Inverted academic spin-offs by wulinqing

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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: nk@teiser.gr
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: dim@teiser.gr
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: pkate@teiser.gr.
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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