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University Knowledge Transfer: Private Ownership, Incentives, and Local Development Objectives

Duke UniversityLondon School of Economics

We study the impact of private ownership, incentive pay, and local development objectives on university licensing performance. We develop and test a simple contracting model of technology‐licensing offices using new survey information together with panel data on U.S. universities for 1995–99. We find that private universities are much more likely to adopt incentive pay than public ones but that ownership does not affect licensing performance conditional on the use of incentive pay. Adopting incentive pay is associated with about 30–40 percent more income per license. Universities with strong local development objectives generate about 30 percent less income per license but are more likely to license to local (in‐state) start‐up companies. In addition, we show that government constraints on university licensing activity are costly in terms of forgone license income and the creation of start‐up companies. These results are robust to controls for observed and unobserved heterogeneity.