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The role of university spin-off firms in strengthening regional innovation systems in weaker places
THE ROLE OF UNIVERSITY SPIN-OFF FIRMS IN
STRENGTHENING REGIONAL INNOVATION SYSTEMS
IN WEAKER PLACES
Paper presented to Territorial Production and Networks 3: Knowledge, Development
and Policy, Sixth European Urban & Regional Studies Conference, 21st 24th
September 2006 Comwell Hotel, Roskilde, Denmark
Paul Benneworth
Centre for Urban and Regional Development Studies
University of Newcastle upon Tyne
Newcastle upon Tyne
Latest version 16th
August 2006
Draft 3.3, 8, 300 words in body text
Not for quotation without the authors permission.
INTRODUCTION
Universities should be very important actors in contemporary economic development.
The rise of the knowledge economy has made economic success increasingly
dependent on capacities to exploit knowledge and compete through innovation (see
Temple, 1998 for a review). Universities purposes are intimately related to
knowledge, learning and innovating universities create new knowledges,
challenging existing knowledge, diffuse and circulate that knowledge, transfer it to
businesses and teach it to students. Whilst the cloistered medieval origins of the idea
of a university (Newman, 1843) have sustained images of detached ivory towers,since the American Land Grant Universities of the 1860s, universities have worked
closely in partnership with government and business in their various knowledge
activities (Charles et al., 2003; Etzkowitz, 2005).
Many of the most compelling stories of high technology regional economic success
intimately involve universities working with businesses, notably in the totemic sites
of this new economy, such as Boston, Silicon Valley and Cambridge (Armstrong,
2001). But universities do not emerge as strong actors in these stories, their mostsignificant contributions to regional economic development apparently coming
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
through the high-technology businesses and entrepreneurs which emerge from those
universities into the real economy. Clusters of regional spin-offs linked to key
businesses such as Fairchild Semiconductors (Silicon Valley), the Digital Electronics
Company (Boston) and ARM Holding (Cambridge) all exemplify Etzkowitzs view
(2001) that universities can provide an entrepreneurial DNA that makes regional
economies more entrepreneurial and successful (Lee et al., 2000; Zhang, 2003;
Garnsey & Heffernan, 2005). But this relegates universities role to a pre-condition,
necessary but not sufficient to explain particular regional economic success stories.
Universities have thus become included alongside other shadowy factors such as
culture, trust, institutional thickness and industrial tradition, integral to particular
regional success stories, but whose contribution can never precisely be defined. Inthis paper, I distinguish universities specific contributions to regional economic
development by exploring their economic development function in less successful
regions. My premise is simple in less favoured regions (LFRs), cultures, economic
structures and institutional arrangements are a barrierto economic success (Linders et
al., 2005). Consequently, exploring specific successes in these regional contexts
illustrates more general processes by which university institutions contribute to
territorial economic development.
In this paper, I look at case studies from two such less successful regions, Newcastle
in the North East of England and Twente in the Netherlands. In both regions, which
have suffered decades of industrial decline, universities have become important
regional development actors. Each university has pursued a very different regional
engagement strategy, reflecting national and local differences in higher education
systems. Nevertheless, despite very different approaches in both regions and very
different national systems, universities have had remarkably similar regional impacts.The universities have created insulated high technology spaces which have allowed
entrepreneurs to succeed despite negative regional economic environmental features.
These spaces have also attracted new external investors who have sought to access
unique hybrid knowledges which have been produced by particular university-
business relationships. Outside actors resources have further stimulated regional
networks promoting, retaining and diffusing regionally the benefits of high
technology growth. Universities in both cases have been central to attracting and
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
anchoring global knowledge investors, a critical territorial economic development
process.
UNIVERSITIES AS GLOBAL/ LOCAL ACTORS
The knowledge economy is extremely unevenly distributed, and many analyses have
subsequently inferred that an increasing importance for the regional scale to the
knowledge economy. A range of territorial innovation models (TIMs) have
emerged arguing that regions are important as the optimum scale for new knowledge
production, learning and innovation (cf. Moulaert & Sekia, 2003 for a review). But
others have noted that territorial innovation capacity is only relevant to economic
development insofar as it supports the international competitiveness of its firms
(Lagendijk & Oinas, 2005). Cooke & Piccaluga (2004) conceptualise TIM effects as
being produced within regions networked innovation systems. They see an ideal
type regional knowledge laboratory as a place where two distinct groups, knowledge
producers and knowledge users interact effectively to create regional economic
advantage (see figure 1).
[Figure 1 goes about here]
In this model, both knowledge producers and users have their own global networks,such as academic prestige and industrial competitiveness. Effective regional
innovation systems (RISs) facilitate connectivity between the two groups, allowing
regional combinations to be made from the various global flows passing through the
region, producing a local buzz from these global connections (Bathelt et al., 2004).
Well-functioning RISs maximise the local benefits produced from these global flows,
creating tangible economic activities and regional development (Cooke et al., 2003).
The various TIM concepts can be regarded as features which support systemic
linkages within the RIS, and hence produce this local benefit drawing on external
resources.
This broader networked RIS model implies a wider political-economic structure of
regions inter-related through the various global flows which pass through them
(Henderson et al., 2004). Well functioning regional knowledge laboratories are
attractive to outside investors because of their systemic and proven capacity to create
economic value by combining knowledges (Cooke & Piccaluga, 2004). There are
regions which suffer because they do not have such systems which combine global
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knowledges locally, and as Cooke & Piccaluga note, it is hard to conceptualise their
regional development processes in terms of knowledge-based development. The
challenge for such regions is to rebuild their local regional innovation systems in
ways that facilitate and promote these global/ local connections.
Such places face a range of barriers to effective RIS integration (Benneworth, 2007),
ranging from a lack of local institutional thickness (Amin & Thrift, 1994), to a lack of
critical mass (Lagendijk, 1999), the lack of entrepreneurial resources (Dubini, 1989),
and a mismatch between the science base and the knowledge users (Fontes &
Coombs, 2001). Tdtling & Tripl (2005) produced a typology of dysfunctional RISs,
distinguishing (a) remote peripheral regions with little institutional thickness, (b) old
industrial regions with few industrial champions, and (c) fragmented metropolitanregions. In this paper, I focus on one of these classes, old industrial regions:
Tdtling & Tripl characterise such regions problem in terms of lock-in, stressing
that in such situations, their networks are often characterised by technological and
/or political lock-ins (p. 1209).
