Background Paradigms
There is a solid consensus among practitioners that economic growth depends on investment in education, the protection of individual ideas and the development of entrepreneurship, which is especially the case of an intermediary economy1 like Slovenia. The development of aggregate growth theories has seen technological progress as a main determinant of long-run economic growth with different attempts at explaining the mech- anisms of technological progress. Up until the 1980s, Solow’s neo-classical growth model and its reinterpretations played the dominant role. Solow’s (1956) model assumes labour-augmenting technological progress that raises the productivity of the workforce and the marginal productivity of capital along with that.
This slows down or reverses the diminishing marginal productivity of capital as capital accumulates, creating incentives for further investments and leading to long-run economic growth. Technological change is seen as a necessary condition for sustained growth. Solow’s model introduced tech- nological progress as an exogenous variable, leaving it unexplained. But only some technological progress can be accounted for by random scientific discoveries, which would then justify its exogenous nature in the model. The lion’s share of it results from the decisions of economic subjects in response to certain factors and should thus be regarded as endogenous.
Indeed, it was the endogenous growth theory that dropped the standard neoclassical assumptions and drove the explanation of technological progress the furthest. A key paper that started this wave of research was by Romer (1986). He introduced a model in which long-run growth is driven primarily by the accumulation of knowledge by forward-looking, profit- maximizing agents, thereby bringing in innovation as an endogenous factor.
While Romer’s theory brings in some of the institutional factors affecting innovative activities, a number of other authors have put more emphasis on
the importance of the environment for the rate of innovation and growth.
Clear answers as to the contribution of institutionalizing to economic growth are lacking, yet a plausible assumption is that through overinstitu- tionalizing, the effect of decreasing marginal economies of scale occurs.
National innovation systems consist of the generation of new know- ledge, the absorptive capacity to exploit this knowledge (Yencken and Gillin, 2002) and an external environment that is not prejudicial to inno- vation (Hindle and Yencken, 2004). For the technological innovation that results from the commercial exploitation of new knowledge, the ultimate objective is wealth creation, whether it is through the creation of a new business entity or by the establishment of a new venture within an existing company. The exploitation of such new knowledge leading to the discovery of a commercial opportunity essentially changes the production function (Schumpeter, 1962).
Knowledge enters technology development via codified and tacit know- ledge (Hindle and Yencken, 2004). Codified knowledge consists of the pub- lished knowledge base of the science or engineering involved in the
‘discovery’, new knowledge contained in patents, copyrights, registered designs, and the codified content of postgraduate or undergraduate train- ing in entrepreneurship and/or technology management. Tacit knowledge inputs to technology development are no less important and include the ability to find ideas that can be converted into opportunities (Fiet and Migliore, 2001), the technology and scientific background brought to new ventures by the ongoing involvement of the original inventors (Thorburn, 2000), familiarity with the particular product/industry sector (Cooper et al., 1994), and entrepreneurial experience including start-up manage- ment, risk management, established access to business networks and raising finance (Legge and Hindle, 1997).
Consequently, even when knowledge is codified in publications or patents its full exploitation will require the transfer of a component of tacit knowledge that is possessed only by the producer(s) of such knowledge (Dasgupta and David, 1994). Correspondingly, the knowledge resources needed for a technology transfer to occur are derived from entrepreneurial capacity. Other codified knowledge includes the disciplinary learning of the inventor and the entrepreneurship training of the entrepreneur. The tacit knowledge brought in by the various players starts with the technological understanding of the inventor in relation to the development of the specific new knowledge or technology being commercialized. The final ingredient in the process is entrepreneurial capacity: the experience and skills of the entrepreneur as both a manager of new technological ventures and a key informant in the business sector in which the venture will operate (Hindle and Yencken, 2004).
The Role of Technology Entrepreneurship in the Knowledge Transfer Process
The key drivers of technology entrepreneurship are technology entrepre- neurs. Drawing from Schumpeter’s seminal work where he stated that eco- nomic growth is the result of the successful innovating of entrepreneurs, regarded as the ‘persona causa’ of economic development, technology entrepreneurs are nowadays the widely acknowledged key catalyst in the process of industrial formation and growth (for a review, see Oakey, 2003).
Industrial history confirms that the birth of new industries has usually depended on the revolutionary skills of one or more of these key technical innovators who make the critical pioneering scientific discoveries (and/or innovations in management) that trigger the birth of new industrial sectors (for a review, see ibid.) and new jobs through the establishing of new high-technology-based firms (NTBFs). Major candidates for high- technology technical entrepreneurship are scientifically qualified staffwho have ‘spun off’ from either public sector research establishments (including universities) or existing (usually large) industrial firms (ibid.).
Advocates of public intervention in favour of NTBFs point out that these firms are a source of radical innovation based on unconventional technical approaches. Such innovations challenge existing technological paradigms dominated by large established industry leaders and have the potential for revolutionizing industries, technology acquisition, transform- ation and diffusion within innovation networks (Autio, 1997), and opening up new industry segments (Colombo and Delmastro, 2002). Altogether, the benefits to society arising from the innovative activity of NTBFs largely exceed those that can be appropriated by them. Hence, such positive exter- nalities justify governmental support (Oakey, 1995).
