Andrew A. Toole

The Impact of Public Basic Research on Industrial Innovation: Evidence from the Pharmaceutical Industry

While most economists believe that public scientific research fuels industry innovation and economic growth, systematic evidence supporting this relationship is surprisingly limited. In a recent study, Acemoglu and Linn (2004) identified market size as a significant driver of drug innovation in the pharmaceutical industry, but they did not find any evidence supporting science-driven innovation from publicly funded research. This paper uses new data on biomedical research investments by the U.S. National Institutes of Health (NIH) to examine the contribution of public research to pharmaceutical innovation. The empirical analysis finds that both market size and NIH funded basic research have economically and statistically significant effects on the entry of new drugs with the contribution of public basic research coming in the earliest stage of pharmaceutical drug discovery. The analysis also finds a positive return to public investment in basic biomedical research.

Biomedical Academic Entrepreneurship Through the SBIR Program

This paper considers the U.S. Small Business Innovation research (SBIR) program as a policy fostering academic entrepreneurship. We highlight two main characteristics of the program that make it attractive as an entrepreneurship policy: early-stage financing and scientist involvement in commercialization. Using unique data on NIH supported biomedical researchers, we trace the incidence of biomedical entrepreneurship through SBIR and describe some of the characteristics of these individuals. To explore the importance of early-stage financing and scientist involvement, we complement our individual level data with information on scientist-linked and non-linked SBIR firms. Our results show that the SBIR program is being used as a commercialization channel by academic scientists. Moreover, we find that the firms associated with these scientists perform significantly better than other non-linked SBIR firms in terms of follow-on venture capital funding, SBIR program completion, and patenting.

Patent Protection, Market Uncertainty, and R&D Investment

The real options investment theory shows that greater uncertainty about market revenues reduces current R&D investment by increasing the value of waiting. This paper presents empirical evidence that patent protection mitigates the effect market uncertainty on R&D investment.

Exploring the Relationship Between Scientist Human Capital and Firm Performance: The Case of Biomedical Academic Entrepreneurs in the SBIR Program

There is an emerging debate in the scholarly literature regarding the extent to which academic human capital contributes to firm performance. This debate centers on the nature of an academic scientists human capital and its institutional specificity. Using data on the human capital of biomedical scientists developed during their careers in academe, this paper analyzes how the depth of their scientifically and commercially oriented academic human capital contributes to firm performance when these scientists subsequently start or join for-profit firms. We find that the scientific and commercial components of an academic scientists human capital have differential effects on the performance of research and invention tasks at the firm. We also find that the contribution of an academic scientist to a firms patent productivity is decreasing with the depth of their scientifically oriented human capital, all else constant. These results support the view that academic human capital is heterogeneous and has an institutional specificity that mediates its value when applied in a commercialization environment.

Commercializing Science: Is There a University “Brain Drain” from Academic Entrepreneurship?

When academic researchers participate in commercialization using for-profit firms, there is a potentially costly trade-off---their time and effort are diverted away from academic knowledge production. This is a form of brain drain on the not-for-profit research sector that may reduce knowledge accumulation and adversely impact long-run economic growth. In this paper, we examine the economic significance of the brain drain phenomenon using scientist-level panel data. We identify life scientists who start or join for-profit firms using information from the Small Business Innovation Research program and analyze the research performance of these scientists relative to a control group of randomly selected research peers. Combining our statistical results with data on the number of university spin-offs in the United States from 1994 to 2004, we find the academic brain drain has a nontrivial impact on knowledge production in the not-for-profit research sector.

The Evolving Institutional Structure of Public and Private Agricultural Research

Over the past several decades, the private sector has assumed a larger role in developing improved technology for food and agriculture. Private companies fund nearly all food processing research and development (R&D) and perform a growing share of production-oriented R&D for agriculture. In addition, institutional partnerships for public-private research collaboration are growing in the United States and other countries. This article outlines the major forces driving these changes and offers an interpretive framework to explore some of the implications for the volume and nature of research performed by the public and private sectors. One of the critical issues is whether public agricultural research complements and thereby stimulates additional private agricultural R&D investments. Another important issue concerns the role and contribution of alternative public-private partnership arrangements. To date, changes in the institutional structure of public and private agricultural research have outpaced systematic investigation, and new theoretical and empirical research is needed to help guide policy and address key societal challenges, such as climate change, clean energy, water scarcity, food safety, and health.

University Spinoffs and the 'Performance Premium'

The creation of spin-off companies is often promoted as a desirable mechanism for transferring knowledge and technologies from research organizations to the private sector for commercialization. In the promotion process, policymakers typically treat these “university” spin-offs like industry start-ups. However, when university spin-offs involve an employment transition by a researcher from the not-for-profit sector, the creation of a university spin-off is likely to impose a higher social cost than the creation of an industry start-up. To offset this higher social cost, university spin-offs must produce a larger stream of social benefits than industry start-ups, a performance premium. This paper outlines the arguments explaining why the social costs of entrepreneurship are likely to be higher for academic entrepreneurs, and empirically investigates the existence of a performance premium using a sample of German start-up companies. We find that university spin-offs exhibit a performance premium of 3.4 % points higher employment growth over industry start-ups. The analysis also shows that the performance premium varies across types of academic entrepreneurs and founders’ academic disciplines. Copyright Springer Science+Business Media New York (Outside the USA) 2014

Is there a trade-off between academic research and faculty entrepreneurship? : evidence from U.S. NIH supported biomedical researchers

Is there a trade-off of scholarly research productivity when faculty members found or join for-profit firms? This paper offers an empirical examination of this question for a subpopulation of biomedical academic scientists who received research funding from the US National Institutes of Health (NIH). In this study, we are able to distinguish between permanent versus temporary employment transitions by entrepreneurial faculty members and examine how their journal article publication rates change using individual-level panel data. We find that the biomedical scientists who eventually choose to found or join a for-profit firm were more productive during their careers in academe than a randomly selected control group of their NIH peers. When they pursue entrepreneurship in the private sector, however, their scholarly productivity falls. Those entrepreneurial faculty members who return to academe are not as productive as they were before their entrepreneurial experience in terms of journal publications.

R&D Investment Under Uncertainty: The Role of R&D Subsidies and Patent Policy

This book focuses on technological policies, in other words all public interventions intended to influence the intensity, composition and direction of technological innovations within a given entity (region, country or group of countries). The editor has gathered together many of the leading scholars in the field to comprehensively explore numerous avenues and pathways of research. The book sheds light on the theory and practice of technological policies by employing modern analytical tools and economic techniques.

The R&D Investment-Uncertainty Relationship: Do Competition and Firm Size Matter?

This paper investigates how competition and firm size affect the relationship between market uncertainty and R&D investment. We use an intuitively appealing measure of firm-specific uncertainty along with panel data to show that firms invest less in current R&D as uncertainty about market returns increases. The effect of firm-specific uncertainty on R&D investment is smaller in concentrated markets – those where market power is higher and strategic rivalry is more intense. Further, the effect of uncertainty on R&D investment is attenuated for large firms which may be the result greater economies of scope.