The Impact of Science-Based Entrepreneurial Firms - A Literature Review and Policy Synthesis

How to convert scientific and technological knowledge developed in public research institutions into economic and societal impact is a key concern for both research and innovation policy. Policy makers and universities have spent considerable resources to promote the creation of science-based entrepreneurial firms (SBEFs) as a tool to create value from investments made in research. The impacts of SBEFs are, however, highly debated among both practitioners and researchers. Some argue that these firms play an important role in terms of revenue and job creation, but also as technology transfer agents. Thus, SBEFs are considered to have an important role in the innovation system by transforming scientific knowledge into application. Others question the impact of SBEFs and argue that exceptional success stories cannot be generalized and that most SBEFs are technology lifestyle firms that remain small, despite strong public support. We have conducted an extensive search in high quality international journals and identified 162 scientific articles dealing with SBEFs. We observed that the number of studies on SBEFs has grown rapidly over the last decade and has contributed to a better understanding of the role and the particular characteristics of this type of new ventures. The literature is dominated by studies from North America and Western Europe, particularly the US and the UK. A subset of 14 articles explicitly considered the impacts generated by SBEFs. Two different perspectives can be identified. Some studies explored the economic impacts of SBEF, often in terms of contributions to regional development. Other studies discussed the impacts of SBEFs as technology transfer agents serving a role in the dissemination of research into application. Most studies portray a highly positive image of the impacts generated by SBEFs. However, the literature is dominated by a handful of successful case examples and some authors question whether the general prominence given to SBEFs in government policies can be justified. SBEFs seem to be a special type of firms that have other purposes than other startups in terms of technology transfer and other societal benefits. However, many potential types of impacts have not been sufficiently explored by empirical data. For instance, successful acquisitions are rarely included in the datasets used. Much work remains before any general conclusions can be made whether and under which conditions SBEFs creates an impact that exceeds the alternatives. Another subset of 28 articles included empirical data regarding the links between the start-up conditions and the performance of SBEFs. It seems clear that SBEFs face particular opportunities and challenges compared to other new ventures related to their academic origin and their need to develop links to commercial actors, particularly in the earliest stages of venture development. The studies investigate a number of factors have been found to influence the performance of SBEFs in different contexts, but how these factors interrelates remains scarcely studied. There is no doubt that policies and support can promote the performance and impacts of SBEFs, but the mechanisms leading to successful outcomes appears to be highly context specific. Thus, policy actions need to be differentiated according to the particular regional and institutional context, the phase of development, and the business model chosen by the SBEFs, as well as the type of impacts sought. In the 42 studies reviewed above that considered impact and performance, we observed that a broad range of indicators were used. Most studies were looking at firm level performance using indicators such as survival, employment, resource acquisition, financial indicators and growth measures. Although indicators to measure impact at regional level and in terms of technology transfer were discussed in several studies, it seems very difficult to measure these types of outcomes. None of the studies explored the non-economic and societal impacts generated by SBEFs in any detail. SBEFs have long development paths and successful firms typically remain small for a rather long time period before they start to grow. To be able to capture this development there is a need to measure their impact over a longer period of time than most current studies have done. Studies following the development of a cohort of SBEFs or university technologies over an extensive period of time, where different economic and societal outcomes are considered, would yield important new insights.