A number of studies of less successful regions which have successfully restructured
emphasise the importance of building regional capacities which revitalise and
reconnect old locked-in knowledges to emerging global markets (inter alia Rehfeld,1995; Cumbers, 2000; Hospers, 2004; Batherlt & Boggs, 2005; Liefooghe, 2005).
Malmberg & Power (2005) highlight the importance of key actors in building up
effective RISs in old industrial regions most notably strong firms by bringing in
external (global) resources which can then initiate new local growth dynamics. The
issue facing old industrial regions is that they are typically undergoing both
restructuring and economic decline. Consequently, large firms in such regions are
often playing a contrary role to that envisaged by Malmberg & Power, removingresources via rationalisation and restructuring. This reduces these firms positive
territorial economic impacts, and raises the question of which key actors couldtake on
the RIS building function in such regions.
I argue in this paper that this global/ local function could conceivably be played by
any large, globally-connected organisation, not merely companies. There are regions
which have achieved renewal and economic growth through strong public sectors (cf.
Gray et al., 1996), whilst supranational and non-governmental organisations haveprovided a stimulus behind knowledge-intensive service complexes in emerging
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world cities (Smith, 2003; Baeten, 2004). However, supranational organisations tend
to be concentrated in capital cities, and the geography of public sectors across
advanced economies limits the extent to which they can influence old industrial
regions development trajectories.
There is an increasing recognition that universities may have a role to play in
stimulating regional economic development (Goddard & Chatterton, 2003, Rutten &
Boekma, 2003; Boucher et al., 2003). Certain types of universities have historically
been premised upon constructive linkages between global knowledge and local
application, embedding abstract theories in students, and transferring academic value
into commercial contexts (Delanty, 2002). American land grant universities,
European technical universities and polytechnic-type institutions have often beenimportant in diffusing their knowledge into regional contexts. Many universities are
well resourced for creating localised spill-over benefits, through the various global
networks which they assemble and combine in delivering their core teaching and
research missions (Goddard & Chatterton, 2003); examples are creating knowledge-
intensive business service activities, spin-off & graduate start-up firms, and training
knowledge workers (Boucher et al., 2003). This suggests that universities regional
interactions fit Malmberg & Powers (2005) description of global/ local RIS
animateurs. But in old industrial regions, there are few high-technology local partners
through whom universities transmit their value outwards (Fontes & Coombs, 2001)
and universities and research organisations in such regions are too often oriented on
traditional industries/ technologies (Tdtling & Tripl, 2005, p. 1209).
In this paper, I address the question how do universities become important economic
development actors in less favoured regions? through the question of how
universities can turn their global excellence into a local growth impulse?. Theheuristic that I explore is of universities in such contexts building small scale
knowledge laboratories within their regions (cf. Cooke & Piccaluga, 2004). These
knowledge laboratories are localised, insulated regional innovation networks. Local
entrepreneurs and global partners come together in these networks, using university
resources and creating economic value drawing on university-derived knowledge.
Assembling external stimuli and investors with local entrepreneurs creates unique
hybrid knowledge assets. Hybrid activities create spill-over benefits for local
entrepreneurs embedded in the regional economy, support universities; global
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excellence and attract outside knowledge investors. I focus on one concrete
mechanism by which universities build tangible local/ global networks, namely
university spin-off companies. I draw on examples from two old industrial regions,
the North East of England, a former coal/ steel/ engineering region, and Twente, a
former textiles region in the east of the Netherlands.
METHODOLOGY
In this paper, I argue that universities entrepreneurship promotion activities can have
a systemic effect on positioning the region within the knowledge economy by
strengthening those regions RISs. Old industrial regions tend to have what Dubini
(1989) has characterised as sparse entrepreneurship environments, often lacking the
necessary resources for innovation (Alderman & Thwaites, 1992). The universities in
the two case study regions have both attempted to stimulate regional economic growth
through promoting university spin-off companies (USOs)1 in new high-technology
areas. This is an attempt to create a knowledge-using network within their region,
who valourise academic knowledge by generating external sales. It is not
unsurprising that universities play this role, as Claryss et al. note in environments
with less demand for innovation, characterised by a weak entrepreneurial community
and a lack of other resources, [research institutions] may need to play a more
pro-active incubation role (2004, p. 1-2).
Spin-offs are a quintessentially new economy activity; high-technology, high-value
businesses in emerging sectors with high growth potential (Benneworth & Charles,
2005). Both universities have achieved their regional impacts despite very different
models for promoting entrepreneurship. Newcastle University has focused on
supporting entrepreneurial professors, and its website lists some 25 spin-offs created
over the last 27 years directly related back to the university, although it does not count
companies founded by graduates, including the multinational accountancy business
firm Sage which currently employs 10,000 globally. The University of Twente (UT)
has encouraged students to create their own businesses after graduation, providing a
loan, access to laboratories and mentors to support this low selectivity approach.
Since UT began this approach in 1984, 400 companies have from the university
employing 3,000 people in Twente (Karnebeeket al., 2001; cf. footnote 8).
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My argument is based upon case studies from these two regions, each comprising two
elements, a review of regional information sources and a set of key respondent
interviews. In the first part of the study, a wide range of documents were reviewed,
including historical and contemporary reports about both universities and their
regional contexts, along with contemporary policy documents and strategic plans
from the university, regional partners and the national government2. The main
substantive method was 75 face-to-face interviews in the two study regions, 32 in
Newcastle and 43 in Twente3 undertaken through a snowball approach (cf. Yin,
1994)4. Care was taken to reflect the fact that each university approached
entrepreneurship very differently, whilst ensuring broad interviewee samples; the
number and types of interview are set out in tables 1 and 2 below.
[TABLE 1 GOES ABOUT HERE]
[TABLE 2 GOES ABOUT HERE]
Interviews focused on how interviewees used relationships with other regional actors
to access resources to solve problems in establishing new high-technology firms and
developing their high-technology products, the precise focus varying by interviewee5.
These interviews and background materials were selectively combined to produce a
set of stylised narratives about university commercialisation, community building and
policy impacts in the two regions. A critical realist methodological perspective was
then used to infer more general structures, processes and mechanisms for
knowledge-based regional economic development from these stories and relationships
(Benneworth & Charles, 2005).
BACKGROUND TO THE CASE STUDIES
The two case studies cover regions where universities have actively prioritisedregional engagement, promoting university spin-offs in territorial contexts
characterised by long-term processes of severe deindustrialisation. Both regions are
archetypal sparse regional entrepreneurship environments. Despite being created at
very different times within contrasting national science systems, there are clear
similarities in each institutions regional role. Both universities were created as
applied technology institutions, and both institutions had a mission including social
and economic relevance. Both regions lacked large R&D intensive firms able to
respond meaningfully to policy-makers instruments, with universities becoming
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central to their respective RISs. As deindustrialisation compounded the weaknesses
of those RISs, both institutions developed more regionally-oriented readings of
societal relevance within their institutional missions.
