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Inverted academic spin-offs Nikolaos Karanassios1, Dr. Dimitrios Paschaloudis2. Aikaterini Poustourli3 Abstract Enterprises with a solid market share do not venture with innovative ideas, taking into consideration the risk to affect their entire status if their innovation fails. Innovation is addressed to the consumers, one or the other way, even when deals with production systems or chemical components. Innovative ideas are most expected to be the outcome of research, so their provenience is more probable to be the Academic than the business world. Small and Medium size Enterprises that cannot afford their own research activities, assign their research to the nearest University Laboratories and co-operate with the Professors and Researchers, in order to prove the viability of their business ideas and create the relative necessary technical documentation. When the research ordering enterprises have all the results, they still are reluctant to implement innovation, some because they consider the results as “academic” or theoretical, others because they feel that they take all the risks, while researchers stay at the safety of the Academia. A survey about the hypothetical involvement of researchers (Professors, Research Staff and students) in partnership with the research ordering enterprises, founding new enterprises, as a risk sharing procedure, has been addressed to entrepreneurs, financiers, professors, researchers and students. The survey place was a small town and surroundings of Northern Greece, where the level of industrialization is bellow the Greek average and entrepreneurship is mainly service oriented, where a 20 year old “Polytechnic” is operating. Key words: Entrepreneurship, Academic Spin-Off, Applied Research, Innovation Introduction The conclusions of the Conference in Lefkada about SMEs development and Economic Growth, included a statement that “in spite of all policies, new and especially innovative enterprises tent to concentrate in places where other similar businesses are already successful, rather than where important research is being 1 Nikolaos Karanassios, B.Sc. In Economics at the Aristotle University of Thessaloniki (Gr) 1978, Diploma di Perfezionamento in Direzione Aziendale at the L. Bocconi, Milano (It) 1980. Assistant Professor at the “Technological Education Institute” of Serres (Gr), CEO of the Serres EC- Business and Innovation Center, in charge for entrepreneurship training and business planning assistance to students. CEO of the EC-BIC of Serres. E-mail: firstname.lastname@example.org 2 Dr. Dimitrios Paschaloudis, GEUG-Diplome d‟Etudes Univercitaire Generale, Paris X- Nanterre, License–Economie Internationale, ParisX-Nanterre, Maitrise-Economie International, ParisX-Nanterre, DEA-Psychologie des Masses, ParisX-Nanterre, DEA- Economie et Structures, ParisX-Nanterre, Doctorat-Eonomie et Structures, ParisX-Nanterre. Professor of the “Technological Education Institute of Serres”, Director of the Faculty of Business Administration and Economics. Scientific. Supervisor of the Career Services Office. E-mail: email@example.com 3 Aikaterini Poustourli, Diploma of Production & Management Engineer of Technical University of Crete (GR). Visitor Professor at the “Technological Education Institute” of Serres (Gr). Executive manager of the Career Services Office. Accredited Auditor of ELOT SA (Hellenic Organization for Standardization) for management systems in accordance to standards ISO 9001:2000, ISO 14001, ISO 18001. E-mail: firstname.lastname@example.org. done”. This gave the idea to our team to browse through our previous surveys and plan and execute more surveys, in order to identify some important factors, which mainly influence the creation of innovation and start-ups. It is well known that Europe has still a grate difference in levels of development, especially if the levels and rates of development compare Regions and in-Region Provinces. Europe is also behind USA, Canada and Japan, a reason why the European Policy is promoting entrepreneurship in all levels of education. Researchers are continuously publishing correlations explaining the reasons why people do not take the risk of creating a new enterprise or why established companies do not innovate. Such correlations, based on surveys, have had little success, when policies were based on their results and explanations. Whatever Entrepreneurs, Academics, Researchers or students tick on a questionnaire, when it comes to the implementation of their intentions, there is an unknown mix of opposing and favoring influences, which affect their decisions and actions. The decisions made and the actions taken are a result of a thorough examination, much different than answering hypothetical questions, making surveys biased and their results nothing more than indicative. Each of the above groups involved in business creation and innovation implementation, has already decided to play a different, but specific role in the society and everyone in the group is expected to behave according the stereotypes defining this role. Even when they are convinced to modify the characteristics of this role, thus expressing their desires in a survey, their family and their social environment retain them from mixing their role with characteristics of another group. For