A longitudinal comparative study of university research commercialisation performance: Australia, UK and USA.

SUMMARY

Research commercialisation surveys are now available for Australia for Financial Years (FY) 2000 and 2002. This paper reviews longitudinal comparative data for research commercialisation performance in Australia, the United Kingdom and the USA. It discusses commercialisation performance measures, with a specific focus on entrepreneurial spin-off companies, and performance comparisons are made based on research expenditure in US dollars adjusted for purchasing power parity. Conclusions from these analyses suggest that, in recent years, Australian public agency performance in generating spin-offs per unit of research expenditure, adjusted for purchasing power parity, has been comparable or superior to some universities in other countries reviewed. However, Australian university revenue from intellectual property licensing royalties and research contracts has been below that of other countries studied. Analysis suggests that this results from problems in both demand--low business investment in R&D and hence low technology absorptive capacity--and supply, that is lack of time and lack of incentive to academic researchers to develop contacts with and meet the expectations of industry and other research users for technology that works.

KEYWORDS

commercialisation; innovation; intellectual property; research; universities

INTRODUCTION

Fundamentally new ways of understanding the world will come out of ... basic research and with that will come new technologies and business opportunities.

(Emeritus Professor Barry Ninham, 2000)

Innovation is not just the idea--innovation is only achieved when the idea has been transferred into an outcome which has value (Livingstone 2000).

The translation of knowledge into economic activity has emerged as a recognised university function, alongside research and teaching (Etzkowitz and Leyesdorff 1997: 1).

These three quotations illustrate well the environment in which commercialisation of research outcomes takes place: firstly, the importance of maintaining an adequate level of basic research; secondly, that innovation is about wealth creation; and thirdly, the increasing expectations for universities and other research providers.

Research commercialisation surveys are now available in Australia for FY 2000 and 2002. This paper reviews longitudinal comparative data for research commercialisation performance in Australia, the United Kingdom and the USA. Commecialisation performance measures with a specific focus on entrepreneurial spin-off companies are discussed and performance comparisons have been made based on research expenditure in US dollars adjusted for purchasing power parity. Earlier research by the present authors suggested the use of purchasing power parity as preferable to currency exchange rates in making international comparisons (Yencken 2004).

GLOSSARY AND COMPATIBILITY OF DEFINITIONS

As a first step, it is essential to clarify and define the various constructs involved, to ensure that compatible definitions are used when comparing commercialisation performance between countries.

Commercialisation

The process of converting science and technology, new research or an invention into a marketable product or industrial processes.

(Scottish Enterprise 1996)

Disclosure

An invention disclosure occurs when a device, substance, method or process that is apparently new, useful and involves an inventive step is made known to personnel within an institution who have responsibility for managing the institution's research commercialisation activities.

(ARC 2002)

Licenses, options, agreements (LOAs)

Australian definition:

The term 'licensed technology' refers to a technology that becomes a product to be sold or to a technology that is a process that is put into commercial use as opposed to developmental use by a company. For the purpose of this survey, license, option and assignment agreements were defined as follows:

* A licence agreement formalises the transfer of technology between two parties, where the owner of the technology (the licensor) permits the other party (the licensee) to share the rights to use the technology;

* An option agreement grants the potential licensee a time period during which it may evaluate the terms of the license agreement. An option agreement is not constituted by an option clause in a research agreement that grants rights to future inventions, until an actual invention has occurred that is subject to that option; and

* An assignment agreement conveys all right, title and interest in and to the licensed subject matter to the named licensee.

(ARC 2002)

The US Association of University Technology Managers (AUTM 1998: 30) was involved in the FY 2000 Australian Commercialisation survey and, as expected, its definitions were identical.

In the OECD definitions (OECD 2003: 30), the only relevant definition was Right of First Refusal, which might be considered as an Option. No comparable definition of Licences was given.

Spin-offs and start-ups

The definition used in the Australian survey (DEST 2002: 94) was:

START-UP COMPANIES: ... companies or

traders as persons engaged in businesses that

were dependent upon licensing or assignment

of the institution's technology for initiation. If

a technology were licensed to an existing startup

company, but not to a Start-Up Company

(as defined here), this company should be

counted as a Small Company when responding

to Question 6c, as opposed to a Start-Up

Company. Start-Up Companies, as used in

this Survey, will continue to refer only to those

companies that were dependent upon your

institution's technology for initiation.

The AUTM definition was identical (AUTM 1998: 30).

The only relevant (OECD 2003: 80) definitions of spin-offs and start-ups were:

Spin-offs are firms established by staff from a

Public Research Organisation (PRO) to develop

or commercialise an invention. Start-ups

are new firms set up specifically to develop or

commercialise an invention licensed from a

public research organisation, but without participation

from that PRO.

The Australian and AUTM definitions of startup companies fit closely to the OECD definition of spin-off companies. This definition parallels the definition of Direct Research Spin-offs developed by one of the authors in his recent doctoral thesis (Yencken 2005) and by Hindle and Yencken (2004: 797).

A critical issue in approaching commercialisation performance through the generation of new ventures, as opposed to licensing technology to existing businesses, has been to give proper consideration to the difference between a spin-off where there is an ongoing intellectual property (IP) and usually equity relationship with the parent research provider and a start-up or Indirect Research Spin-off (Hindle and Yencken, 2004: 797) that may have been generated by a student or staff member with no university IP ownership. This difference has not always been clear for several European and North American universities that have claimed large numbers of new ventures generated out of their research and new technologies.

DATA AVAILABILITY, CONSISTENCY AND RELIABILITY

The unit of analysis for this paper has been an individual university or other research provider. This has limited data collection and analysis to data available for individual universities. For some countries, such as the United Kingdom, no commercialisation performance data for individual universities were available in the national surveys. The paper seeks to make comparisons internationally between universities with comparable research expenditure only where such data are available. The paper has not sought to make comparisons relating to performance at the national level, as has been done for example in the OECD survey 'Turning Science into Business' (OECD 2003).

The Australian data came from a survey by the Commonwealth Department of Education, Science and Training (DEST) covering the period FY 2000-2002 (DEST 2004). The authors are aware that significant effort was required for this survey to reconcile university responses on their research expenditure and those reported by the Australian Bureau of Statistics, but there was no mention in the DEST report of any separate audit of the performance output data. Not all universities responded to all questions. For example, the University of Melbourne did not provide any data on Disclosures for FY 2000.

For the United Kingdom, published annual commercialisation performance reports, as a matter of Vice Chancellor policy, have not shown data for individual universities (UNICO/NUBIS 2002). For this reason, analysis has focussed on data for selected Scottish universities for which data were available from other publications (Smailes et al. 2002). Another source was the Annual Reports of Edinburgh Science and Innovation Ltd, the technology company owned by the University of Edinburgh. The US data originally was published in AUTM annual survey reports. Extracts from these reports used in this paper came from the comparative analysis of performance of US and Scottish universities in Smailes et al. (2002).

The availability of comparative data for individual universities determined the choice of financial year and precluded more recent comparisons.

DRIVERS OF COMMERCIALISATION PERFORMANCE