Newcastle University, the North East of England
The North East of England industrialised from the late 18th century, developing a
peculiar form of carboniferous capitalism characterised by many small industrialists
unable and unwilling to invest in new production methods (Tomaney & Heyward,
1996). This complex began its secular decline from 1900, but demand for coal, steel
and shipbuilding in two world wars and the following reconstruction efforts masked
the emergence of deep-seated structural economic problems. The government
responded during the 1940s to 1960s by nationalising these industries intending to
modernise them, but a wider national economic crisis in the 1970s left the government
committed to austerity, rationalisation and downsizing, undermining attempts to
invest and modernise these sectors (cf. table 3). Nationalisation of these industries
also crowded out investments in high-technology industries, leaving the North East a
typical branch-plant region (Byrne & Benneworth, 2006). This situation was
compounded through the enduring misperception by key national science policy
makers that the North East was a place unsuitable for science, discouraging the
government from investing in strategic science facilities in the region, (Heim, 1985) a
misperception which came to have self-fulfilling properties6.
[Table 3 goes about here]
Newcastle University was formally created in 1963 from Kings College Durham.
This institution had its roots in Armstrong College, a specialist marine engineering
and agriculture institution created in the 1870s, which merged in 1937 with the
(Newcastle-based) Durham Schools of Medicine and Dentistry to create Kings
College (Loebl, 2001). Agriculture, medicine and engineering were all applied
subjects, and Kings College reflected this disciplinary mix in its ethos as a place of
useful knowledge (Potts, 1998). Despite successive UK governments discouraging
university/ regional engagement from the 1940s to the late 1970s, Newcastle-based
academics maintained industrial contacts throughout this period (Potts, 1998). After
1979, mobilising indigenous business assets for innovation became increasingly
important in the new European Regional Development Fund programmes. With few
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private or governmental R&D organisations active in the North East, the local
Department of Trade and Industry office and local authorities both demanded North
Eastern universities become regionally engaged (Benneworth, 2002). Newcastle
University responded with a number of activities over time, including a
Micro-Electronics Applications Research Institute (MARI, 1983), an City Technology
Centre (1984), a seed capital fund (NUVentures, 1987), a regional development office
(1995) and finally, a Business Development Directorate (2003). By 2004, regional
engagement had become a central principle in two key institutional documents, the
Business Plan and the Estates Masterplan (Newcastle University, 2004a; 2004b).
The University of Twente, East Netherlands.
Twente, in the East of the Netherlands was chosen in 1830 by King Willem I to be the
site of a new Dutch textiles industry. The Brussels Revolt of 1830 had ceded the
Flanders textiles areas from the Netherlands to the newly created Kingdom of
Belgium. In choosing a location for a new Dutch textiles industry, the king was
attracted by the traditions of home weaving amongst Twentes impoverished
subsistence farmers (Hospers, 2002). A huge textiles industry emerged after 1830,
exploiting Dutch colonies as dominated suppliers and a captive market, using royal
patronage and monopoly privileges, making Twente the third Dutch manufacturing
region by the 1870s (Brouwer, 2005). Industrialisation produced a particular form of
paternalism; workers enjoyed high living standards, quality housing and relatively
luxuriant leisure facilities (Jaarboek Twente 2005), at the cost of plummeting
competitiveness, with monopoly breeding complacency regarding their long term
prospects. The loss of the Dutch Indonesian colonies (1949) and the rise of Asian
low-wage competitors in the 1950s saw steadily declining employment, but as late as
1961 regional elites argued that those declines were temporary (ETIO, 1961 cf. table
4). By the 1970s, exacerbated by the oil shocks, the industry reached crisis point
(Lambooy, 1995), and by 1985, the industry had all but vanished from its former
heartland (see table 4 below).
[Table 4 goes about here]
The Technical Polytechnic of Twente (THT7) was created in 1961 to support Dutch
aspirations towards being an advanced manufacturing economy, by increasing
technical graduate numbers and promoting regional textiles renewal (Sorgdrager,
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1981). However, as the textiles crisis unfolded in the 1970s, the Government
considered closing THT to allow refocus scarce public resources to be refocused on
regions and industries with better economic prospects (Groeneman, 1991). What
saved THT was leadership; under the renowned Rector Magnificus8 Harry van der
Kroonenberg (1979-1982; 1985-1988), the university pioneered a series of
institutional innovations now typical of entrepreneurial universities (Clarke, 1998).
These included a technology transfer office (1979), an incubator unit (1982), student
entrepreneurship schemes9 (1985), knowledge circles (1990), regional venture funds
(1996), an open innovation centre (1997) and a technology accelerator (2003). The
university also rebranded itself University of Twente: the entrepreneurial university
in 1985. Its innovation resources made UT a central partner of the provincial
government and regional development agency as they have sought to expand high-
technology growth within what remains a comparatively underperforming regional
economy.
UNIVERSITIES AS KEY ACTORS IN REGIONAL DEVELOPMENT:
RELATIONSHIPS THROUGH SPIN-OFF ACTIVITIES
The first argument is that the spin-offs emerged beyond the university, taking assets
from the university and creating new commercial activities with an economic impact
wider than the university. Newcastle University adopted a spin-off promotion model
led by academic type staff; in 10 of the 13 businesses, professors and independent
lecturers started companies to pursue commercial work alongside their main research
activities. In the 1980s and early 1990s, the university at times tolerated, and at other
times promoted, spin-offs within wider efforts to expand their commercialisation
activity. Some spin-offs hired their own staff, including professional managers, and
rented university space. In a majority of cases (8/13) these adjunct teams grew to be
considerable and largely independent from the university. Three further firms were
formed from whole research groups formally left the university as fully functioning
commercial businesses. At UT, the model developed in the 1980s was primarily
external; in 1985, the university used government funds to establish a graduate
entrepreneurship scheme, TOP (cf. footnote 9) which provided entrepreneurs with a
personal loan (f. 30,000), business mentoring and networking, and laboratory space in
the university research group for a one year period. Applicants for this scheme wereprimarily masters students from UT, but over time, employees in businesses working
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closely with the university and people from businesses facing closure, used the TOP
scheme to establish new businesses business.
