To make or buy commercialization: A synthetic control approach

Abstract

Many public service organizations engage in commercialization, or market‐oriented strategies designed to generate non‐public revenue for the organization. Managers and policymakers sometimes choose to “buy” these commercialization strategies by setting up separate organizations, ostensibly to avoid inefficiencies associated with coordinating market activity within an organization designed for public service. Using a synthetic control approach, this study measures the effect on efficiency of a commercialization strategy in the tech transfer domain by leveraging the spin‐off of a large public tech transfer enterprise. I find that the spin‐off decreased revenue and licensing activity, and I find no meaningful effect on contract costs. My findings suggest that government entities in pursuit of revenue and efficiency gains should not consider “buying” commercialization strategies a magic bullet for efficiency gains.