Frontiers of Entrepreneurship Research
1997 Edition

SUMMARIES

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ENTREPRENEURSHIP: THE NEW PARADIGM OF UNIVERSITY TECHNOLOGY TRANSFER 
1Dennis R. Trune
2Lewis N. Goslin

1Oregon Health Sciences University, Portland, OR  97201-3098
2Portland State University, Portland, OR  97207-0751

Telephone: 1503-494-2931 , 2503-725-3760
Fax: 1503-494-5656,  2503-725-5850

Principal Topics

University technology transfer is becoming a significant form of faculty  entrepreneurship.  Faculty inventions and other technology licensed to outside companies amounted to $266 million in royalty payments to U.S. universities in 1994.  Thus, this entrepreneurial activity by faculty is being increasingly encouraged by university administrations because it is a source of revenue to the university.   However, no published information is available regarding the administrative costs of maintaining a university technology transfer program and if these costs are sufficiently offset by the university=s portion of the royalty income.  Therefore, an analysis was made of technology transfer costs and benefits to assess profitability in U.S.  universities.

Method

The analysis included data on technology transfer at 155 U.S. universities for 1994 published by the Association of University Technology Managers. This included the number of invention disclosures, patent applications, royalties, number of technology transfer office personnel, and new research dollars resulting from technology licensing.  From these data, estimates were made of office personnel costs, patent fees, legal expenses, and faculty opportunity costs.  Furthermore, it was assumed that royalty income was split equally between the inventor, inventor department, and university administration.  From these data, a profitability estimate was made for  a) maintaining the technology transfer office (1/3 royalties versus office costs),  b) maintaining the entire university program (2/3 royalties versus costs for the office, patents, and faculty), and  c) income generated for the community as a whole  due to the existence of such a program (direct university dollars flowing into the local economy).

Major Findings

The analysis of technology transfer office expenses revealed only 59 (38%) universities operated at a profit.  However, enough universities were sufficiently profitable that  the average university generated $291,000 in  royalties above related expenses.  Similarly, the
 costs of maintaining the entire university program caused only 53 (34%)  universities to operate at a profit.  Again, the larger successful universities caused the national average income to be $619,000 over expenses.  Finally, the local community benefit of these entrepreneurship programs was $337.5 million nationally, an average of over $2.1 million  from each university.

Implications

This is the first time any analysis has been done of the university=s administrative costs for technology transfer.  On a national scale these entrepreneurial programs appear to be making money for the universities and benefitting their local communities.  Many university technology transfer programs have been in existence only 5-10 years and presumably have not transferred sufficient technology for a profitable royalty stream.  Nevertheless, the continuation of this entrepreneurial emphasis by university administrations undoubtedly will increase the financial gains of technology transfer in this era of dwindling support from traditional state and federal sources.
 
 

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