example, a student is expected to follow a career as an employee, either in the industry or in the Academia, as Academics are expected to teach and produce results of basic research, researchers to produce patents and entrepreneurs to profitably exploit resources and opportunities. There are many persons, among each group, seeing a change in the definition of the role they have been involved with, called with different, but yet with the same meaning, names, such as “globalization”, “knowledge based economy”, “new economy”, “interdisciplinary skills” or other. Everyone has a different point of view. The Academic and Research point of view is expected to analyze the interactions of scientific, engineering, educational and economic factors. The student point of view is expected to be concentrated on acquiring demanded knowledge and skills. The entrepreneurs‟ point of view is expected to be concentrated in the exploitation of opportunities. The European policies, regarding entrepreneurship and innovation, are directed to a parallel system of targets. On one hand, they promote entrepreneurship in all Academic education and non vocational training systems and levels, on the other, they are aiming to motivate and help enterprises to invest in academically approved research. The results of such policies are slow, while they are expected to create positive changes in the next generation, with a high degree of uncertainty, not because they are poorly assessed, but because it was impossible to foresee all the changes in the global economy that will happen as a result of risky initiatives taken anywhere in the globe. Excellent ideas have appeared and are financing joint research, between Academic Institutes and Enterprises, but the results are limited to big companies and little innovation. This may be a reasonable result, while the brilliant minds are attracted by and Academic career, which bases recognition on an exhaustively documented procedure, meaning both laboratory and bibliographic foundations, while innovation may be defined as a breakthrough and as such is potentially profitable and surely risky. These conditions have influenced our perception of the socio-economic environment and have driven us to search for another perspective. Since the policies of motivating the enterprises to do some research, get closer to the Universities and the Research Institutes, recruit researchers, young graduates, on the one hand and educate and motivate students to start-up enterprises, as well as Universities to exploit the research results, have not reached their goals, we assumed that all those activities are aiming to persuade people to take risks that they are not used to take. Entrepreneurs are not used in devoting funds to research, because they are not able to calculate the return on their investment. Academic and Research staff members, measure the research outcome by the papers and publications produced, not the market value of their research results, the later being the only understandable amount for the entrepreneurs. The students usually measure the outcome of their studies in terms of career and salaries, orienting themselves to the disciplines that appear to provide them with the most popular knowledge and skills. With these considerations, we found it interesting to examine a different approach and so we arrived at the “risk sharing” assumption. The mainstream Despite a series of public presentations of comparisons between faster than the European expanding and growing economies, in the form of awareness about the bureaucratic restraints of innovative initiatives and the respective enterprise creation and development, both business persons and researchers, still affect policymakers, in terms of scenarios based on assuming that the sum of public and private expenditure in research, functions as a lever of growth and development. This is true, since numeric calculations match, when examined in a closed economic environment. In a global economy with little or no barriers at all, new forms of comparison and assessment should emerge. Quantitative methods are, nowadays, very accurate, but they still need a stable global environment, stated in Latin as “ceteris paribus”. What all social actors have considered as a description of the socio-economic environment is that: Innovation is generated by researchers attracted by the remuneration, to be provided to them by the entrepreneurs, who will be convinced to exploit it. Innovative ideas originate from technological and scientific knowledge and research. Universities are interested in producing and commercializing technology and innovation. SMEs are ready and capable to invest in early stage technology and new scientific discoveries. Subsidies and financial aid to SMEs will produce the desired results. Innovation concerns only the implementation of high technology. The main initiatives that transform these mainstream perceptions, to name a few, are: Entrepreneurship Education Academic Spin-Off Incubators Technology Parks Technology transfer Venture Capital Start-up Capital Business Angels Promotion of joint and commissioned Research Risk Capital Benchmarking The European experience of the implementation of such initiatives, have not been as successful as policymakers expected. We tend to believe that those initiatives, having been adopted