Break the Barrier Series 21 st November 2011 Market opportunities made or found? Opportunity recognition and exploitation in Irish University Spin-outs (USOs) Natasha Evers Marketing Discipline
Structure of presentation Landscape of academic entrepreneurship What makes USOs distinct from other new ventures? Entrepreneurship and Marketing Literature to explain : Opportunity recognition Opportunity exploitation Cases of Irish USOs Some conjectures for discussion
What about University Spin-outs? Only received increasing attention during the past few years both in the academic literature and in practice (Clarysse and Moray, 2010; Clarysse et al., 2001). New firms created to exploit commercially some knowledge, technology or research results developed within a university (Pirnay Bernard and Nlemvo, 2003, p.356) How do academics identify new business opportunities? Do they possess entrepreneurial intentions? What activities do they engage in for their ventures to emerge?
Academic spin-offs show some traits that make them distinct from other high-tech start-ups. Team of academics working in own disciplinary knowledge in closed academic circles Network emerge in HEI environment made up of administration and academics and the TTO support Organizations have commercialisable ideas in their research portfolio BUT differ in terms of: opportunity search and how their trajectory of business development is guided and supported.
Summary Metrics Ireland 2005 present 2007 2008 2009 2010 Total 2007-2010 Licence/ Option/Assign 56 67 100 93 316 Spin-outs 13 7 35 31 86 Invention Disclosures 271 407 457 431 1566 Patents Applications 124 202 148 101 575
Some Successful University Spin-outs Eirecomposites (NUIG) Wavebob (NUIG) Celtic Catalysts (UCD) Biancamed (UCD) Mutebutton (NUIM) Ntera (UCD) Miravex (TCD)
Research objective To explore how opportunities are identified and exploited for new venture creation in the context of university spinouts.
Recognition and Exploitation Entrepreneurship begins with the formation of opportunities which is the subject of the entrepreneur (Shane, 2000; Katz and Shepherd, 2003). Opportunity exploitation can be a process dependent on the decision of the entrepreneur and falls typically within the boundary of the firm which, through its capabilities, manifests opportunities into market outcomes (Whittaker et al., 2009).
Research questions and theoretical positioning from Entrepreneurship/Marketing literature Research questions 1. How do USOs identify opportunities? Theoretical premise 1) Concepts of entrepreneurial opportunity creation and discovery 2. ) How are USOs created to exploit such opportunities identified? 2) Theoretical Framework of Organisational Emergence (Katz and Gartner,1988)
Are opportunities identified through processes of discovery (found) or creation (made)? Discovery approach (Austrian economists Kirzner 1979,1997;) Objectively real (ex ante entities) formed exogenously Founder s alertness to market disequilibrium Conscious search for market opportunities Creational approach (Schumpeter, 1934; Sarasvathy, 2008) Created, endogenously by the actions of the entrepreneur Creational process : who I am, whom I know what I know (Sarasvathy et al. 2008)
Opportunity discovery - derived from market disequilibrim Extant studies often make the fundamental assumption that opportunities emerge from an exogenous environment. May be problematic in respect to emerging markets and fast evolving industries such as biotech and lifescience - produce new markets as technologies emerge uncertainty, volatility. New opportunities are the result of market disequilibrium OR the enactments of opportunities to create markets that from the outset are imperfect per se?
Are opportunities identified through processes of discovery (found) or creation (made)? Discovery approach (Austrian economists Kirzner 1979,1997;) Objectively real (ex ante entities) formed exogenously Founder s alertness to market disequilibrium Conscious search via market orientation (Controversial) Creational approach (Schumpeter, 1934; Sarasvathy, 2008) Created, endogenously by the actions of the entrepreneur who I am, whom I know what I know and their Intentions (Sarasvathy et al. 2008)
Founding entrepreneurs are cognitive agents that perceive, make sense and enact their environment in turn creating entrepreneurial opportunities. P1: In USO creation, academic entrepreneurs create opportunities enacted through their endogenous environment rather than discovering them exogenously. P 2: In USO creation, the human capital of the academic entrepreneurs influences their ability to create opportunities.
Opportunities created (made)
2 nd Inquiry Opportunity Exploitation? Research questions 1. How do USOs identify opportunities? Theoretical premise 1) Concepts of entrepreneurial opportunity creation and discovery 2. ) How are USOs created to exploit such opportunities identified? 2) Katz and Gartner (1988) four properties for organisational emergence: 1. Resources 2. Boundary 3. Intentionality 4. Exchange
Realising Market Opportunity through organisational creation
Entrepreneurial Intentionality and Self-efficacy Intentionality is a state of mind that directs a person s attention (and therefore experience and actions) toward a specific goal or path in order to achieve a market outcome Entrepreneurial self-efficacy refers to the strength of an individual s belief that he or she is capable of successfully exploiting the opportunity, thus, it can be argued: Intentionality of potential academic entrepreneurs dependant on their notion of self-efficacy
Academic entrepreneurial intentions & selfefficacy Prodan and Drnosvek (2010) found entrepreneurial selfefficacy had the highest path coefficient among all predictors of academics entrepreneurial intentions. Entrepreneurial intentions of academics were important in predicting the dynamics in emergence of firms with high growth potential.
Propositions to explain how opportunities are exploited for USO creation P 3: In USO creation, academic entrepreneurs demonstrate self-efficacy in their intention to exploit the created opportunity
Resources via Relational Capital Entrepreneurship does not occur in a vacuum, but involves economic actions between actors and builds upon ongoing interaction in social relationships (Birley, 1985). Being part of a closed network with a high degree of embeddedness is proposed to be advantageous. The ability to exploit opportunities is linked to a firm s position in the network as well as on the nature of relationships.
Realising Market Opportunity through organisational creation
Firm boundaries and relationship with environment Typically, when potentially patentable knowledge is created by university employees, the university has ownership rights to this knowledge. However, it is in the interests of the university to drive as much IP into commercialisation in return for royalities and also academic reputation, hence negociation of IP rights emerge as mutual and for benefit of creating a legal entity separate from university.
Propositions for USO Opportunity Exploitation P 3: In USO creation, academic entrepreneurs demonstrate selfefficacy in their intention to exploit the created opportunity P 4: In USO creation, the academic entrepreneur s access to personal and network resources influence the resourcing of the USO. P5: In USO creation, the USO boundaries are influenced by the academic entrepreneur s relationship with their academic environment. P6: In USO creation, USO exchanges are mainly export-led.
Conjecture 1: Opportunities were made not found in USOs Created endogenously and enacted meaningfully by individuals influenced by their own antecedent knowledge corridors and beliefs Exaptive process of creating opportunities an evolutionary process in which a given adaptation is first naturally selected for, and subsequently used by the organism for something other than its original, intended purpose.
Conjecture 2 Notion of Self-Efficacy necessary condition for opportunity exploitation Intentionality in new venture creation by reinforced by the notion of self-efficacy to create the venture. Self-efficiacy enabled by antecedent knowledge corridors, mediated by their access to personal networks determine opportunity exploitation in USOs..
Exploitation of Market Opportunity through organisational creation (adapted framework by Katz and Gartner, 1988)