Although each spin-off model was very different, there were a number of notable
similarities, notably common dependencies from these USOs to the university, where
spin-offs used university assets to solve key problems encountered during start-up,
growth and innovation. In some cases the university provided soft resources for the
spin-offs, related to the people forming the companies. The majority of the
entrepreneurs involved in the spin-offs were university staff or former students
(although in Newcastle a number of firms hired professional managers after start-up),
with a very small minority having no direct link to the university. The university was
also an important source of staff , know-how and soft knowledges, includinglaboratory technical skills, assisting spin-outs through a variety of sub-contract,
temporary contracts and consultancy activities. It is notable however that no
companies formed from either institution were created solely to exploit a patent
without hiring former university staff10.
Each university was also a source of hard resources; both universities had seed
investment funds, along with links to a range of commercial and subsidised
investment funds. Both universities made space available within their campuses forrelated companies, within departments as well as in incubators. Universities provided
licenses, intellectual property (IP) and purchasing contracts which put value and cash
into the firm. In some cases, the universities provided what could be considered as
network resources, bringing together diverse resources and assembling them into a
working research group which was subsequently spun off. 3 companies in each
region were former research groups or support services that span themselves out of
the university.
It is of course unsurprising that USOs have links back to their universities,
particularly the soft links which are present in all spin-offs except licensing vehicles
(cf. footnote 10). More interesting is the multiple dependence of these new firms on
their host universities. Table 5 below shows the reliance of the four most successful
firms in each region, (average size 65 employees), on the university for the provision
for the nine key resources (classified as hard, soft & network) outlined above11. On
the basis of this classification, each USO had an average of five types of linkage backto the parent university, the same in both regions. The most important dependencies
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were on the university as a source of entrepreneurs, scientific staff and for premises.
This hints that the university is actually playing a number of different roles
simultaneously in each region, roles that in regions with more functional RISs might
be played by other actors, such as property developers, public R&D laboratories and
high-growth, high-technology firms (cf. Clarysse et al., 2004).
[Table 5 goes about here]
USOS SYSTEMIC IMPACTS ON THEIR RISS
The next step of the argument is that spin-outs played a number of roles in building up
their regional innovation environments. It is difficult to argue that the USOs directly
transformed Twente or Newcastles regional economies, as neither region had enough
new high-technology activity to represent a strong new knowledge-exploitation
subsector (Benneworth & Charles, 2005). However, in a number of cases, spin-offs
did contribute to RIS-building activities. All spin-offs worked directly with some
local partners, helping to raise their innovative capacities; all the companies
interviewed either sold some form of technical development service to local
companies, or involved local companies in product development processes12
.
Another direct effect on the RIS was that spin-offs themselves were sources of furtherknowledge-exploitation activities, in the form of daughter companies which
themselves had links back to the university. In Newcastle, three of the companies had
formed their own daughter companies. Figure 1 below shows how four companies
became a focus for growth in Twente through this serial entrepreneurship process,
creating new businesses, establishing joint ventures, and rescuing troubled
businesses13
. In total, these four spin-off companies, although strictly accounting for
only 150 jobs, had through their daughter companies an overall employment
footprint in Twente of 255 jobs.
[Figure 1 goes about here]
Spin-offs also became involved in other activities which indirectly supported high-
technology commercialisation in each region. In both regions, spin-offs had been
instrumental in establishing a number of local networks which more generally
supported innovation and entrepreneurship. Three of Newcastles nanotechnology
spin-offs with complementary expertises (one in pure biotechnology, one in pure
nanotechnology, and one in applied chemical engineering) provided applied
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development services for local businesses. The three firms shared their
complementary skills through sub-contract arrangements which relied heavily on
strong inter-personal contacts, which in turn drew on contacts originating in the
university. In Twente, a number of design and engineering firms (including USOs)
had created a formal networking organisation, the Twente Initiative for Medical
Products (TIMP), that supported collaborative innovative in the field of medical
products, and underwrote the growth of a number of its c. 10 membership. The
university had initiated a technology ring for its spin off companies in 1990,
originally to help them sell to large regional firms, but the nature of the organisation
changed in the mid-1990s, in response to demands from a number of the high-growth
spin-offs, into mentoring and network organisation. A number of the companies
subsequently formed used the technology ring (TKT) to receive feedback on their
business plans, to identify non-executive directors and access venture finance.
Spin-offs as successful high technology companies were also enrolled into larger
projects by actors seeking to harness selected characteristics. In both regions,
university spin-offs were important in establishing new publicly-supported venture
capital funds. A majority of the spin-offs had accessed some firm of equity funding
or venture finance (8/13 in Newcastle, 11/18 in Twente), and a number of spin-offs in
each region had been sold to produce profits for their investors. The fact that
spin-offs had successfully used that finance was accepted by regional policy makers
as demonstrative that there was a latent demand for subsidised regional venture
capital fund for early stage investments. The majority of investments subsequently
made by these funds in fact went to non-USOs (cf. OOST, 2005, NStar, 2005).
This evidence suggests that USOs did have a wider systemic effect on the RIS than
purely stimulating employment creation in knowledge-exploiting subsectors. Thesesystemic impacts had three characteristics; firstly, spin-offs drew on various
university resources, and then built linkages out into the regional innovation system,
creating external points of access into the university. The spin-offs played a
cantilever role in this bridging process, taking assets tightly held within the
university, and helping to move them beyond the universitys formal institutional
boundary. Secondly, spin-offs helped to promote regional growth, creating daughter
companies, and raising the quality of innovation in other local companies. Thirdly,
they had a demonstration effect, helping to make the case that the two study regions
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
where places where high-technology investments could make profitable returns. One
exciting feature of the system building in all these cases is that it produced the kinds
of asset typically absent from sparse RISs in old industrial regions. Moreover,
although in all these cases, the universities were very important to supporting these
impacts, it was not the universities themselves who were the key actors actually
building up the RISs
UNIVERSITIES AS STABLE INNOVATION ENVIRONMENTS
The third step of the argument is demonstrating how RIS activities developed by
spin-offs from the two universities were in turn firmly anchored around the university.
This had the effect in each case of producing a commercialisation community
around each university. The two universities had both evolved institutionally towards
making very similar contributions to their regional innovation networks, somewhat
surprisingly given the very different institutional approaches to entrepreneurship and
spin-offs in each university which reflected underlying differences in national higher
education systems. A clear mechanism encouraging this convergence was the fact
that promoting entrepreneurship had in turn changed the nature of each institution;
each governing body struggled with reconciling entrepreneurship promotion with core
university missions.
