Research universities are becoming increasingly essential for economic success. The research performed by universities creates new knowledge and serves as a basis for innovation that benefits industry. Indeed, many industries have relied on university research for commercial purposes. There has been a rise of commercialization of academic research in recent decades, particularly in the United States, as new technologies and innovation transfer from universities into the private sector. This technology transfer takes many forms: trained graduates who get private employment; personal interactions between industry and academia; or publication of research results. However, an important method of technology transfer is the entrepreneurial activity of university faculty and the licensing of university-produced intellectual property to established firms or new start-up companies.

Historically, there were high barriers to technology transfer from universities, especially with licensing intellectual property. Federal funding of university research entailed the government retaining title to inventions made with those funds, regardless of who performed the research. Licenses issued to that research were primarily non-exclusive. This made it challenging to offer innovations and technologies to the private sector so that they could be commercially profitable. Then, in 1980, the Patent and Trademark Law Amendments Act – often referred to as the Bayh-Dole Act – set a legal framework for university technology commercialization and created a stable environment that allowed intellectual property rights to be retained from federally funded research. The Act allows inventors from universities or other nonprofit institutions to retain intellectual property ownership from federally sponsored research and development. Because of the Act, patenting at universities increased dramatically, and many universities have set up methods, such as technology transfer offices, to transfer their patents into the private sector.

Technology transfer offices (TTO) promote the utilization of inventions from university research. In the United States, they allow universities and researchers to capitalize on the intellectual property rights they gained through the Bayh-Dole Act, while attempting to resolve concerns regarding conflicts of interests. They identify research that has potential commercial interest, assist with work related to marketability and funding sources, provide legal and commercialization support to researchers, and serve as a liaison interested in commercializing university-developed technologies Many universities have channeled their innovation activities through a central TTO. By selling, licensing, or patenting technologies or research, universities may recover the investments of its project or support future research while making that property available to society.

TTO’s, however, are not without their criticisms. While some TTO’s are effective at spreading innovations into the marketplace, others have been criticized as impeded technology transfer by adding extra layers of administration and bureaucracy. For example, research has shown that some university administrators would rather use TTO’s as generators of university revenue instead of focusing on transferring technologies, neglecting some innovations that have little profit potential in the commercial marketplace. Academic red tape with some TTO’s tie up university faculty with patent-related paperwork and which detracts from the main research mission. TTO’s personnel sometimes have little knowledge of research results, innovation, and the marketplace for an invention. Finally, intellectual property management and technology transfer revenue distribution policies can be confusing and rigid.

Moreover, there are questions of TTO’s impact on the university’s core academic mission. Some argue that a focus on patenting innovations – for purposes of commercialization and profit – impedes the free flow of information from university research. Researchers may delay publications of their findings before they patent technologies that could stem from them, thereby risking impeding innovation. A focus on research into commercial-ready technologies could lead university researchers to focus on applied research, rather than the basic research which is often the purview of universities and fundamental to broader innovation across sectors. This diversion of research priorities risks the critical scientific exploration that leads to new discoveries and knowledge. However, many scholars find that there is little evidence that suggests this shift is occurring; likewise, some have found that commercial activity increases research efforts and publication outputs. This is to suggest that entrepreneurial activity at universities do not hamper scientific performance.

There are also issues of conflict of interest and incentives for university faculty to engage in technology-related research and transfer. Researchers may be sponsored by industry for their work on a specific technology or scientific inquiry, which can lead to ethical issues related to their results, methodology, or priorities. Meanwhile, while there are several reasons why scientists, with proper incentives, would be more likely to coordinate with industry to disclose and transfer inventions, scholars have found that incentives do not motivate university faculty to engage in entrepreneurial activities. Indeed, some have found a negative correlation between monetary incentives given to scientists whose inventions were licensed and the number of start-up companies that use that licensed technology. Some argue that universities have thus struggled to find an incentive structure that prompts faculty to commercialize research and foster an entrepreneurial culture within the university.

At any rate, TTO’s have blossomed in the United States. At the time the Bayh-Dole Act was passed in 1980, there were 25 technology transfer offices at United States universities. By 2005, there were over 3300. Success with TTO’s widely varies, with a wide disparity among universities of revenue, invention disclosure, patenting rates, and licensing across universities. In 2012, 8 universities – the top 5% of universities earning revenue on university-produced research – took 50% of the total licensing income of the American university system. This is manifest from differences in the organization structure of TTO’s, such as staffing levels, funding sources, procedures for sharing royalties between the inventor, school, and department, and relationships with the faculty. Moreover, disparities reflect differences in university factors such as the scale and specialization of their research portfolios, historical reputation, geographic proximity to potential investors and industry partners, and their public vs. private status.

TTO’s, along with the growth of university-based innovation through research and development, has lead to a boom in the establishment of start-up companies. TTO’s are placing emphasis on creating new start-up companies as the optimal path of commercialization. To achieve that aim, some universities have created incubators and science parks where start-ups can share space and services, and where there is closer proximity and collaboration between the entrepreneur and the researcher. Others have launched university venture firms to invest in start-up companies that are commercializing university-produced and licensed technologies. This may be a measured success; indeed, research has found that the number of start-up firms commercializing university research grew from 241 in 1994 to 555 in 2007. However, other research has indicated that there is marginal, if no, causation between university incubators, university venture capital investments, and the rate by which new firms are launched.

However, entrepreneurial universities do ingrain a culture of innovation and entrepreneurialism that translates from academia into the private sector. Researchers, academics, and students who participate in basic and applied research at a university and secure a license for a certain technology developed through the course of their work can then start-up their own company and try to commercialize it. To that end, universities that engage in technology development do have a “spin-off” effect in that the individuals who participate in it then propagate out into the private and entrepreneurial sector.

American research universities have been generally successful in creating new innovations and inventions for high-tech industries, and the economy would suffer if it was without an entrepreneurial role for universities. The transfer of new technologies plays an important role in the creation of new products and industries. Universities have stimulated this transfer through the establishment of technology transfer offices and assistance to start-up firms that seek to commercialize that technology. This is not without criticisms, of course, nor has it shown itself to be as effective as commonly assumed. However, the role of the university as an innovation generator has only recently begun and is constantly evolving; future models may see universities reorganize their education and research and reconsider how to best disseminate knowledge and technologies into the economy.