University Innovation and the Professor's Privilege

Abstract

National policies take varied approaches to encouraging university- based innovation. This paper studies a natural experiment: the end of the “professor's privilege” in Norway, where university researchers previously enjoyed full rights to their innovations. Upon the reform, Norway moved toward the typical US model, where the university holds majority rights. Using comprehensive data on Norwegian workers, firms, and patents, we find a 50 percent decline in both entrepreneurship and patenting rates by university researchers after the reform. Quality measures for university start-ups and patents also decline. Applications to literature on university technology transfer, innovation incentives, and taxes and entrepreneurship are considered. (JEL I23, L26, M13, O31, O33, O34)

The impact of the abolishment of the professor’s privilege on European university-owned patents

“…Our findings are consistent with previous studies (Czarnitzki et al 2015, Hvide and Jones 2018, Ejermo and Toivanen 2018 which have also found negative effects of abolishment on university patenting activity and entrepreneurship. We add a broad international dimension previously absent in the literature and show that econometric results are robust to different specifications and numerous controls.…”

“…To our knowledge, we are the first to address the question of the impact of the abolishment of the professor's privilege on the technological importance and the efficiency of the management of university-owned patents. Using a multidimensional approach to the measurement of the quality and value of inventions, our findings are in line with previous results for individual countries regarding university patenting activity and entrepreneurship (Hvide andJones 2018 for Norway, Czarnitzki et al 2015 for Germany, Ejermo and Toivanen 2018 for Finland). We observe a relative decline in the average technological importance and effective exploitation of the value of university-owned patents in the countries abolishing the professor's privilege.…”

“…On the other hand, Czarnitzki et al (2015) use patents with inventors from Public Research Organisations (PROs) as a control group in a difference-in-difference estimation of the impact of the change on patents with inventors from universities, by consolidating German and EPO filings at the family level, and excluding patents filed by researchers with dual affiliation, PRO and university. They find that academic-invented patents decreased following the change, in line with Hvide and Jones (2018) for Norway. When they distinguish between different types of university researchers they find that patenting by researchers with previous connections to industry fell after the change and patenting by researchers without such connections rose; consequently, they conclude that the latter benefited more from the institutionalisation of technology transfer, as the absence of support from their universities made patenting relatively more costly.…”

“…IP reforms may affect the incentives of university researchers at the origin of the invention and of TTO managers, who decide whether to file a patent at their universities. Hvide and Jones (2018) argue that the abolishment of the professor's privilege in Norway could be interpreted as an increase in the expected tax rate for the faculty. Prior to the reform, researchers were able to perceive 100% of the revenue from patent royalties; following the reform, they were required to share such revenue with the university administration.…”

Public research and innovative entrepreneurship

“…For example, Åstebro, Bazzazian and Braguinsky (2012 [7])find that that recent graduates are twice as likely as their faculty to create a business venture, and that these spin-offs are not of low quality. Similarly, an analysis of Academic Enterprise Europe Awards finalists shows that the largest group of awarded founders were doctoral students, while professors were less numerous (Hoefer, Magill and Santos, 2013 [48]).…”