Does knowledge translation drive spin-offs away from the “valley of death”? A nonparametric analysis to support a banking perspective

Abstract

PurposeThe purpose of this paper is to empirically test if the interaction between universities and spin-offs, as proxy of knowledge translation (KT), which is based in particular on negotiation, semantics and pragmatics, has a positive impact on spin-off performance – in terms of greater distance from the “valley of death” – and allows access to credit and financial instruments.Design/methodology/approachThe authors adopt an appropriate nonparametric conditional efficiency approach for panel data. The authors provide a unique picture of the innovation environment in Italy using an original dataset. These data provide information regarding the intensity of interaction between universities and spin-offs along with financial balance datasheet of the spin-offs. The nonparametric approach is particularly suitable for nonlinear relationships typical for this type of data.FindingsThe results of the analysis confirm that the translation of knowledge, based on negotiation of interests, semantics of the text and pragmatism, favored by the interaction between universities and spin-offs, improves the productivity performance of the spin-off by allowing them to move away from the “valley of death”. Therefore, universities must pay particular attention to the way they work with spin-offs by making use of the translation of knowledge, based on semantics and pragmatism, in order to encourage an understanding of knowledge, sharing of interests among the partners and stakeholders of the spin-off, often belonging to different backgrounds. These are processes that favor the transfer and development of research outcomes to the market, improving the spin-off competitiveness of the territory and strengthening relations with universities and their stakeholders (banks and financial intermediaries, local and national politicians, institutions and the community at large).Research limitations/implicationsImplications for research can be identified at policy and managerial level and refer to the effectiveness of the so called “Third Mission”, university entrepreneurship through the creation of profitable spin-offs which contribute to innovation, and to the socioeconomic development of the territory. In turn, spin-offs with good performances are more likely to have access to external financing to allow the growth of their business in the market. Further studies can investigate the organizational way of the universities that promote these virtuous results, distinguishing them by spin-off efficiency clusters.Practical implicationsFor universities, the results make it possible to envisage organizational processes to support spin-offs that are important both for compliance with the regulations and for the Third Mission. Researchers, teachers and PhD academics have the opportunity to exploit the results of their innovative research on the market. Spin-offs and start-up founders should note that the results of scientific transfer can create value for the firm and the territory. Useful information also derives for banks and financial intermediaries that intend to improve the credit risk assessment of the spin-offs during the loan assessment phase.Originality/valueThe value of the work entails in offering a unique overview of university innovation, through an original dataset and a robust methodology. By adopting a different approach, the contribution of KT at national level was assessed, measuring the impact on the technical performance and on the probability of survival of the companies. Originality of the paper lies not only in the approach but also in the fact that this is the first attempt to use the KT as a key factor for the economic sustainability from a financial perspective of start-up companies.

University innovation ecosystems and innovation channels

“…Business incubators are normally projected in the university context to support the formation of spin-offs, being important instruments for knowledge flow Wright (2015). In this vein, the collaboration of incubated startups with universities can augment the chance of overcoming the incubating stage (Stefanelli et al, 2020).…”

“…In this scenario, there are several types of financial agents such as public funding, public venture capital (Audretsch et al, 2016), private funding in the form of angel capital, venture capital, and banks (Wright et al, 2017;Padilla-Medéndez et al, 2020;Taylor and Khan, 2021). In some cases, the advising of the university to spinoffs in financial issues and the design of contracts can contribute to facilitating the raising of financial resources of financial agents (Stefanelli et al, 2020).…”

“…Universities can foment the formation of spin-offs. These firms can have a diverse origin, such as those founded by experienced researchers (Wright et al, 2017;Cunningham et al, 2019;Rasmussen et al, 2017 andStefanelli et al, 2020), by students (Wright et al, 2017;Padilla-Medéndez et al, 2020), and mixed spin-offs, which are formed by teams composed by researchers, students and professional managers (Boh et al, 2016;Olli-Matti et al 2020;Padilla-Medéndez et al, 2020).…”

Translating knowledge in new entrepreneurial ventures: the role of business plan development

“…Within growing attention to reducing the theory and practise divide, the literature has identified several techniques and tools to promote and enhance the process of knowledge translation (Dal Mas et al , 2020d), boosting the performance of firms, including start-ups and new business ventures (Stefanelli et al , 2020). Amongst those, we may highlight the role of mentoring Wister et al (2014) to assist in the training of new researchers and distribute research capacity.…”

Assessing Academics’ Third Mission Engagement by Individual and Organisational Predictors

“…Moreover, while previous research on TM activities of academics has focused on either commercialisation or university-industry collaboration (UIC) (Baycan and Olcay 2021;Knudsen et al 2021;Ranga et al 2016;Stefanelli et al 2020), we will focus on a broader variety of TM activity engagement. However, to do so, it is crucial to conceptualise TM first, as for the operationalisation to be valid and reliable.…”