Academic Entrepreneurship: Bayh-Dole versus the 'Professor's Privilege'

Abstract

We explore whether the Bayh-Dole intellectual property regime is associated with more, and more valuable academic entrepreneurship than the “Professor’s Privilege” regime. Using data on U.S. STEM Ph.D.’s becoming entrepreneurs during 1993-2006 and similar data from Sweden we present evidence showing that in both countries the entry rate into entrepreneurship is lower for those originating from academia than for those orginating from non-university employment, and that the relative rate of academic entrepreneurship is slightly lower in the U.S. than in Sweden. We also find that the mean economic gains for becoming an entrepreneur is negative, both for Ph.D.’s originating from academia and non-university alike in both countries. Further analysis indicates that in both countries there is selection from the bottom of the ability distribution among academics. The results suggest that policies aimed at screening entrepreneurial decisions by younger, tenure-track academics may be more effective than general incentives to increase academic entrepreneurship.

Keywords: Academic entrepreneurship, economic incentives, Bayh-Dole, Professor’s Privilege

JEL Classification: L26, J20, N32