater licensing royalties have fewer start-ups but more licenses. The number of start-ups is decreasing in the interest rate, increasing in the S&P 500, and unaffected by levels of industrial research funding and the presence of a medical school. All of these results are consistent with the predictions of our theory.

Suggested Citation

Chukumba, Celestine O. and Jensen, Richard A., University Invention, Entrepreneurship, and Start-Ups (July 2005). Available at SSRN: https://ssrn.com/abstract=760168

Celestine O. Chukumba

University of Notre Dame - Department of Economics and Econometrics ( email )

P.O. Box 399
Notre Dame, IN 46556
United States

Richard A. Jensen (Contact Author)

University of Notre Dame - Department of Economics ( email )

Notre Dame, IN 46556
United States

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