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Designing Contracts for University Spin-offs

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  • Macho-Stadler Inés

    (AUTONOMOUS UNIVERSITY OF BARCELONA CATHOLIC UNIVERSITY OF LEUVEN)

  • Pérez-Castrillo David

    (AUTONOMOUS UNIVERSITY OF BARCELONA)

  • Veugelers Reinhilde

    (AUTONOMOUS UNIVERSITY OF BARCELONA CATHOLIC UNIVERSITY OF LEUVEN)

Abstract

We provide a theoretical model for designing academic spin-off contracts between the university Technology Transfer Office (TTO), the researcher and the venture capitalist. The optimal contract entails the allocation of founder shares to the researcher to secure her participation in the venture, and it may also require the researcher to be financially involved in the project to give her incentives to provide effort. We prove that, when this happens, there may be overinvestment in the spin-off. Finally, we show that when the TTO has more accurate information than the other two participants concerning the likelihood of success of the spin-off, the TTO will signal profitable projects by taking financial stakes. Hence, theTTO will end up owning both founder and financial shares in the venture.

Suggested Citation

  • Macho-Stadler Inés & Pérez-Castrillo David & Veugelers Reinhilde, 2007. "Designing Contracts for University Spin-offs," Working Papers 201071, Fundacion BBVA / BBVA Foundation.
    • Handle: RePEc:fbb:wpaper:201071
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    Cited by:

    1. Nicos Savva & Niyazi Taneri, 2015. "The Role of Equity, Royalty, and Fixed Fees in Technology Licensing to University Spin-Offs," Management Science, INFORMS, vol. 61(6), pages 1323-1343, June.
    2. Erika Färnstrand Damsgaard & Marie C. Thursby, 2013. "University entrepreneurship and professor privilege," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(1), pages 183-218, February.
    3. David Grosse Kathoefer & Jens Leker, 2012. "Knowledge transfer in academia: an exploratory study on the Not-Invented-Here Syndrome," The Journal of Technology Transfer, Springer, vol. 37(5), pages 658-675, October.
    4. Macho-Stadler, Inés & Pérez-Castrillo, David, 2010. "Incentives in university technology transfers," International Journal of Industrial Organization, Elsevier, vol. 28(4), pages 362-367, July.
    5. Dechenaux, Emmanuel & Thursby, Jerry & Thursby, Marie, 2011. "Inventor moral hazard in university licensing: The role of contracts," Research Policy, Elsevier, vol. 40(1), pages 94-104, February.
    6. Banal-Estanol, A. & Macho-Stadler, I., 2008. "Commercial Incentives in Academia," Working Papers 08/13, Department of Economics, City University London.
    7. Joanna Poyago-Theotoky, 2009. "University-industry technology transfer options: licensing or research joint venture?," Economics Bulletin, AccessEcon, vol. 29(4), pages 2582-2591.
    8. Son, Hosung & Chung, Yanghon & Hwang, Heeju, 2019. "Do technology entrepreneurship and external relationships always promote technology transfer? Evidence from Korean public research organizations," Technovation, Elsevier, vol. 82, pages 1-15.
    9. Schmitz, Patrick W., 2023. "Incentivizing research with (un)conditional teaching duties: Punishment or rent extraction?," Economics Letters, Elsevier, vol. 224(C).
    10. Козырев А.Н. & Неволин И. В., 2013. "Применение Алгоритма Решения Задачи Об Оптимальном Распределении Ресурсов К Проблеме Назначения Цены За Использование Интеллектуальной Собственности," Журнал Экономика и математические методы (ЭММ), Центральный Экономико-Математический Институт (ЦЭМИ), vol. 49(3), pages 57-68, июль.
    11. Li, Qing & Zhang, Huaige & Hong, Xianpei, 2020. "Knowledge structure of technology licensing based on co-keywords network: A review and future directions," International Review of Economics & Finance, Elsevier, vol. 66(C), pages 154-165.
    12. Stefano Poponi & Alessio Maria Braccini & Alessandro Ruggieri, 2017. "Key Success Factors Positively Affecting Organizational Performance of Academic Spin-Offs," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 14(05), pages 1-18, October.
    13. Samira Yusef Araújo Falani Bezerra & Ana Lúcia Vitale Torkomian, 2024. "Technology Transfer Offices: a Systematic Review of the Literature and Future Perspective," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 4455-4488, March.
    14. Gerry Edgar & Omid Ali Kharazmi, 2023. "Systems Evaluation of University-Industry Collaboration Efficiency in Iran: Current Situation and Proposed Policy Framework," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 645-675, June.

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