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According to Schumpeter, innovation is about entrepreneurship: the implementation of new ideas that change established procedures and alter organizational practices (1934). While the idea of creative destruction is compelling, there are few opportunities to observe the characteristics of change agents in situations where new practices emerge. University technology transfer – the realization of commercial value from university research – presents such an opportunity. While universities are an important source of invention and new knowledge, there is great variation across universities in the commercial realization of academic discoveries (Nelson, 2001). This result is understandable when we consider that university technology transfer has only become a formal activity for most universities in the United States in the last twenty-five years. In this regard, a series of changes marked by the passage of the 1980 Patent and Trademark Law Amendment Act (P1 96–517), commonly known as the Bayh–Dole Act, represent gales of change as universities embrace new objectives that value active technology commercialization over older routines that promoted passive knowledge diffusion. However, the commercial realization of academic discoveries is ultimately dependent on the personal decisions and actions of the faculty, as faculty invention disclosures form the basis for university patents and subsequent licenses. Though the Bayh–Dole Act specifies that faculty members are to disclose their inventions to the university technology-transfer office, enforcement of this requirement has proven difficult. When individual faculty members choose to disclose their discoveries to the university's technology-transfer office, they signal that they are entrepreneurial in adopting the new initiative that aids in the transfer of knowledge out of the university to established companies or to use in the formation of new companies.
American research universities have long served as a source of invention and technological expertise for industry (Rosenberg and Nelson 1994). This relationship, traditionally at arm's length, has entered a new era marked by closer interaction as universities actively manage their intellectual property in a process known as technology transfer. Moving beyond publication and teaching, the traditional modes of disseminating academic inventions, many universities now have technology transfer offices dedicated to securing invention disclosures from campus research and establishing intellectual property rights over them. These offices work to license to firms the rights to use the intellectual property, sometimes encouraging the formation of new firms for this purpose.
This chapter employs the term “entrepreneurship” in two distinct senses. The first, drawing on Clark (1998), who coined the phrase “entrepreneurial universities,” conveys the broader and more active role that American research universities now play in facilitating technology diffusion and promoting economic growth within the national system of innovation. The second meaning of the term coincides with Hart's definition in the introductory chapter to this volume, referring to the formation of firms based on university research.
Entrepreneurship in this second, narrower sense has become a favored mechanism by which universities transfer technology to the commercial realm. Based in part on the examples of the Massachusetts Institute of Technology (MIT) and Stanford University, which played active roles in the genesis of industrial clusters along Route 128 and in Silicon Valley respectively, university spin-off firms are seen as a means to transform local economies and a mechanism that provides a way for these economies to capture the benefits of proximity to research universities.
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