Academic entrepreneurship: the future driving force of economic growth
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January 2012, Cezary Iwan
There is little doubt today among economists that in the years to come, the pace of economic development in all developed countries and their individual regions will largely depend on the ability and determination of the young generation to create their own businesses, in particular through the creation of technological start-ups, i.e. companies based on innovative ideas and solutions.
The processes taking place in advanced economies show clearly that companies of this type contribute greatly to the creation of new jobs and increase significantly the value of manufactured goods and services. Thousands of small and medium-sized, relatively "young" enterprises constitute the fundament of the German economy. The impressive development of Israel's economy is primarily based on innumerable technological start-ups founded in the country every year, many of which are conquering successfully global markets.
Global developments and trends
In the time period 1980-2010 most of the net employment growth in the U.S. was the work of companies "younger" than 5 years. According to Carl Schramm, an economist and president of the Kauffman Foundation, the world's largest foundation devoted to entrepreneurship, "the United States, in order to maintain economic leadership in the world, should recognize entrepreneurship as its main comparative advantage. Nothing else can be a better leverge for the economy.”
Promotion of entrepreneurship is a key element of the national innovation strategy of President Barack Obama. One of the initiatives launched in 2011 within the framework of this strategy is "Startup America", a program aimed at the increase in the number and scale of new businesses that contribute to economic growth, generate innovation and create new jobs.
The most common forms of entrepreneurship are micro-entrepreneurship (small services) and the formation of small businesses that fill a niche market, but never go beyond it. But the most valuable type of entrepreneurship is the so-called high-growth entrepreneurship, comprising technology startups – companies that introduce breakthrough innovations and contribute to fundamental changes of entire industries, or to the creation of new sectors of the economy. Such innovations are in most cases the result of business activity undertaken by people associated with universities (researchers, doctoral students, graduates) and the formation of academic spin-offs. Observations of processes occurring over the last decade in developed countries indicate that more and more often authors of such disruptive technologies are entrepreneurial academics at a very young age.
The founders of companies considered at the moment as the most innovative and successful globally – e.g. Apple, Google and Facebook - are good examples of this trend. After taking a closer look at the histories of many other well-known multinational companies, it appears that in many cases their originators and founders were also creative people in their 20s and 30s - post-graduate students or graduates of prestigious universities. This allows one to formulate the thesis that economic development and growth in Poland and the rest of the world will depend in the future largely on the scale and intensity of the development of academic entrepreneurship, especially among young academics.
Polish experience: room for improvement
Numerous publications and reports published over the past few years show clearly that despite a growing number of initiatives and programs aimed at the promotion of academic entrepreneurship in Poland, a significant progress in this area in the form of large-scale formation of spin-offs has been almost unnoticeable so far, both nationally and in individual regions.
The reasons for such a modest commercial activity of academics and a small number of operating spin-offs have been diagnosed partly by the Wroclaw Research Centre EIT + between 2010 and 2012 as the company was looking intensively for innovations with promising market potential. As a result of direct meetings with more than 80 teams of authors of innovative solutions, associated with universities located mainly in Lower Silesia, the following major barriers to commercialization of knowledge have been identified:
- insufficient knowledge of the realities and existing business and market mechanisms among scientists
- lack of market-oriented attitudes among academics (too much focus on the proposed idea/solution, disregard for the importance of market analysis (competition!), execution as well as sales and marketing activities
- lack of experience and knowledge of good practices in successful commercialization of research results (what needs to be done step by step to transform an idea into a profitable business)
- excessive burden placed on academics with teaching and research work, which necessitates to entrust business management to other people with time and relevant skills
- poor determination of scientists, particularly staff with many years of experience, to start and run a business (low motivation, lack of predispositions).
At the same time, previous experience of the Wroclaw Research Centre EIT+ shows that cooperation with the academic community aimed at the creation of spin-off companies works best and is most fruitful in the case of doctoral students, recent graduates, researchers with relatively short duration of employment at the university, and former academics working in industry.
It turns out repeatedly, that when the author of an innovative solution is an experienced scientist involved in teaching and scientific work, who does not have on his team or in his immediate environment people who could be entrusted with the coordination of business activity, collaboration often proves to be impossible and ends in fiasco.
Initiation of business ventures with the participation of experienced, professionally active scientists is possible and productive only when their role is limited to R&D, supervisory and advisory functions, and the management, implementation, operations and sales and marketing are handed over to vigorous, flexible, results- and market-oriented business people with considerable market experience.
The above considerations lead to the conclusion that in order to increase the scope and pace of development of academic entrepreneurship in Lower Silesia and in Poland, it is necessary to take on a continuous basis the following actions:
1. Creation and implementation of educational programs and trainings on entrepreneurship and effective commercialization of knowledge, with particular emphasis on "learning-by-doing" initiatives and focus on promoting the principles and mechanisms of the market.
2. Promotion of academic entrepreneurship within the academic world, especially among young researchers and students in their final year of study, and identification of individuals/teams motivated and having predispositions to engage in business activity.
3. Facilitating and diversifying access to finance for entrepreneurs at an early stage of development.
4. Identification, continual monitoring and removal of barriers to entrepreneurship: formal, organizational and mental.
5. Promotion and dissemination of active cooperation between authors of innovative solutions, the industry and investors.
6. Popularization of academic entrepreneurship, among other things, by broad public exposure of success stories and by building awareness about the advantages of involvement in knowledge-based business activity.
Challenges and homework for tomorrow
The resources and processes that for the last 20 years constituted the driving force of economic growth in Poland – privatization, infrastructure investment, foreign direct investment resulting from access to a large market and relatively well-skilled and cheap labor, EU subsidies and funds - are running out and/or coming slowly to an end. At the same time, the continuous increase in average wages of Poles is not accompanied by a significant improvement of labor productivity. This means that in the near future there is quite a high risk of permanent and progressive loss of competitiveness of Polish economy. Combined with the problems of the European and world economy, it may result in many years of stagnation, drifting and “losing on distance” to the highly developed countries.
So it necessary to activate on a large scale resources remaining still at the disposal. One such resource is without doubt Poland’s human capital. One of the few strengths of the Polish economy, causing envy and admiration in Western Europe, is the fact that it is one of the biggest hotbeds of whole masses of well-educated and qualified graduates in all fields, including engineers of various specialties. Nurturing and making wise use of this phenomenon should become a priority for all those who design and shape development programs, decide about the direction of change, create legislation and engage in civic initiatives.
About the Author
Cezary Iwan is the Head of Spin-off Incubation and Management Unit at the Wroclaw Research Center EIT+.
mail: cezary.iwan@eitplus.pl