after their success in the USA, did not take into consideration the special characteristics of the European conditions, in respect of the social values, occupation expectations, University governance and finance, social leadership, banking system and procedures, research funding and taxation systems and conditions, as well as bureaucracy. Eurostat anb Innobarometer present data that justify the change in European policy about entrepreneurship and innovation. Inverting the mainstream Our point of view is that entrepreneurs, since they know the business and the market, are the persons with “business ideas”. Whenever their ideas have a need of research, or simply the products or processes are science and knowledge intensive, all the available options, like hiring researchers or assigning research to Universities or Research Centers, they are reluctant for three main reasons: They cannot “feel” the risk, never mind calculate it, while they lack experience and relative knowledge. They cannot safeguard their investment in terms of secrecy. They believe that the members of Academia and the students alike deliver the assigned work in a scientific, rather than a business form. This quite understandable tendency of the business persons has driven EU funding for Research and Development mostly to Medium than Small companies with previous experiences in how to handle research maters. Research oriented persons see almost the same obstacles from the opposite side: They cannot calculate the market risk, because they are not used in taking market risks. They fear that entrepreneurs will exploit them, by rewarding them with only a small fraction of what the value of their research results worth. There have been some attempts of bridging this apparent conflict. Sensors of Innovation In 1989 at the Universita della Calabria, a non profit organization named Centro d‟ Ingegneria Economica e Sociale (CIES), as a tool for regional development. Under this umbrella and as Training Center, the Scuola Superiore Majise emerges as an opportunity for graduates to improve their skills in Knowledge Management, Logistics, Cultural Heritage Management, Logistics etc. From 1996 we are discussing with Prof. Jacques Guenot, exponent of the CIES, the possibilities of creating a network of research, training and commercial exploitation of the results in the context of the Mediterranean countries. The result came as “Sensors of Innovation”. Among others, the “Sensors of Innovation” bring the research ideas to the entrepreneurs, so that they prepare the conditions of adopting the results that seem interesting, before any research results appear. The network is still under expansion, while is welcome by the policymakers. For example, the President of the Italian Republic inaugurated the node in Belgrade in 2002. Verite / URENIO At about the same time (1990), the initiative of the Professor Nikos Komninos of the Aristotle University of Thessaloniki to create a center of Innovation facilitation of the enterprises, started with a team of Territory Planning Engineers. From 2001 a subset of this initiative is to manage and benchmark innovation VERITE (Virtual Environment for Innovation Management Technologies). It has created a series of IT tools, like databases, business planning tools and produced benchmarks, already accepted, by the EU authorities, as good practice. In a series of meetings with Professor Komninos, one with the participation of Professor Guenot, the main issue has been how to convince the entrepreneurs to invest in the research ideas of the researchers, while usual methods seemed to have disappointed them. Although there has been no conclusion, sharing undocumented experience has been more useful than evaluating collected data. Risk Sharing (our assumption) Driven by the awareness of the lack of novelties with a potential to bring the interests of Researchers, Entrepreneurs and Investors together, we started examining where these interests overlap. Reviewing our past surveys, we have had enough initial indications which led us to present a hidden, yet obvious, alternative. Other institutional or individual research have exhaustively showed the linear interdependence of the expected reward as an investment of time, money and effort, levered by intelligence, experience and knowledge, in either the Academic / Research or the market world. The expectations, although there are statistical methods of evaluation, needing previously registered “cause – effect” tests, have to be otherwise be taken into consideration. It is common sense that neither enterprises nor research, while personal ambitions prevail, would accept to consume their resources, for just the sake of the scientific laboratory documentation. A potential bridge between the business way and the Academic one of accepting to take risks of investing money and efforts, might be one that is founded on sharing the risk of a research, that hypothetically drives to, both scientific and entrepreneurial criteria, possible satisfaction. To what we know, there have been no previous attempts of sharing the risk of the success of a new business idea which involves innovation as a result of academically coherent research, between the investors and the researchers. Risk Capital and Start-up Capital are addressed to researchers with a business idea, business