Universities in the world are being hit by an entrepreneurial outbreak in the form of transforming the creation of new technologies from research conducted by academics so that it becomes an engine of economic growth as well as a strategy to diversify financing sources for the university. As economic progress shifts from agricultural to technological base, countries need to achieve and maintain the state of technological art through research conducted by universities at the same time the discovery of new technology is sought to become part of industrial development.
Although multinational companies are more controlled by short-term income-oriented stock exchanges, investment by multinationals in long-term basic research begins to decline. Given the enormous cost of investing in long-term oriented basic research, some companies closed basic research laboratory facilities, such as Bell Labs, IBM, and Xerox Park, or converted their laboratory facilities into medium-term oriented laboratories and immediately turned a profit for the company.
These conditions create a gap between the results of university research findings and investment in developing these findings into new products and processing them. Entrepreneurship began to address the gap by leveraging high-risk venture capital and in certain cases supplementing it with government assistance for small businesses, in investing in new technologies developed by universities. The University’s enhanced Intellectual Property Rights and licenses make new ventures protect themselves from the competition with major companies in the future through exclusive licenses in the form of patents. Furthermore, the venture markets its products directly to the market or forms alliances with large companies to further develop and market the new technology. The process of the emergence of university business ventures is what was then called a university spinoff.
The process of entrepreneurship development in university is like a food chain. Starting with government support for basic research at the university, then identifying various research findings to be protected with intellectual property rights. Then enter the stage of technology licensing, the process of selling the inventions license to the company to be further developed. In the case of a newly established venture, this section covers several stages; birth and development ideas about new companies, the commitment of the founders to their formation, staff identification, capital search, and negotiation of licensing agreements with universities.
Putting all agreements at a complex time: on the one hand, the agreement must provide new ventures with the adequacy of resources to operate and provide incentives for investors, while on the other hand provide universities with a) guarantees that investment adequacy is provided for the development of such technologies; b) protection against liability and c) financial investment returns. The food chain stage of the next technological development is to identify the best technology platforms. The next stage is to market the product either directly or through strategic alliances with large companies. The food chain then repeats itself to the beginning with both positive and negative consequences. Positive consequences include more cooperation with industry, increased satisfaction for both parties, and education for lecturers and students in entrepreneurship. On the other hand, the university is concerned about distortions for the direction of research, conflicts of commitment by lecturers, and the process of emergence of conflicts of interest from lecturers.
Some studies on entrepreneurial universities show that university spinoff activities have the following benefits:
- Stimulates economic growth in the regions where the entity does its business. Entities produce innovative products that satisfy the needs of consumers and at the same time create jobs, especially the educated workforce.
- Generate significant economic value. The economic added value of the university spinoff as estimated by the Association of University Technology Managers from 1980 to 1999 was recorded at $33.5 billion.
- Creating jobs. In addition to the added value of the economy, spinoff activity absorbs a workforce of 280,000 or an average of 83 workers per entity.
- Encourage investment in university technology. Spinoff encourages the private sector to invest in the development of technology produced by universities.
- Increasing the commercialization of technology developed by universities. Spinoffs can improve the commercial side of newly developed technologies that may not appeal to established companies to develop them further.
- It is an effective commercial vehicle for uncertain technology. The spinoff is an effective vehicle for technology products that are uncertain and are still in the early stages of development that may not be ready for copyrights so large companies are reluctant to invest in the development of such products.
- It is an effective vehicle to encourage the involvement of inventors. The spinoff is an effective mechanism in maintaining the involvement of inventors in the process of commercialization of technology, in addition to being a necessary condition for the development of technological products and services for universities.
- Help the university realize its mission. A spinoff is a valuable entity in realizing the university’s mission in teaching and research.
- Support further research. Spinoffs can open up opportunities for advanced research conducted by universities. The income generated by the entity can be used to finance the research activities.
- Attract and retain academic staff. Spinoffs provide additional incentives beyond salary so that they will attract and retain outstanding academic staff.
- Help train students. Spinoffs can also serve as student entrepreneurship incubators that provide educational services and exercises in business.
From the series of advantages of university spinoff as described above, some obstacles that need to be considered by the university are: 1) the costs and obstacles that will be faced in developing spinoff companies; 2) Conflict of interest; 3) changes in the orientation and focus of the university of teaching; 4) influence scientific studies for researchers; 5) Prevent the open dissemination of knowledge.
Critics of the university spinoff both from inside and outside the university are based on concerns that the role and function of universities in the field of teaching and development of science and technology will be reduced to market or commercial values. This shift in the role will eventually make higher education institutions only “sewers” who receive orders from others while forgetting academic moral responsibility to the public. Academic freedom will be dictated by the will of the market.