University spinouts in Serbia--problems and difficulties.

Tekic, Zeljko ; Cosic, Ilija

Abstract: This paper discusses and examines difficulties for creating new university spinout ventures in Serbia and how they are related to European practice. The findings show that there are differences in intellectual property issues, financial and human resources availability, as well as network access and infrastructure support. These results have significant policy implications, especially with regard to the development of specific regional programmes for encouragement of academic-based entrepreneurship and improve education.

Key words: Technology transfer, university, spin out, Serbia

1. INTRODUCTION

One of the greatest challenges of the European economy is facing is developing capacities to convert scientific breakthroughs and technological achievements into industrial and commercial successes in order to become the most competitive and dynamic, knowledge-based economy in the world. Consequently, over the past 15 years, entrepreneurial and commercialisation activities have started pervading university and public research institutes in the UK and Europe, which were traditionally considered as conservative and nonrisk-taking organisations. Etzkowitz (1998) clarifies this as an evolution of universities' position and argues that the overall aim of this third stream of higher education activity, alongside teaching and research, is to develop effective means of technology, knowledge transfer, or rather exchange, between business and universities in general.

Technology is information that is put to use in order to accomplish some task. There is no widely accepted definition of technology transfer, but it can be defined as the sharing of technology, technique or knowledge and also know-how and organizational rationalities, which are "soft" dimensions of technology among: individuals, industry, universities, public research institutions, federal, state and local governments and third party intermediaries.

It is clear that there is more than one mechanism of the commercialisation of academic intellectual property. Eight different transfer communication channels for technology transfer process could be recognised: literature, patent, license, absorption, informal, personnel exchange, on-site demonstration and spin-off. Through all forms of technology transfer, but especially, spin-off companies, patents, licenses and research join-ventures, universities have become a driving force in the development of high technology industries and regional economic development (Jones-Evans et. al., 1999).

2. LITERATURE REWIEV

Academic spin-outs are widely recognised as an important means of technology transfer from an academic organization, an important mechanism for creating jobs and new wealth (Birley, 2004). Furthermore, they are important means of the economic development of regions (Jones-Evans et. al., 1999), a key dimension in industry-science links, and an important mechanism for introducing new commercial products to the marketplace. However, the university spin out route to the market is still an under-developed option (Birley, 2004; Etzkowitz, 1998).

In this millennium sustained competitiveness in the global economy will depend on technological or innovation-based strengths, such as ability to apply new technology, to develop new products, to access new markets successfully, to incorporate best practice in the management, and to develop skill across the full spectrum of the labour force (Jones-Evans et. al., 1999). These are elements to which universities can make a substantial contribution, particularly on a regional level by linking industry and academic institutions and generating flows of knowledge between the two partners.

University spin-out (USO) is a venture founded by employees of the university around a core technological innovation, which had initially been developed at the university (Birley, 2004). The USO is created mostly to commercialise IP initially generated within the parent universities.

The archetypal places where USOs have succeeded are mainly already successful places, such as Route 128, Silicon Valley, and Silicon Fen, and it is hard to distinguish the success of these companies from the extremely supportive entrepreneurial community with the capability to select the best projects and allocate resources to them (Clarysse et al., 2004). It is not clear that these conditions would hold in less successful regions.

Firstly, in less successful regions where economic conditions are less prosperous and entrepreneurial environments tend to be less generous, it could be expected that USOs are more difficult to generate. In environments with less demand for innovation, characterised by a weak entrepreneurial community and a lack of other resources, research institutions as well as government may need to play a more pro-active incubation role (Clarysse et al., 2004).

The second issue is that those USOs which overcame these barriers would tend ceteris paribus to be less successful and have less of an economic impact than in economic 'core' regions. This could be referred as a "growth myopia", the assumption that economic growth is entirely dependent on the existence of high technology start-up firms.

These two issues together might reduce any capacity that USOs had to improve the economic performance of less successful regions, and even much less to reduce the gap between the core and peripheral regions.

3. RESEARCH QUESTION

Is there any role for university spin-off firms in supporting economic development in less successful places? What are the difficulties? How to support USOs? It does seem that recent analyses have demonstrated that USOs can act as drivers of economic development in 'ordinary' places. Within many countries, universities are increasingly considered to be an integral part of the city or regional network of public facilities that act as centres of attraction for individuals and enterprises. They are catalysts for the enhancement of employment opportunities for local industry, especially with regional and national governments viewing the high technology and knowledge-based sectors as a crucial source of direct and indirect employment opportunities in the future (Jones-Evans et. al., 1999).

However, there is a lack of research focus upon the strategies and policies that are undertaken to increase the process of technology transfer from academia into local indigenous business, especially, creation of university spin out companies within South East European countries, particularly in Serbia. This paper discusses and examines difficulties for creating new university spinout ventures in Serbia and how they are related to European practice.