Newcastle University had to address the issue of increasing amounts of research work
undertaken by spin-offs outside the university structures. The university attempted to
manage the benefits it received from this, both in terms of publications from the work,
but also receiving commercial revenue for assets used. Newcastle University
therefore found itself involved in commercial relationships with a lot of very small
firms, which was both risky and time-consuming. Newcastle responded by
appointing business development managers (BDMs) to manage relationships with
these micro-businesses. BDMs relationship networks developed over time,
extending to business angels, venture capital providers and public sector technology
support organisations. BDMs assembled a community of trusted individuals around
the university, and the university bound these trusted external individuals into the
university through its formal academic and governance structures, such as visiting
chairs, appointments to Senate, Court and Council, and as consultants to the senior
management team. Not all individuals involved with spin-offs lay within this trusted
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community, notably amongst those three companies formed from research groups
which had left the university. This community of trusted individuals is depicted in
figure 2 below.
[FIGURE 2 GOES ABOUT HERE]
At the University of Twente, increasing effort was devoted to tying spin-offs back
into the university. From 1979, UT was concerned with its visible contribution to
regional development, at that time still important in justifying its existence, something
which required that its spin-offs remained in the Twente region. In 1982, the
University invested with two other partners in a Business Technology Centre (an
incubator, BTC) opposite the campus to provide premises for TOP companies. BTCs
success persuaded the municipality to develop the adjacent fields as a Business and
Science Park, which also provided space for firms which outgrew the BTC14
. The
Twente Technology Circle (qv) had also been created in 1990 to provide spin-offs
with a rationale to stay connected to the University. What motivated UT to shore up
links with its spin-offs was increasing government pressure on universities to
demonstrate applied value in research. This led UT to involve spin-offs in core
research activities, which in turn needed a network of available spin-offs around the
university.
The case of MESA+ (a nanotechnology and materials research institution) illustrates
this institutional evolution and enrolment process. In 1993, UT had six research
institutes, including two (MESA and CMO) in materials and nanotechnology; MESA
and CMO had each produced two spin-off companies. In 1995, the decision was
taken to amalgamate them into a new institution (MESA+), and appoint a commercial
director to develop a new laboratory site with parallel academic and commercial
facilitites, managed by a trading body allowed to rent space to commercial firms.
Young masters and doctoral students doing practical research in the MESA+ facility
came into contact with commercial employees. As a number of key UT professors
refused to allow staff to do commercial research15
, more commercially-minded
students used the TOP programme to exploit MESA+ research to establish their own
companies. By December 2005, 30 nanotechnology companies had been formed
through the MESA+ arrangement16,17. The first decade of MESA+s life involved the
creation of a community of regional companies anchored around the universitythrough MESA+ (see figure 3 below).
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
[Figure 3 goes about here]
In both these cases, the universities evolved to a common model with an academic
core, a shared space with academics and commercialisation activities present, which
held spin-offs and other commercial partners around the university. Although
MESA+ had a physical footprint, this was not the case in Newcastle or in other cases
around UT; the space appears to have been a virtual network space.
UNIVERSITIES CREATING HIGH-TECHNOLOGY SPACES OF
OPPORTUNITY IN LESS FAVOURED REGIONS
The final element of the argument is that these spaces were places where a variety of
resources were combined, both from regional and external actors. These spaces were
appealing to external actors because they offered pathways to academic knowledges
with the promise and track-record that they could effectively be commercially
exploited. The university spaces became places which anchored highly localised/
embedded networks with global and local constituents, where global resources flows
interacted to produce local economic benefit.
In Newcastle, a first global/ local element was the fact that spin-offs had begun to
develop external connections; a majority of the companies (8/14) had brought inexternal finance; 3 had obtained corporate venture capital investment, 2 from private
businesses, and 2 from business angels. One USO, with several academic parents
had located in Newcastle but used funds raised by financiers in the cities of its other
parents. Three of the six that had not raised external finance had been created within
the university, using national/ European research funds, alongside consultancy funds
from international clients to assemble commercially-oriented research groups18
.
These relationships had continued after the spin-off event, with those three spin-offs
emerging as very well globally-networked businesses embedded to varying extents in
the Newcastle RIS.
A second global/ local element provided at Newcastle was the way in which USOs
helped to connect other local companies to external knowledges, helping to
restructure regional industry towards more innovative market segments. There were
several elements of reconfiguration visible in the way that the university-based
nanotechnology network (the university, a BDM and three spin-offs) had helped to
support a number of regional businesses to engage with nanotechnology. One local
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
company worked with this grouping to reorient their R&D away from mature bulk
chemicals into nanotechnology. This research group was subsequently spun off, grew
into a small businesses (i.e. >50 employees), and is now AIM-listed. An existing
local mature chemicals firm had previously experimented with nanotechnology, but
had spun-off that activity because of a poor fit with its core business. That spin-off
business developed close links with the university, and was bought out by a market
leader which retained core R&D and manufacturing in the region because of the
regions unique skills base. This prompted the parent business to reactivate its
nanotechnology activities; it embarked on a research programme involving the
university, the BDM and three spin-offs, to develop a new core technology area.
Although the footprint of the nanotechnology spin-off cluster was tiny, with c. 20
employees, in total there were a further 200 employed in these three additional
activities. These jobs were either entirely new jobs, or jobs which had replaced
mature chemicals manufacturing activities, the kinds jobs most at threat from
disinvestment in old industrial regions.
The third global/ local element in the North East was the impact of successful
spin-outs on central government perceptions of the quality of the North East as a
place to do science (qv). Newcastle University had built up two hybrid knowledge
exploitation activities (in nanotechnology and life sciences). The nanotechnology
facility - INEX (Institute for Nanotechnology Exploitation) exemplifies how such
centres built up. A professor had been initially funded by the university to pull
together nanotechnology expertise in the university, and had written a number of
multi-disciplinary bids for infrastructure support. One proposal subsequently won
external funding, initially from the RDA but later from UK science agencies and EU
Framework programmes19
. The UK DTI were persuaded to invest national funds in
local exploitation activity because of Newcastle Universitys perceived
commercialisation success demonstrated through its track record in creating spin-offs
(S&TC, 2004). Newcastle University received one-sixth of the entire national
allocation for the first round of the Governments nanotechnology commercialisation
programme (3m of 18m). This brought considerable new funds into Newcastle
University to invest in resources which both academics and companies could use..
In the case of Twente, the processes of global/ local connection functioned very
differently; in the late 1990s, Twente was successful in attracting R&D from a
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
number of multi-national companies who came to the region to work with the
university, to recruit their graduates but also collaborate with spin-off companies. As
a consequence of the bursting of the high-technology bubble, many closed,
including activities from CGM Logica, Lucent Laboratories and Ericsson. In the case
of Ericsson, a number of individuals working for the company established spin-off
companies, drawing on various community facilities including the TOP programme,
the TKT, BTC and BSP. Four new companies were created out of a research team
comprising 30 staff, in each case externally-oriented high-technology activities from
particular businesses stuck to anchoring points created through university activities,
keeping elements of those activities locally, even when the firm itself closed down.
