THE GEOGRAPHICAL PROXIMITY CHOICE OF UNIVERSITY SPINOUTS IN IRELAND (PART 2)

(Continued from Part 1)

Table 1 below shows the locational characteristics of USOs for the 11 Irish HEIs (Appendix I breaks down into more details). If all institutions are taken into consideration, the average distance between a USO and its parent university in Ireland is 31.27 Km (about 19.43 Miles), while the median distance is much shorter which stands at 4.31 Km (about 2.68 Miles). Furthermore, in Ireland, the shortest distance between any USO and its parent university is only 230 Metres, with the longest distance being 229 Km (about 142.29 Miles). The fact that the median distance is less than 3 Miles seems to indicate a dominant presence of geographical proximity between Irish USOs and institutions.

Table 1 Locational characteristics of university spinouts in Ireland, 2007-2011

Institution Number of USOs Shortest distance (Km) Longest distance (Km) Average distance (Km) Median distance (Km)
DCU 10 0.25 66.10 13.66 9.11
DIT 6 0.77 57.50 15.04 9.77
ITTRALEE 1 2.29 2.29 2.29 2.29
NUIG 11 0.77 194.00 42.70 3.06
NUIM 9 0.23 185.00 44.98 23.00
RCSI 1 218.00 218.00 218.00 218.00
TCD 17 0.23 208.00 13.65 0.59
UCC 7 1.07 229.00 78.85 4.77
UCD 18 2.21 197.00 33.15 5.03
UL 6 1.50 76.80 15.23 2.91
WIT 4 0.32 17.20 5.22 1.68
           
All institutions 90 0.23 229.00 31.27 4.31

Source: Author’s own elaboration.

As two institutions – ITTRALEE and RSCI – have only a single spinout company during the period, their data should be treated with special cautions. For the rest nine institutions, some interesting patterns emerge. First, the longest distance between any spinout from WIT and the institution is 17.20Km, much shorter than the number for the other eight HEIs, suggesting that there is a strong tendency for academics based at WIT to locate their businesses within a relatively short distance from the institution.

Second, UCC shows the longest average distance from its spinouts among the nine HEIs, which could be understood as an indication that USOs from UCC, in comparison with their counterparts spun from other Irish HEIs, are less concerned about the importance of geographical proximity with their parent university. As explained, the underlying factors that determine the location choice could vary from one firm to another, but it could be argued that spinouts founded by academics based at UCC are relatively further away from the institution than the rest cases.

Last but not least, the median distance shown by TCD spinouts (590 Metres) is the shortest among the institutions. A closer examination of the locations of those spinouts reveals that many of them are housed by the Trinity College Enterprise Centre, which has circa 16,000 sq.m. of lettable space for small and medium-sized enterprises in the heart of Dublin. The Centre was purchased by Trinity College in 1999 to be converted to a knowledge-based company generation and support facility.

The availability of university-run incubation space, which has been claimed by many scholars to be an essential way to strengthen and support academic entrepreneurship, seems to explain, at least in part, why USOs from TCD tend to be agglomerated around the university. To this end, future study could investigate the scale and quality of incubation facilities which could be used by USOs in Ireland.

Appendix I Locational characteristics of university spinouts in Ireland, 2007-2011

Institution <1 Km 1-5 Km 5-10 Km 10-20 Km 20-50 Km >50 Km Total No. of USOs
DCU 3 1 2 2 1 1 10
DIT 1 1 1 2 0 1 6
ITTRALEE 0 1 0 0 0 0 1
NUIG 1 5 1 1 0 3 11
NUIM 1 0 1 1 4 2 9
RCSI 0 0 0 0 0 1 1
TCD 10 4 2 0 0 1 17
UCC 0 4 0 0 0 3 7
UCD 0 9 2 2 2 3 18
UL 0 4 1 0 0 1 6
WIT 1 2 0 1 0 0 4
               
All institutions 17 31 10 9 7 16 90

Source: Author’s own elaboration.

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…)

A SNAPSHOT OF TECHNOLOGY TRANSFER EFFICIENCY OF IRISH HEIS

To build up the technology transfer system in the country, Enterprise Ireland in 2006 commenced a five year programme called the Technology Transfer Strengthening Initiative. According to a 2012 HEA report, up to €30M had been invested into the programme during 2007 and 2012.

Entitled ‘Inventions & innovations: The positive impact of ideas from research on Irish industry and society’, the report illustrates the trend of technology transfer activities managed by the ten Technology Transfer Offices physically located in universities, IoTs, and colleges. Each of the seven universities has its own dedicated TTOs, with the rest three offices being operated by Dublin Institute of Technology, Royal College of Surgeons Ireland and Waterford Institute of Technology.

It has been suggested that Ireland has made impressive progress in this area in a short period of time, represented by an almost four-fold increase in the number of spinouts generated since 2007 and a ten-fold increase in the number of technologies licensed to industry between 2005 and 2011 (Table 1).