4. METHODOLOGY

This research utilises multiple levels of analysis within three case studies in order to extend understanding and add strength to what is already known about technology transfer and university spin outs in Serbia. The multiple case design permits a "replication" logic (Yin, 1994), allowing the case analyses to be treated as a series of independent experiments.

Cases are selected from the University of Novi Sad and all companies come from engineering research background. The face to face and phone semi-structured interviews were conducted with a diverse range of stakeholders--university management representative, academic entrepreneurs and outside university consultant.

Interview approach (Yin, 1994) encompassing multi-perspective analyses is used, meaning that the research considers not just the voice and perspective of the actors--academic entrepreneurs, but also other relevant groups of actors and the interaction between them.

Representatives of a research teams are selected based upon the convenient sampling that relates to previous experience and leading position in a team.

A frequent criticism of the case study methodology is that its dependence on a single case makes it incapable of providing a generalising conclusion. However, Yin (Yin, 1994) forcefully argued that the relative size of the sample whether 2, 10, or 100 cases are used, does not transform a multiple case into a macroscopic study. The goal of the study should establish the parameters, and then should be applied to all research.

5. EMPIRICAL FINDINGS

In Novi Sad, Nis, and Belgrade, an entire series of spin-out companies from the Universities and research institutes has already been founded. Our findings suggest that university spin outs in Serbia are mostly created to exploit commercially technical know-how technology, technology-based ideas or research results developed within an academic institution where an academic institution does not have the property rights for commercialisation. This is an unusual situation because European and the US practice is opposite--universities are mostly owners of IP developed through publicly funded research. Furthermore, it is rare that a new technology commercialised by USO is patent protected in Serbia. This could be a big problem for attracting venture capital investments as well as protecting market position from potential competitors.

From its founding, USOs are focused on technology and development of state-of-the art solutions. The companies lack skills, know-how and experience in the fields of marketing its solutions, building up professional sales operations and establishing long lasting profitable client relations with key accounts. This lacks focus on few commercially fit products/solutions and pushing sales into that direction lead to the development of diversified product portfolios, which are in different stages of development at the moment.

On the one hand, recognised weakness is the inability to identify the appropriate market niche/segment, to streamline development efforts on these niches/segments in line with client handling and to consequently and substantially push sales in those fields. On the other hand, there is a lack of clear mid- and long-term development strategies for the company with defined targets and plans. This is particularly true for the businesses internationalisation.

In the 1990s, spinning off new ventures from academic labs gained acceptance in Europe as a valid method of technology transfer. To stimulate the commercialisation of university-based research and promote spin-outs policymakers in many developed countries have responded by infrastructure measures facilitating the commercialisation of scientific research outputs.

However, this practice is still in infancy in Serbia. There is little institutional support which should provide educational, training and financial services to existing as well as would-be academic and graduate entrepreneurs. First attempts are made by national competition "The Best Technological Innovation" (www.innovation.org/en) supported by Serbian Ministry of Science, but it is not enough. Government as well as universities needs much more proactive role in order to create sustainable policy, to make available proof of concept funding, to develop scientific and technology parks, to bring European VCs.

6. CONCLUSION

This paper discusses and examines difficulties for creating new university spinout ventures in Serbia and how they are related to European practice. The findings show that there are differences in intellectual property issues, financial and human resources availability, as well as network access and infrastructure support.

Universities could become increasingly important for local economic development and a significant force in Serbian and regional economies, as a source of income and new employment. However, a greater understanding and further research is required of the pro-active role that the university itself can play in developing strong linkages with industry. Also, governmental support to promotion of entrepreneurship, particularly through mechanisms such as university spin-out is needed.

Research results in the case of Serbia have significant policy implications, especially with regard to the development of specific national as well as regional programmes to encourage academic-based entrepreneurship.

7. REFERENCES

Birley, S. (2004). Universities, academics, and spinout companies. International Journal of Entrepreneurship Education, 1(1),1- 21

Clarysse, B.; Wright, M., Lockett, A., van de Velde, E. & Vohora, A. (2005). Spinning out New Ventures: A Typology of Incubation Strategies from European Research Institution, Journal of Business Venturing, 20 (2) 183-216

Etzkowitz, H., (1998). The norms of entrepreneurial science: cognitive effects of the new university-industry linkages, Research Policy 27, 823-833

Jones-Evans, D.; Klofsten, M., Andwerson, E. & Pandya, D. (1999). Creating a bridge between university and industry in small European countries: the role of the Industrial Liaison Office, R&D Management 29 (1), 47-56

Yin, R. (1994). Case study research: Design and methods. Beverly Hills, CA, Sage Publishing