The EERN Blog

Engage with leading researchers, policy makers, and practitioners

The potential for university-driven entrepreneurial ecosystems (Part 2)

A university established in 1961 to support industrial conversion of the textile industry, drives a regional entrepreneurship make-over, a region known now as a European entrepreneurial leader [1] and hub for high technology start-ups as well as being recognised as the Engaged University of the Year in the Netherlands in 2016, to replace the demise of the same industry when it left in the 1980’s.

A young engineering university founded in 1957 to support manufacturing in the region, becomes the heartland of Canada’s ‘technology  triangle’, the source of Blackberry and in excess of 500 technology companies, putting it in stark contrast to the tens of other communities in Canada that went through a similar decline but without the same rejuvenation.

The story of how these regions have been transformed in a relatively short period of time, driven by the University Twente and University of Waterloo respectively, are both inspirational for other regions, but also potentially misleading if their complexities are not fully understood.

For this reason, there are two key insights from these cases that are important to understand: (i) the importance of an entrepreneurial ecosystem for creating systemic entrepreneurship (this was addressed in our previous blog [2], (ii) the central role that a university can play in developing entrepreneurial regions (the topic of this blog) and (iii) the ecosystem for entrepreneurship involving universities (future blog).

So why is entrepreneurship being increasingly associated with universities?

Since the first entrepreneurship course was established in the US at Harvard University in 1947, universities have increasingly been associated with the concept. There were isolated examples of academic entrepreneurship as early as in the 19th century, which became increasingly prevalent following the introduction of the Bayh Dole Act in 1980. The Act awarded IP rights of publically-funded research to universities as a means for facilitating the commercialisation of university science, which resulting in licensing of research discoveries and spin-outs companies.

In academic literature, through the Entrepreneurial University framework in 1983 and the Triple Helix model published in 1995, which recognise the vital role universities can have in knowledge-based societies, Henri Etzkowitz provided frameworks for how universities can influence the world through entrepreneurship. In practice, the two cases mentioned above are an example of how universities are increasingly being recognised for their central role in building competitiveness of a society (primarily regional), which more recently has included a focus on entrepreneurship and making a greater entrepreneurial impact.

So what is the role of universities in respect to entrepreneurship?

The report ‘Developing Entrepreneurial Graduates – Putting entrepreneurship at the centre of higher education’ [3] identified that universities are well positioned:

  1. to sensitise, educate and train students to develop individuals with their own entrepreneurial capabilities through teaching and learning practices,
  2. to engage stakeholders inside and outside the university and to create an enabling and supportive institutional environment.
  3. to create an enabling institutional environment including leadership and vision, culture development and providing mechanisms to support entrepreneurship

In addition, the article titled ‘Towards the Entrepreneurial University’ by Gibb and Hannon, an oft-cited source for the entrepreneurial university, states that the university’s role also includes:

  1. to provide a source of entrepreneurship in terms of new ventures,

Adding further to this, Etzkowitz in his concept of the entrepreneurial university in 1983 [4] proposed that universities role should include:

  1. to commercialise their research and technologies into public value,

In essence, the contribution of universities to the entrepreneurial ecosystem is twofold: (i) the contribution to the entrepreneurship / innovation chain and (ii) the contribution to the human capital supply chain.

So what is the contribution of universities to entrepreneurial ecosystems?

Considering the four capitals that comprise the basic elements of an entrepreneurship ecosystem, universities can contribute to each of them in the following way:

  1. Cultural and intellectual capital –universities can have a substantial impact through both education and research.
    • “R&D is the backbone of a globally competitive, knowledge-driven economy”[5]. Through cutting-edge and future-oriented research, universities offer substantial contributions to new knowledge and technologies resulting in new products and services. Moreover, the nature of these discoveries and their high degree of technological and platform innovation, provides entrepreneurs with access to more radical and breakthrough products and services,
    • Universities substantially contribute though education to develop human capital, including starters, employees and mentors. Success in starting a new venture has been found to increase substantially with each completed step in the education process, high school, bachelor and post graduate. In his study of start-up success, Scott Shane found that those ‘starters’ with a post-graduate degree are likely to achieve 40% greater sales than a university graduate, who themselves are likely to achieve 25% higher sales than a high school drop-out [6].
  2. Strategic capital – any forms of collaboration with universities or concepts emerging from universities are almost always promoted by the entrepreneurial business with the university name and branding like ‘Made at XYZ university’. Why is this? Primarily because the name of a university signifies innovation or leading-edge, which can undoubtedly increase reputation and authority. It carries more weight that simply the name of a new venture or SME and it obviously carries far more authority than ‘we came up with the idea over lunch’.
  3. Network capital – As universities are recognised as essential to regional innovation systems, investments in university-centric collaborative spaces, infrastructure and equipment are reaching all-time highs, for example in the UK and Canada. Additionally, the extensive support from networks and relationship building that can occur through universities is increasing as they take their place at the table for regional governance with business and government. Alumni networks that operate worldwide, university embedded entrepreneurial networks involving students and academics, student-business projects or industrial PhD mobility programmes are increasing the scope of universities to influence network capital.
  4. Economic capital – whilst some universities have their own competitions offering financial awards or their own investment fund for financing new ventures and commercialisation purposes, their financial contribution to entrepreneurship is limited. However, where universities tend to make a higher contribution is through resources. As described above, investment in accessible resources at universities have increased including collaboration spaces including incubators, accelerators and maker spaces as well as access to cutting-edge equipment and labs.

The influence of universities on the entrepreneurship ecosystem has a huge potentially. But how should the university-driven entrepreneurship ecosystem actually look? This will be covered in our next blog.


Blog take away: Universities have a high potential to contribute to the entrepreneurship ecosystem by:

  1. developing entrepreneurial human capital through teaching and learning practices,
  2. providing a source of entrepreneurship in terms of new ventures
  3. providing commercialisation opportunities from their research and technologies discoveries
  4. engaging stakeholders inside and outside the university in the topic of entrepreneurship
  5. creating an enabling institutional environment for entrepreneurial activity

 

[1] OECD (2011). OECD Reviews of Regional Innovation – Regions and Innovation, ISBN Number: 9789264097384

[2] Davey, T. & Galan-Muros, V. (2016). The importance of an entrepreneurial ecosystem for creating systemic entrepreneurship: Lessons from the Amazon rainforest and Silicon Valley (Part 1). The EERN Blog. Accessed from: http://eernetwork.org/index.php/2016/09/28/the-importance-of-an-entrepreneurial-ecosystem-for-creating-systemic-entrepreneurship-lessons-from-the-amazon-rainforests-and-silicon-valley/

[3] Herrmann, K. (2008). Developing Entrepreneurial Graduates-Putting entrepreneurship at the centre of higher education, NESTA Publication.

[4] Etzkowitz, H. (1983). Entrepreneurial Scientists and Entrepreneurial Universities in American Academic Science. Minerva, 21(2-3), 1573-1871.

[5] Markovich, S.J (2012). Promoting Innovation Through R&D. Council on Foreign Relations, Accessed from: http://www.cfr.org/innovation/promoting-innovation-through-rd/p29403

[6] Shane, S. (2008). The Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers. New Hafen & London.

Leave a Reply