Universities face many challenges with decreased federal and state funding and increased expectations from graduating students. Some universities attempt to solve these challenges by earning revenue in an entrepreneurial fashion. An entrepreneur is a person who creates something and accepts responsibility for the risks associated with this venture to get the rewards. Some colleges focus on getting potential entrepreneurs to succeed with their businesses after they graduate. Others earn revenue when existing faculty make great discoveries that earn the institution royalties.
One example of this second concept is the development and success of the drink Gatorade. A researcher in a lab at the University of Florida in the 1960’s used the football team as his research subjects and discovered that his electrolyte beverage was a great success. The university received licensing royalties of hundreds of millions of dollars because it retained its rights to the product.
What Are Entrepreneurial Universities?
Universities have established two types of systems to support these needs. Both types are called entrepreneurial universities. The first type attempts to support a graduating student toward building a successful business. It does this by creating a business incubator in which students can use what they have learned to follow a dream and make it come true.
The second type of entrepreneurial university prevails when faculty members perform research that result in patents, inventions and royalties. The intellectual property is licensed and revenue is earned for the university. The first such institution is considered to be Louis Pasteur’s Institute in 1888 when he split from the Sorbonne. He took his inventions, including the secrets behind the process of pasteurization, and the resulting economic consequences with him.
How Entrepreneurial Universities Are Created
Most universities do not have entrepreneurial concepts written into their mission statements. First, therefore, a university must decide that making an historical precedent would be best for the institution, faculty and students. The university must then collaborate with government agencies to gain the financial support it needs to proceed. In some cases it will need to form collaborations with financial supporters from industry and determine what projects will benefit both parties. Industry funding for academic research and development has increased from $1.5 billion to $2.3 billion from 1995 to 2005.
Next, an infrastructure must be laid out and implemented to support both the students and faculty. Educational programs and curricula must be established. Sufficient research laboratories, classrooms and personnel must be acquired. At this point the university will create a corporate model and a local off-site business incubator. They will renovate this building with offices, space to work and the appropriate people to support the individuals’ business goals. It may even invest more to form a more general model to support various types of ventures.
The Difference between Entrepreneurial Universities and Other Universities
Most universities are satisfied with accepting students and teaching them a subject plus a few electives. They release the student four or five years later with a diploma, perhaps some research experience and a huge loan that the student must pay off. Some may have undertaken an internship which would give them a better chance of getting a position at a company. Some will inherit their family’s business. But most have no idea how or when they will get a job. Many find jobs in completely different fields.
Entrepreneurial universities, on the other hand, assist their students by preparing them for their future while they are enrolled and continue doing so after they graduate. They have specialized educational programs for the students and continued support for graduates.
The primary role for most universities is to educate their students through courses and research. Faculty at entrepreneurial universities, however, must find a way to incorporate research that is primarily motivated by making a profit. This can generate a large amount of money through patents, inventions and licensing. Since some of their university funding is acquired from industry, the researcher in this case is limited in what he can pursue. He has collaborated with a private entity and must adhere to agreed upon entrepreneurial projects. This can be difficult since each has its personal motives and these are not usually mutual.
The Elements That Make Up an Entrepreneurial University
For an entrepreneurial university to thrive, it needs a variety of elements. These include:
- Dedicated faculty, staff and personnel
- Students with an entrepreneurial spirit
- University funding and coordination from local, state and federal government
- A business incubator and research facility
- Off-site collaborators.
Each of the above must be focused toward a common goal to maximize the benefit of the whole.
The Advantages and Disadvantages of Entrepreneurial Universities
There are several key advantages that increase the entrepreneurial success of such universities.
- Students are offered a program that includes pertinent courses, research, faculty and personnel that are trained to efficiently drive their students to their goal.
- Faculty members have the resources they need including research laboratories, staff, students and funding.
- The university has a reputation, funding from royalties and improved infrastructure.
- The local community also gains from the addition of potential businesses, income and jobs.
There are, however, some clear disadvantages of such a system. If a researcher makes a discovery using a university laboratory, like the Gatorade example, the university is the primary recipient of the royalties. The researcher may publish on the subject and be associated with the discovery. But he does not personally benefit with a substantial financial profit.
Industry can interpret this relationship as a business deal and demand to be in control of the direction of research. They use the research groups to develop technology and fill their pipelines with new products. They own the intellectual property and demand confidentiality. No longer can the university researcher decide to work on an interesting project that may take 10 years; he must follow orders and research money-making theories. Research is no longer to discover new things and share that knowledge; it is for profit.
Examples of Well Known Entrepreneurial Universities
- Stanford and the University of San Francisco: Herbert Boyer of UCSF and Stanley Cohen of Stanford obtained a patent for a gene splicing technique that brought both universities over $200 million over 17 years.
- UCSF: Research performed here also resulted in Genentech which produces much of the insulin used by diabetics.
- University of Texas: Dell computers originated here
- University of Alabama at Birmingham
- Massachusetts Institute of Technology (MIT)
- University of Arkansas.