Taken altogether, research commercialization, entrepreneurship and technological innovation are closely linked phenomena that are vital to the creation and maintenance of national wealth (Hindle and Yencken, 2004).
Ample empirical evidence supports the salience of technology transfer with technical entrepreneurs and their spin-off firms as key transmitters in the process.
Technology Transfer and Spin-offFirms
Technology transfer is the application of information (a technological innovation) for use (Gibson and Rogers, 1994). The accumulated tacit knowledge and culture of the entrepreneur are resources essential for cre- ating wealth from research commercialization leading to technological innovation and the creation of NTBFs (Hindle and Yencken, 2004). The
technology transfer process usually involves moving a technological inno- vation from a research and development (R&D) organization to a receptor organization (such as a private company). A technological innovation is fully transferred when it is commercialized into a product that is sold in the marketplace. The mechanisms of technology transfer (Rogers, 2001) are spin-offcompanies, licensing, publications, meetings and cooperative R&D agreements.
A spin-off is a technology transfer mechanism because it is usually created in order to commercialize a technology that originated in a gov- ernment research laboratory, a university research centre or a private research organization. In a further elaboration of the NTBFs’ role, Autio (1997) believed that NTBFs are part of a ‘technological articulation process’ through which generic scientific knowledge is transformed into application-specific technological knowledge. Chiesa and Piccaluga (1998;
see also Fontes, 1998) expanded on this issue by pointing out that one important contribution of spin-offentrepreneurs is to take technologies that are often ‘shelved’ in a research organization and to test them in terms of industrially related issues – such as production, market and regulatory aspects – thereby uncovering their commercial potential. Hence, spin-offs tend to emerge as a response to system gaps regarding the exploitation of academic research (ibid.).
Founders of spin-offcompanies are usually individuals who were former employees of a parent organization, and have a core technology that is transferred from a parent organization (Rogers and Steffensen, 1999). As such, spin-offs are categorized as university spin-offs and corporate spin- offs (Lindholm, 1994). Empirical research among spin-off firms showed that their founders, highly specialized professionals, are generally driven by the aspiration of owning a business; they are often retrenched or unhappy with their current working environment or seek a comfortable and satisfy- ing way of life. In the specific case of public research organizations, the motivation for creating spin-offcompanies can also embrace the desire to market specialist skills and tacit knowledge held within the host organiza- tion through consulting and research contracts (Stanworth and Curran, 1986). The taxonomy of spin-offcompanies includes (Hindle and Yencken, 2004): (a) direct research spin-offs (DRSOs) are created in order to com- mercialize intellectual property arising out of a research institution where intellectual property is licensed; (b) technology transfer companies (TTCs) are companies set up to commercially exploit the university’s tacit know- ledge and know-how, usually but not solely in the area of process rather than product innovation, where no formally protected (for example, patents) intellectual property and/or exclusive licensing is involved; and (c) start-ups or indirect spin-offcompanies (ISOs) are companies set up by
former or present university staffand/or former students drawing on their experience acquired during their time at the university, but which have no formal intellectual property licensing or similar relationships with the university.
The Role of Support Infrastructure for Technology Entrepreneurship Are the marginal costs of establishing high-technology firms in some sectors ultimately higher than in others? Recent research on academic spin-off firms has shown that in some fields, particularly science-based ones such as biotechnology, the utility of high-technology-based firms involved in the transfer of public research results to the market is higher than in others (for example, Kenney, 1986; Fontes, 2001). Due to its specific proximity to scientific research, the biotechnology field is particu- larly appropriate for the transformation of academic knowledge into pro- ductive knowledge.
Experience has shown that a research scientist without entrepreneurship training and experience, while competent as the initial technology cham- pion, is often not well suited to the ‘jockey role’ needed to drive the NTBF forward (Daniels and Hofer, 1993; Samsom and Gurdon, 1993).
Technology parks can facilitate the development of critical knowledge resources for bringing high-tech products to the market: the founder’s unique awareness of opportunities, the ability to acquire the resources needed to exploit the opportunity, and the organizational ability to recom- bine homogeneous inputs into heterogeneous outputs. Empirical data show that start-ups involved in the process of technological innovation usually do not stem from the one person (Hindle and Yencken, 2004).
It has been shown that technological parks can generally be defined as property-based initiatives aimed at supporting innovative firms through the provision of technological and other business services. The following factors are crucial for the support of tenants in technological parks: (a) proximity to university laboratories and other research centres (Acs et al., 1992), which contributes to innovation spillover effects; (b) technology parks enable easier access when exploring the opportunities for the commercialization of innovations of academic and research personnel; (c) agglomeration economies related to the close clustering offirms in a relatively small geog- raphical area; and (d) networking opportunities. In spite of the recent diffusion of technology parks in Europe, whether they have been successful or not in supporting NTBFs is still unclear since empirical studies have provided mixed results (Colombo and Delmastro, 2002). Clarity on the nature of the bridging role of technological parks in fostering cooperation and networking between tenant firms is also lacking.