A second set of global/ local connections were where local spin-off entrepreneursinvolved multi-national companies in two regional networks (Mechatronica Valley
and the Technology Exchange Cell) bringing external R&D investment into those
regional networks. Mechatronica Valley was a foundation created by a USO
entrepreneur who had graduated from a professors research group, which was
contemporaneously facing closure. The entrepreneur approached several
multi-national firms with local development laboratories, who as he did recruited
graduates from the professors research group. He persuaded them to subscribe to an
organisation to sponsor a new professor at UT to ensure the continued flow of
graduates, but also providing an additional MESA+ professor. The Technology
Exchange Cell (TEC) was developed by French defence contractor Thales and UT as
a rapid development facility to develop business ideas from scenario analysis to
virtual and rapid prototypes. TEC depended on (and paid for) regional spin-offs to
provide the real development and prototyping services within its virtual development
environment. Both these projects brought hundreds of thousands of euros into the
region from external businesses investing in activities which reinforced UTs wider
commercialisation community.
A final example of global/ local connections was the way in which TOP companies
became involved in helping other firms access finance. One was TKT (qv), now
governed by seven TOP alumni, with links to two business angel networks based in
the west of the country, each of which have invested in two further USOs. Secondly,
two of the three founders of one spin-off created a corporate venturing company in the
Enschede city-region; this was recently awarded 1.2m from the national
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
Technostarters programme to support their work in investing in early stage high-
technology start-ups. Thirdly, MESA+ has been designated as the hub for the Dutch
national government strategic research programme Nanoned. 50m from the
Hydrocarbon Fund20
was invested in applied nanotechnology research with
potentially significant economic impacts. Although only a fraction of these funds are
being invested in Twente, it nevertheless provides complementary resources and
activities alongside the existing critical mass, and may help to qualitatively increase
the scope of hybrid activities at MESA+ and in Twente.
In both regions, the universities created spaces where entrepreneurs could assemble
resources, and in doing so benefit from various kinds of university spill-overs,
through a five fold process:-
The two universities created a set of new actors in the region, held in orbitaround university through research and commercial linkages,
These new actors behaved independently, pursuing explicitly commercial goals,growth and innovation,
Spin-offs brought other actors into the university, their partners and advisors, andtogether, these group of actors formed a community around the university.
New spaces emerged around the university which provided places for this widercommunity family to function and live.
Other regional innovators were selectively permitted access into those spaces andcommunities thereby accessing resources that helped them to innovate and grow.
Each university benefited from having a cadre of spin-offs demonstrating university
success in commercialisation. The university community involves a group of people
with expertise and experience of how high-technology venturing can be successfully
pursued despite the prevalent sparse regional entrepreneurship conditions. In that
sense, the space encompassed by the wider commercialisation community differed
quite radically from the economic conditions prevailing elsewhere in the region. Each
local community environment was much more supportive, with finding partners with
complementary resources easier than in the region as a whole. The community could
be considered as a space of opportunity where entrepreneurs are not hampered by
resource shortages in innovating and creating unique assets. The universities and this
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
wider community provided potential entrepreneurs with a point of stability around
which other activities and resources were assembled into coherent, viable businesses
and activities.
CONCLUDING DISCUSSION: UNIVERSITIES, ENTREPRENEURSHIP AND
TERRITORIAL ECONOMIC DEVELOPMENT
Universities as points of stability and spaces of opportunity?
This paper considers how universities become significant economic development
actors in LFRs with relatively under-developed regional knowledge economies, and
what roles they can play in plugging the gaps in RISs in such regions. Firstly,
universities do not automatically fulfil this role: both institutions placed significant
effort into regional engagement. Certainly, there was not a strong pull factor where
academics found it easy to establish new businesses exploiting their academic
knowledge. Consequently, each institution followed two pathways for creating
spin-offs. Both institutions went through an early phase in the mid-1980s of creating
research businesses which were subsequently spun-off in a relatively complete form.
Subsequently, the universities responded more or less enthusiastically to proposals
from external entrepreneurs acting in private capacities to create autonomousspin-offs.
Both types of firms were insignificant in regional economic terms, but over time their
presence forced the universities to reconfigure themselves to be more supportive of
their daughter companies, and consequently for regional entrepreneurial activities.
Both universities validated their activities in terms of their early successes, and USOs
helped to define the role of entrepreneurship in the university mission. In both cases,
entrepreneurship was defined as an external activity, to be performed by outsideagents limiting the university contribution but also bounding its risks. Each
universitys role was restricted to supporting and sheltering companies in the context
of a difficult regional economic environment.
Universities used a range of relationships to retain linkages to their spin-offs,
anchoring the spin-offs around the university. This was given findings elsewhere that
that spin-offs tend to drift away from the university after the entrepreneurial event
(Dahlstrand, 1999; Elgen et al., 2005). This anchoring also represents a key
mechanism for understanding how university activities had a broader system-building
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impact on the RIS. These anchoring mechanisms were initially based on particular
personal relationships, but some became institutionalised over time (MESA+ , the
BDMs). Access to the benefits of these institutions was not restricted to the initial
participants (e.g. TKT, nanotechnology incubator). These institutions evolved into
access points for external investors seeking access to commercially viable university
knowledges (e.g. both national governments, Ericsson). Because knowledge was held
within the communities and institutions, external partners engaged with those
institutions to access the knowledge, which often involved placing their own staff, or
providing funds to, those institutions (MESA+, INEX).
Fortuitously, the increasing policy importance of commercialisation in both countries
allowed both universities well to use their communities of spin-offs to demonstratetheir expertise in commercialisation. Both institutions won government science
funding acknowledging their historical success with commercialisation. The fact that
external partners funded and placed activities in these institutions in turn increased
their regional economic footprint: MESA+ attracted 10m and INEX some 11m of
one-off national grants for scientific infrastructure investment. Whilst the universities
were already large, knowledge-based activities, these wider local projects combining
local, regional and external activities provided direct mechanisms embedding global
and general knowledges within specific applied commercial contexts in those
particular regions. Although the universities were not responsible for those activities,
they played a variety of facilitative roles in both regions, anchoring local actors,
providing financial and knowledge resources, and attracting and convincing outside
investors.