Table 1 Technology transfer performance 2005-2011

    Introduction of Technology Transfer Strengthening Initiative

2005 2006 2007 2008 2009 2010 2011
Licence/Option/Assignments 12 28 56 67 100 93 121
Spin-outs 5 8 13 7 35 31 29
Invention Disclosures 135 193 271 407 457 431 400*
Patents Applications 83 107 124 202 148 101 145*
Note: * Estimated number.

Source: Enterprise Ireland (2012).

Also, the technology transfer system in Ireland seems to compare favourably with its international counterparts that are more mature and established. Figures from another Enterprise Ireland report – Technology transfer in Ireland 2007-2010 – argue that the country generates more licences and spinouts than the EU and the U.S. for the amount of expenditure on research.

The claim that Ireland leads its EU and U.S. counterparts in the performance of knowledge transfer needs however to be embraced with cautions. In particular, it is unclear whether the sample related to the EU and U.S. is statistically representative of the whole region/country. Undoubtedly, it is much easier for Ireland, as a small country, to collect relevant information from its higher education institutions (HEIs) than for the U.S.

Although it is interesting to know how well Ireland compares against its international partners, one may still wonder how Irish HEIs compare against each other in technology transfer. In particular, we use the data compiled by the HEA in its recent publication ‘Towards a performance evaluation framework: Profiling Irish higher education’, which enable a comparison not only among different types of HEIs but also among individual institutions.

The Irish higher education sector is a small one but of great diversity. There are significant differences between institutions regarding the number of students and academics and the amount of income and expenditure. In order to deal with the size variance, we do not compare directly the absolute performance of technology transfer activities between institutions; instead, we intend to compare the ‘relative’ performance. For instance, if institution A accounts for 10 per cent of academics employed by all institutions, but it accounts for 20 per cent of all spinouts generated by all institutions, we would consider institution A performs more effectively and efficiently than expected given its size of employment.

Figure 1 below shows the relative performance of universities, institutes of technology, and colleges in Ireland in relation to their relative size which is measured by the number of academic staff and by the amount of income. Horizontally it illustrates how different types of HEIs compare against each other in a specific indicator, while vertically it presents how well each of the three types of institutions performs in all indicators. It needs to point out that the data for colleges represent only two institutions, namely National College of Art and Design and Royal College of Surgeons in Ireland. Not surprisingly, universities and IoTs are much larger than colleges in the context of Ireland. For instance, universities account for around 58 per cent of academic staff and just above 62 per cent of total income of the whole Irish higher education sector. These numbers are only 3.4 per cent and 4.0 per cent accordingly in the case of colleges.

An interesting finding is that, among the three types of institutions, IoTs are the ones that show the lowest level of technology transfer efficiency. Whilst accounting for 38.5 per cent of academics staff and 33.6 per cent of income of the Irish higher education sector, IoTs are only able to contribute 12.7 per cent of licence agreement conducted by all Irish HEIs, and to establish just above 16 per cent of spinouts founded by all Irish HEIs. On the contrary, the seven universities, in all indicators, could show better performance than ‘they are expected to’ (in consideration of their relative size). Colleges have a mixed performance. A possible explanation of the lower efficiency of IoTs in technology transfer than that of universities is that IoTs focus more heavily on teaching than on hard research which is more likely to lead to intellectual property outputs such as patents and spinouts.

Figure 1 Technology transfer efficiency by type of institution

Image

Source: Author’s own elaboration based on HEA (2013).

Notes: Patent – 2010/2011 cumulative; Licence agreement – 2010/2011 cumulative; Spin-out companies – 2010/2011 cumulative; Income – 2009/2010, € 000.

Universities are the only type we feel the data are comprehensive enough for us to break down the figures further. As mentioned earlier, all but two colleges could report their performance of technology transfer. In the case of IoTs, the technology transfer activities are found to be concentrated within a very small number of institutions, such as Dublin Institute of Technology and Waterford Institute of Technology. Figure 2 below compares the efficiency of the seven universities considering their relative size (to the total size of universities only).

Figure 2 Technology transfer efficiency of seven Irish universities

Image

Source: Author’s own elaboration based on HEA (2013).

Notes: Patent – 2010/2011 cumulative; Licence agreement – 2010/2011 cumulative; Spin-out companies – 2010/2011 cumulative; Income – 2009/2010, € 000.

Obviously, a much more complex picture emerges from figure 2, suggesting Irish universities show strengths in different areas from each other. University of Limerick is the institution that shows ‘better than expected’ performance in almost all indicators. University College Dublin shows best performance in patent applications both in Ireland and elsewhere, while University College Cork seems to have most advantage in patent grant in Ireland.

The data analysed here are mainly collected through the HEA and focus exclusively on the quantity of the IP activities, leaving the quality aspect untouched. Future work could pay more attention to that area, such as the financial returns of each licence and business performance of academic spinouts in the marketplace during a mid- to long period.