Spin-out productivity outperforms peers

University spin-offs have lower economic results than startups from other sources during their first three years, but their productivity surpasses the other companies after that, according to academic research.

Researchers Pere Ortín Ángel and Ferran Vendrell Herrero from Spain-based Universitat Autònoma de Barcelona (UAB) and UK-based University of Birmingham analyzed the productivity of 104 university spin-offs and the other is made up of 73 technology-based, non-university companies in Spain founded between 1994 and 2005.

The study was published in the journal Technovation* and compares what is known as the total factor productivity of these two samples – a technical term economists use to refer to the greater production systematically obtained by some companies when compared to their competitors even when using the same levels of factors of production (resources such as labour or capital).

According to the study, in the university spin-offs this productivity is, on average, lower in the year in which the company is founded. Nevertheless, data shows that after two or three years this productivity equals and after the fifth year the total factor productivity is higher among university spin-offs.

Distinction is made between substantive capacities, those possessed at a specific moment, and dynamic capacities, those which aid to increase the companies substantive capacities in the long term.

Previous studies were said by the researchers to have focused on the first years of life of a university spin-off and argued that their poorer economic results were caused by the differences in the commercial and management capacities of its founders. This study was said by them to be the first to measure the differences in dynamic capacities in these types of companies. The results were said to show that, in the case of university spin-offs, dynamic capacities were higher, which could be due to academic entrepreneurs having “a greater learning capacity”.

Ortín, researcher from the Department of Business of the UAB, said: “One of the possible knowledge transfers between university and business management would be to provide academically-created learning tools, such as statistics, experimentals [and] data treatment, and therefore systematise and improve learning processes within the business sector.”

*Ortín, P., Vendrell F. (2014) ‘University spin-offs vs. other NTBFs: Total factor productivity differences at outset and evolution’, Technovation, 34, 2, 101-112.

Picture: Stanford University Hoover Tower. Source: Wikipedia.