Universities and high-technology development in LFRs
The two case studies together offer evidence corroborating and nuancing the
originally proposed mechanism for universities improving the regional innovation
systems in old industrial regions. The universities in each case built up and sustained
global/ local spaces of possibility, mini-RISs which did not suffer from all the
problems affecting their regional economic environments. Both universities put long-
term efforts into building up and sustaining those spaces, even at times when both
universities faced financial and managerial pressures to abandon their investments in
the absence of short-term profits. Central to the survival of those spaces was their
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occupation by a community of entrepreneurs whose rationale lay in making new
combinations of existing knowledges, attracting finance and ultimately building new
economic activity. Those spaces were assets in their own rights: external
entrepreneurs used those spaces to access unique knowledges, at the same time
contributing their own external resources to the overall combination process. The
contours of this spaces of possibility concept can usefully be applied to the
academic debates initially raised.
The first point relates to the way that gaps are dealt with in sparse, locked-in RISs.
Significant knowledge economy developments are based on combinations of global
and local resources brought to life by and within particular high-technology and
entrepreneurial communities. The essence of the model was that a well-resourced,well-networked actor assembled actors with strong external networks for the
production and exploitation of regional knowledges, simultaneously creating
economic activities through that exploitation activity. This is not restricted in its
application to universities, but there are other such types of organisation which could
conceivably provide an anchoring point for such spaces of possibility, including
non-governmental organisations as well as firms. The five step process outlined
above is clearly specific to old industrial regions lacking a strong knowledge
exploitation community but there are also implications for other types of
dysfunctional RIS.
Whilst these two old industrial regions suffered from the lack of governance
networks, with the universities mobilising governance arrangements to meet their own
needs, other types of dysfunctional RIS have other governance requirements. For
geographically remote peripheral regions and fragmented metropolitan regions, what
appears most important is sufficient institutional thickness to allow actors in suchplaces to focus on particular tangible activities that populate gaps in the RIS.
Institutional capacity in such places lies in identifying large, tangible projects that will
encourage co-operation, then mobilising that network to deliver the projects, creating
a global/ local community anchored around the locality. This is an interesting
perspective on the role of governance in producing well-functioning RISs, developing
from facilitating interaction, to leading and co-ordinating projects which seed and
incubate the necessary co-operations, which in turn lay foundations for future
unselfconscious interactions.
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The second contribution where this concept of a global/ local space of possibility can
be applied is to address the issue that knowledge economy activities in dysfunctional
RISs inevitably look unimpressive against well-functioning knowledge laboratories.
What is important is the possibility that these university spaces offer for networks
communities, allowing new connections to be built between knowledge producers and
knowledge users. In each case, the university anchored the community in those
locations, but the value of the community lay in the sum of the knowledge held within
the community as a whole. It was those embedded communities with whom external
actors engaged, but those external actors were also incorporated within the
community. The fact that external actors were active participants in those
communities also shaped the types of knowledge present in those communities, and
further contributed to and reinforced the place-specific knowledges. The overall
effect was that those external actors reinforced the local embeddedness of those
communities, and such communities could be conceived of as being glocal in
Swyngedouws sense of local manifestations of wider structural relationships (ref?).
This is the second feature of the concept of spaces of possibility, that they are not
purely local spaces, but they provide a means for mediating access to global
(external) forces in ways that strengthen rather than undermine regional
economies and communities. Universities appear able to play this role because the
two case study universities are as I have already noted strongly networked within
global networks of academic funding, prestige and power. Malmberg & Power have
noted that large firms can play this role, and large R&D-active firms are active in both
global knowledge production and exploitation networks. Other types of large
organisation might equally play such a role if they have strong global networks on
which they can draw; governments, non-governmental organisations and big
voluntary organisations (e.g. medical research charities) might also be able to play
such a global/ local role if they can leverage their global networks to provide a local
space of knowledge exploitation.
Thirdly, and finally, the concept of the new spaces of possibility, composed of
strongly embedded hybrid global/ local communities, provides an important relational
dimension to new regionalist conceptualisations of economic growth and
development. Global and local actors in both cases retained their individual
autonomy, but together were enrolled into broader composite projects with a series of
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
glocal characteristics. In this sense, the economic development of the totemic sites
of the new economy might equally be about the production of such glocal spaces.
This in turn hints that such places not merely old industrial regions, peripheral
regions or fragmented metropolitan regions might better be understood by
decomposing and accounting for their success more explicitly into the various actors
global and local which have come together to reshape those places, and the
mechanisms by which that is achieved.
In this paper, I have argued that less successful regions can make local changes which
have broader impacts within the wider structures within which they are positioned.
What distinguishes economically significant local changes is that they are attractive
for external actors, and external actors contribute to realising and sustaining them. Inoted at the outset that some TIMs appear as purely local features, such as territorial
learning competencies, and the only have value insofar as they are able to influence
external actors. This suggests that those external actors are an intrinsic part of those
local advantages, and that the development trajectories of such places is influenced by
the trajectory of the dialectic interplay between local and global actors within such
apparently glocal spaces. Making more explicit and excavating this global/ local
dialectic in otherwise flat knowledge-based development theories of the new
economy could provide a fruitful avenue for further exploration in conceptualising
and understanding shifting geographies of uneven development in the 21st
century.
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Figure 1 The regional innovation system as a local circulation between globally-
connected regional innovators
Global
market/
production
networks
Source: after Cooke & Piccaluga (2004); in Benneworth (2004)
Universities(Knowledge
Generation Sub-
System)
Businesses
(KnowledgeUtilisation Sub-
system)
Technology
transfer
activity
ExportsLearning
Regional
investment
Demand for
technological
knowledge
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
Table 1 Newcastle University interviews (March-July 2004)
Interviewee category Number Interviewee category Number
University senior managers 2 Spin-off/ commercial 3
University BDD 4 Spin-off/ previously academic 5
Academics/ spin-off owners 8 Other firms 4
Business angel 1 Student 1
Former spin-off, now
academic
3 National policy-maker 1
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
Table 2 Twente University interviews (July-December 2004)
Interviewee category Number Interviewee category Number
University central employees 5 Spin-off/ commercial 15
University Research Institutes 6 Regional development
organisations
5
Academics 4 Other firms 2
National policy-maker 1 Other Higher Education 1
Independent consultant 5
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
Table 3 Employment in the key industrial sectors in the North East of England,
1841 1861 1881 1901 1931 1961 1971 1981 1991
Population 617 942 1458 1995 2515 2610 2678 2636 2602
Coal miners 23 50 96 165 188 118 64 39 11
Iron & Steel - 13 31 34 23 57 56 22 10
Shipbuilding - 7 15 42 51 64 39 26 8
Source: Byrne & Benneworth, 2006
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
Table 4 The decline of the Twente textiles industry 1955-1985, employee numbers
Year Employees
1955 44,000
1960 39,500
1965 34,000
1970 22,100
1975 15,300
1980 8,200
Source: Lambooy (1995) on the basis of ETIO-figures
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
Table 5 The role of key factors provided by the university in the growth of eight key
spin-offs
Key factor drawn on by firm A B C D 1 2 3 4
Entrepreneurs
Soft Scientific skills
Academic know-how
Premises/ incubators
Hard Formal intellectual property
Venture finance
University / professors customer
Network Administrative structure
Regional image
Source: authors interviews
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
Figure 2 The formation of new growth families from spin-off companies in Twente
Shading indicates companies within the same group; a bold title indicates the
company is still operational today; oval companies are spin-offs. A dashed line
indicates invested in, an unbroken line means evolved into
Source: authors interviews; company websites
1991
AXIS M. O.
