THE GEOGRAPHICAL PROXIMITY CHOICE OF UNIVERSITY SPINOUTS IN IRELAND (PART 1)

The implicit assumption of theories of agglomeration from evolutionary economics is that spinout firms tend to take root near their parent, similar to apples falling close to the tree.

To locate nearby their parent university, academics who establish businesses will continue to enjoy the advantages of being proximate to their colleagues, social connections and the overall environment. Similarly, as scholars in support of localised knowledge spillovers argue, knowledge – in particular that in tacit forms – is spatially bounded, suggesting that geographical proximity is an important determinant of knowledge exchange.

It has also been indicated that geographical proximity is not alone in influencing the effectiveness of collaboration, but accompanied by many other types of proximity such as organisational, cultural and technological proximity.

This article presents some preliminary findings of the geographical proximity choice of university spinouts (USOs) in Ireland between 2007 and 2011. In other words, we would like to measure the distance between USOs and their parent university.

According to Enterprise Ireland, there are a total of 117 USOs created during the four-year period. With the use of the FAME database, we are able to identify more detailed information on these firms. FAME (Financial Analysis Made Easy) provides information on major public and private UK and Irish companies, including company profiles such as subsidiaries and directors, accounting and financial information, ratios and trends, shareholder details and latest company news.

Our search in the FAME database leads to an exclusion of 27 USOs which have either been dissolved or not been in existence in the database. Therefore, the analysis here is based on a total of 90 USOs which have been established by academics in Irish HEIs between 2007 and 2011 and are still in operation. For each of these firms, we also collect information about their addresses registered for business. Using Google Map tools, we could then calculate the real distance between the firms and their parent university.

Figure 1 below shows the trend of establishment of spinouts by academics in Irish HEIs. In total, 11 Irish HEIs report that their academics have been involved with spinout activity. UCD and TCD are the two institutions leading the performance, with 18 and 17 firms being founded respectively. NUIG and DCU are also each responsible for more than 10 spinouts created during the period.

Figure 1 Establishment of university spinouts in Ireland, 2007-2011

Figure 1

Source: Author’s own elaboration.

Figure 2, in much more detail, shows the exact locations of spinouts from each of three leading institutions in this activity, namely UCD (1st row), TCD (2nd row), and NUIG (3rd row). In particular, each entire row represents one university, the situation of which is illustrated by three different maps which are at national, regional, and local levels respectively from left to right.

For example, all of the three maps on the first row in Figure 2 show where spinouts from UCD are located, although they differ at the scale of the map. For each university, i.e. each row, the first column – the map at the national level – could comprehensively show how concentrated or dispersed its spinouts are situated within the country. The maps at the regional and local levels are drawn to reveal the exact locations of firms.

Figure 2 Location of spinouts from UCD, TCD and NUIG (row) viewed at national, regional and local level (column), 2007-2011

Figure 2-1

Figure 2-2

Figure 2-3

Source: Author’s own elaboration.

It could be easily seen from Figure 2 that most USOs are located nearby their parent university, a trend holds for all of the three HEIs. However, for each of the three universities, there are a couple of spinouts situated relatively farther away. It would be interesting to look deeper into the choice of those firms as to the reasons why they are located somewhere else rather than nearby their parent university. One may expect that the location choice of any firm is impacted by a number of factors which are dynamic and often intertwined.

(To be continued…)

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