culture and appropriate research result, together with the willingness to change their lives from members of Academia to Entrepreneurs. Business Angels, whenever there are such available persons, have already decided to stay out of the market and the anxiety that goes with competition, preferring to support already tested ideas, so that they have faster growth. Venture Capitalists, in order to diminish the risk for their clients, are in fact financing operations of big companies in the fields of new technology or biotechnology, heavily affected by the banking mentality, where collaterals are much more important than expectations. Technology Parks and Incubators are usually connected to Universities, thus with a mainly engineering, rather than marketing orientation. Whenever other organizations, such as Business and Innovation Centers (BIC), run incubators, hosted business initiatives are discouraged by the difficulties in accessing research funding, in comparison with the University governed once. There is no need to display the obstacles that the Academic establishment would place to such initiatives. It is well perceived that they cover Student Unions, Institutional Governance, even State Finance. Sharing Risk, is our hypothesis, which until now has only indicative opinions, but is about to be implemented by September of this year. This is described as: 1. Create a task force of three persons with a good reputation, both among the entrepreneurs and the members of Academia. 2. Promote, at local level, the social acceptance of business risk taking. 3. Using personal approach, detect the intentions of entrepreneurs and members of Academia, of taking the risk to venture in business. 4. Organize confidential and guided meetings between interested persons from Academia and entrepreneurs, coordinated by one of the task force members, where participants will sign a secrecy agreement and so reveal their objectives. 5. Assess the outcome of the meetings, issuing a confidential report, addressed to all parties involved, about the feasibility of the application of the business idea. 6. Keep both parties in line with the business idea; the entrepreneurs rushing for research results and the researchers in performing the research strictly for market exploitation. 7. Assist the team in the preparation of a complete business plan. 8. Assist the “partners” in founding a new enterprise, especially by evaluating and equalizing the contribution of each, like money and sales, offered by the entrepreneurs and know how and scientific documentation, offered by the professors or the researchers, and / or experimentation / study / commitment, offered by the students. This is our point of view about sharing the risk in equal terms with the expected profits, under a constant continuity, as property is guaranteeing. The Surveys We have executed several relative surveys about the spin-off potential, research and innovation performance and readiness of the SMEs, quality certification and others, in the last decade. They provided us with information related to the survey targets, that served their purpose, but without any other value, exceeding the purpose and the time. Two of the surveys in the last two years, although unintentionally, have provided us with collateral information, that brought to us the idea of “risk sharing” as a potential trust platform between business and science persons. Students Survey Identities In September 2003 and in September 2004, 110 students of the Technological Education institute of Serres, a 100.000 inhabitants town, 50 km from the Bulgarian border town with a little less than 10.000 students of University level, which offers courses of Business and Engineering, have been asked to answer 50 questions. The sample has arbitrarily chosen, both times, but the answers had no significant differences. In the sample forty seven per cent (47%) are male and fifty three per cent (53%) are female. The vast majority of the participants come from urban areas. In fact, given the still low mobility of the population within the country and the answers given to the questions “where does you family lives” and the percentage of house and apartment ownership of the participants families, indicating permanency of living in the specific area – city, we conclude that almost seventy five percent (75%) come from an urban area (city with more or with less fifty thousand inhabitants) and only twenty five percent (25%) come from rural areas (villages or towns with more or with less than thousand inhabitants). It is widely accepted that young people in urban areas receive more stimuli concerning entrepreneurship and have more opportunities to observe and experience business activity than those in rural areas. This gives enough information about the surveys. Relative Questions The first relevant key factor was whether the participants were already informed about entrepreneurship in a personal way rather than just reading about it or receiving information through their studies or other sources. In order to decide that, we asked the participants whether a close relative of theirs (including their parents) currently has any business activity. The results, indicate that forty-four percent (44%) have a relative that is in business. This is consistent with the findings concerning the participants‟ parents‟ occupations. As for the type of business activity exercised, the majority is focused on commerce and services with a sixty six percent (66%), followed by small-scale manufacturing at nineteen percent (19%) and industry with the remaining percentage of fifteen percent (15%). The fairly large percentage of participants that have a close relative in business reveals that they are able to examine from the inside the opportunities and the problems presented and make up their own minds whether they would like to create a business or not in the future. Family expectations are an important factor that may influence the opinions and attitudes of the students towards entrepreneurship. A thirty nine percent (39%) of the families of the participating students would like to see them having a career as civil servants. Another seventeen percent (17%) of the participants‟ families would like to see them working as executives in private enterprises, while thirteen percent (13%) would prefer them to have an industrialist‟s career, with the careers of merchants and small-scale manufacturer being in the last places of preference with two percent (2%) and one percent (1%) respectively. The participating students‟ aspirations are remarkably similar to their parents‟. When asked what would be their first choice of working activities, thirty nine percent (39%) of them rated “civil servant” as their first choice, twenty percent (20%) preferred to become self-employed professionals, eighteen percent (18%) would like to become executives for a private enterprise, eleven percent (11%) would like to become industrialists, five percent (5%) would prefer to be employed in an organization (it was not specified whether the organization would be public, closely connected to the state, or not), five percent (5%) would like to work as merchants and only two percent (2%) would prefer the career of a small-scale manufacturer. Entrepreneurs / Investors Survey Identity The empirical research has been carried out from January to April 2004. The surveyed companies were randomly selected, while the sample corresponds to the total distribution of size, legal status and operating sector. Companies contacted were 200, while the questionnaires returned have been 153. Questions were closed, based mostly on Likert Scales, while some questions were set to verify the accuracy of the answers. Questionnaires have been handed out by interviewers, trained to assist the companies to answer. The interviewers were trained to examine the validity of the answers. Only 9 of the answered questionnaires have been dropped because of the inaccuracy, while only 3 have been excluded by the interviewers, because of apparently false information. Number of Staff 10% 5% 12% 73% 1-5 5-10 10-15 15- The average of the Greek economy does not differ from the sample. Relative Questions The main relative question has been; do you turn to the Academia in order to associate for innovation, or elsewhere? The answer is obviously leading to the lack of understanding common interests. Where do you search for innovation? Famous Companies Univestities TEI Chambers of Commerce NGO Recommendations They find us They find us Famous 19% Companies 25% Univestities 8% TEI 2% Recommendations 37% NGO Chambers of 2% Commerce 7% Conclusions Bringing together Science and Knowledge with commercialization is not a question of how much money is spent, but procedures of concentrating to the common interests of cooperation. The influence of the social stereotypes of both Academia and Industry, need “good practice” in terms of profits and career, oriented to persons, instead of institutional entities, in order to trigger creativity of the three pillars of competitiveness and development: Investors, Researchers / Students and determined to prove it, intermediary organizations. Professor Pierangelo Dacrema is publishing a book about the Inutility of money (Inutilita‟ del Dennaro). He maybe right; money does not make the world go round. But still accessibility of commodities and services are possible because some citizens of the world have taken the risk to loose time, effort or accumulated wealth. It is still a question to be examined; what makes new, innovative and most likely to succeed ideas originate? Wealth seeking or personal satisfaction? It may be true that: Money does not make everything work, but everything is done for money. Indicative Bibliography - Katalin Balazs, Academic Entrepreneurs and their Role in „Knowledge‟ Transfer, Sussex, November 1996. - Brent Goldfarb and Magnus Henrekson, Bottom-up vs. Top-Down Policies towards the Commercialization of University Intellectual Property, SSE/EFI Working Paper Series in Economics and Finance No.463 September 24, 20 - Constantinos C. Markides, All The Right Moves, Harvard Business School Press, Boston, 2000. - Sergio Vellante, Mezzogiorno rurale risorse endogene e sviluppo: il caso Basilicata, Donnzelli editore, Roma, 2001. - Brent Goldfarb and Magnus Henrekson, Bottom-up vs. Top-Down Policies towards the Commercialization of University Intellectual Property, SSE/EFI Working Paper Series in Economics and Finance No.463 September 24, 2001. - Promo Cosenza, Competitivita e sviluppo, Klipper, Cosenza, 2002. - Giuseppe Ardrizzo, Rgioni di confine, il Mulino, Bologna, 2002.
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