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International Entrepreneurship and Management Journal
Published in: International Entrepreneurship and Management Journal 3/2017

29-12-2016

Alternative growth patterns of university spin-offs: why so many remain small?

Authors: Nora Hesse, Rolf Sternberg

Published in: International Entrepreneurship and Management Journal | Issue 3/2017

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Abstract

The aim of this paper is to provide explanations for alternative growth patterns of university spin-offs using qualitative research methods. By matching the willingness of academic entrepreneurs to the ability of university spin-offs to grow, four basic types of university spin-offs are derived: ambitious, unwilling, saturated and impeded university spin-offs. By combining theoretical considerations from a specific concept of growth phases and empirical regularities from 68 university spin-offs we construct eight different subtypes of university spin-offs. The results show that the majority of university spin-offs either lacks entrepreneurial growth intentions or is impeded by reasons caused by personal characteristics of the academic entrepreneur, the university spin-off or the external environment. Some subtypes like life stylists, entrepreneurial academics and late bloomers face problems or share attitudes that are very specific in the context of university spin-offs. This paper contributes to the literature on university spin-off growth by providing an in-depth analysis of the underlying reasons for the founders’ willingness and ability to grow or not to grow. This study also reflects the heterogeneity of university spin-off growth and considers the evolutionary perspective. Growth is not only understood as a consequence of an economic process but also a personal and social process. In this way, this study augments the existing concepts of growth phases.
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Appendix
Available only for authorised users
Footnotes
1
For a working definition of university spin-offs see Definitions Section.
 
2
Firm’s performance can be measured in many different ways. Common indicators used in literature are survival rate, employment growth, sales growth, productivity and credit rating (Helm and Mauroner 2007). This paper mainly focuses on employment as a measure of growth because it has the most consistent positive correlation with other growth measures and is a key interest among policy makers (Wiklund 1998; Davidsson et al. 2007). Furthermore, it is less susceptible to fluctuations and a good indicator for the university spin-offs’ overall assets (Gibcus and Stam 2012). Nevertheless, these propositions do not apply to all branches equally.
 
3
Ambitious entrepreneurs are defined as entrepreneurs, whose firms have high growth rates in terms of sales and/or employment in the past and expect to grow above normal in future years (Hermans et al. 2012).
 
4
Leibniz Universität Hannover had 21,478 students and Georg-August-Universität Göttingen 26,381 students in the summer semester 2013 (Georg-August-Universität Göttingen 2013; Leibniz Universität Hannover 2013).
 
5
So-called MINT subjects (Mathematics, Informatics, Natural Sciences and Technology) (Kulicke et al. 2008). The number of students enrolled in MINT subjects is 12,447 at the university in Hannover and 12,787 at the university in Göttingen (Georg-August-Universität Göttingen 2014a; Leibniz Universität Hannover 2012)
 
6
The university in Göttingen has 3972 scientific staff members and is considerably larger than Hannover with 2509. It has to be taken into account that the number for the university in Göttingen includes 1545 scientific staff at its medical center (Georg-August-Universität Göttingen 2014b; Leibniz Universität Hannover 2012) .
 
7
In 2011 the university in Hannover raised third-party funding in the amount to 13.1 Mio. Euro, which constitutes 3.3% of its overall revenues (Leibniz Universität Hannover 2012). The third-party funding at the university in Göttingen are considerably lower at 8.8 Mio. Euro. The share of industry funds of Göttingen’s overall revenues is 0.8%. This low share is due to the high amount of public funding for its medical center. However, when excluding the medical center from the calculations the share is still only at 1.6% (Georg-August-Universität Göttingen 2012).
 
8
Although the cases were also equally distributed between the two chosen universities, we did not differentiate the academic entrepreneurs according to their parent university in this study, because this was only relevant for the central research project. For the aim of this present study the parent university is not relevant.
 
9
The open-ended questions are available from the authors upon request.
 
10
The results of this study are based on university spin-off growth in regard to the number of employees. Of course, the employment indicator is not without weaknesses (as other indicators, too). We chose employment as indicator as this measure is less susceptible to short-term fluctuations (than, for example, monthly sales) and, given the high policy relevance of university spin-offs, employment is by far the most interesting indicator of economic growth policymakers are interested in (see also footnote 2). Other definitions of university spin-off growth could lead to different results. Furthermore, university spin-off growth should not be equated with success, because success always depends on the respective business goals (Hayter 2010; Helm and Mauroner 2007).
 
11
University spin-offs founded 2008 and later were not taken into account to avoid bias. This leads to a reduction of cases from 85 to 68 university spin-offs.
 
12
We are grateful to an anonymous reviewer for pointing this out; see also the previous footnote.
 
13
Due to our qualitative research design and the available resources we were not able to cover the growth of the spin-offs in our sample by quantitative growth indicators in a narrow sense. We know that the best method to identify and compare growth and growth paths of a cohort of university-spin-offs would be to collect and use real panel data (and not just longitudinal data in a broader sense). However, we unfortunately have not had the opportunity to interview the same spin-off founders several times over an extended period of time of, say, ten years. To the best of our knowledge no other empirical study on university spin-offs was able to use such data in order to measure growth.
 
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Metadata
Title
Alternative growth patterns of university spin-offs: why so many remain small?
Authors
Nora Hesse
Rolf Sternberg
Publication date
29-12-2016
Publisher
Springer US
Published in
International Entrepreneurship and Management Journal / Issue 3/2017
Print ISSN: 1554-7191
Electronic ISSN: 1555-1938
DOI
https://doi.org/10.1007/s11365-016-0431-6

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