1988/1994
3T
AXIS I.O.(1999)
TMS(1993)
AXIS W.R.(1999)
LIONIX(2001)
TMSI(2000)
Phoenix
Software(2002)
1995
TMP
Idefix(2003)
Smart-Tip(2004)
C2V(2001)
Medspray(2001)
NANOMI(2004)
1992
Aquamarijn
AXIS V.R(2001)
Ericsson
( art)
Lion
Photonics(2001)
Capilix(2004)
1992
DEMCON
??(2003)
Mimo
Technology(2003)
Art
Innovation(2003)
Micro-
montage(2003)
BBV
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
Figure 3 The wider commercialisation community around the University of
Newcastle, 2004
Source: developed from authors own interviews, Benneworth (2007)
Departed
spin-out
firms
Core
business
development
community
University
senior
management
Externally
involved
stakeholders
Academic
entrepreneurs
Third party
firms
Existing
spin-out
firmsUniversity
external
family
University
institutional
boundary
Externally
motivated
mentors
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
Figure 4 The development of MESA+ as an anchor point for a wider regional
commercialisation community 1993-2004
1993 membranespin-outs
Source: developed from authors own interviews
MTF
30 Nano
spin-offs
MESA+
Regional
firms
CMO
MESA
UT
Closure
Spin-out
MESA
Spin-out
BTC
Spin-out
daughters2006
UT
Membrane
Technologies
Group
BTCEuropean
Membranes
Institute
Regional
firmsMESA+
laboratories
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
Figure 5 The university as a space of opportunity: a heuristic model
1 There is an extensive literature on spin-offs which it is not proposed to review in this stage. For the
purposes of this research, a spin-off company is a company with a link back to the university, in that
the founder was a university employee, or the university supported the entrepreneur in establishing the
company by providing access to laboratory/ office space, loans/ equity or intellectual property which
established a contractual link between the university and the new company (Pirnay et al., 2003). This
definition therefore largely excludes graduate start-ups which start independently of the university, but
does include graduate start-ups formed as a consequence of entrepreneurship promotion schemes, such
as the TOP programme (cffootnote 7).
2 Those documents directly cited in the paper are included in the bibliography; a full list of documents
reviewed is included in Benneworth (2005).
3 More interviews were undertaken in Twente because I did not have a good understanding of the
regional development context in Twente, whilst I had just completed a research project on regional
science policy in the North East England which provided comparable contextual information for the
North East.4 I consulted with academics in each institution with a knowledge of spin-offs to identify a core of
interviewees, and then the same was extended outwards approaching people recommended by theinitial interviewees.
5 For spin-off entrepreneurs, the focus was on their history of entrepreneurship, whilst for university
senior managers, their perceptions of policy evolution were important.
6 There were highly innovative activities in the region, particularly in the staple industries. The Consett
Iron Company pioneered spectrographic purity analysis in the 1950s, and there was world-class
shipbuilding R&D which later combined to become the industrial research organisation, the British
Shipbuilding Research Institute. Local utilities companies had R&D stations in the North East, and
British Gas had its engineering research station in the region at Killingworth. However, privatisation
and a reluctance of central government to invest in R&D in the North East gradually eroded this once
promising public-led research base.
GlobalRegion
Local knowledge
economy
University
Local
actors
Extended
knowledge
economy
Spillover
effectsResource
flows
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The role of university spin-off firms in strengthening regional innovation systems in weaker places
7 THT is the abbreviation derived from the Dutch name for the institution, Technische Hogeschool
Twente. Although literally meaning Technical High School, the Hogescholen are now part of the
higher education system as Universities of Professional Education alongside the Scientific Universities
(Garlicket al., 2006). However, despite the name, THT was created as a scientific university ratherthan a university of professional education.
8 The position broadly equates with the position in UK universities of Vice Chancellor; however, the
governance arrangements in Dutch universities are somewhat different to UK universities. UK
universities are traditionally governed by an academic body such as Senate, which appoints the senior
managers drawn primarily from promoted professors. In the Netherlands, universities have a small
executive board, which reports to (and is appointed by) a supervisory board of stakeholders, including
academic representation, but also the government and the Ministry of Education. The Rector
Magnificus is the senior academic representative on the executive board with responsibilities for
teaching and research; the other positions will typically not be held by academics, and have
responsibilities for finance, estates, regional engagement and internationalisation. In practise, there has
been a convergence of these two systems as both Dutch and UK universities come to terms with very
similar external pressures.
9 The most famous of these, about which a great deal has already been written, is the so-called TOP
programme, from the Dutch name, Tijdelijke Ondernemers Programma or Temporary Entrepreneurs
Scheme. The scheme is open to anyone with a business plan to exploit technologies and know-how in
university research groups; in practise this restricts participation to recent graduates and people
working in companies that have research collaborations to the university. This scheme has existed
since 1985, although it has been tweaked in response to experience and the changing demands of
funders.
10 A number of universities do have deals with venture capital firms in which the venture capitalists
assemble teams and invest their own finance to commercialise particular patents. The companies that
firm have no soft links back to the university, the relationship often being limited to the
IP-for-ownership deal.
11
The firms have been anonymised, with firms A to D being from Newcastle University and firms 1 to4 from Twente University.
12 This is not always the case other research projects in Newcastle have identified spin-offs in thefield of drugs discovery which perform specific clinical services for contract research organisations
outside the region, giving very limited regional impact.
13 The firms shown in figure 1 are not necessarily the same firms as shown in table 3.
14 A survey of TOP companies undertaken by the Business School at UT in 2001 showed that at the
time of the survey of 116 respond
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