Patenting or not? The dilemma of academic spin-off founders

Purpose The purpose of this paper is to analyze the impact of patenting on the performance of academic spin-off firms (ASOs) in the post-creation stage. Specifically, our study analyses how the combination of knowledge transfer mechanisms by ASOs and patents can foster ASOs’ early growth performance. Design/methodology/approach The authors explored the relations between patenting processes and spin-off performance through econometric methods applied to a broad sample of Italian ASOs. The research adopts a deductive approach, and the hypotheses are tested using panel data models by considering the sales growth rate as the dependent variable regressed over measures of patenting activity and quality and assuming that firm-specific unobservable drivers of growth are captured by random effects. Findings The empirical analysis shows that the incorporation of knowledge transferred by the parent university and academic founders through patents affects the performance of ASOs. Specifically, the authors find that the number of patents is a positive driver of ASOs’ performance, whilst patent age does not have a significant impact on growth. Moreover, spin-offs with a larger endowment of patents obtained before foundation, surprisingly, grow less on average. Practical implications The findings have implications for ASO founders by suggesting that patenting processes reap benefits. However, in the trade-off of external knowledge access vs internal knowledge protection, it may be better to begin patenting after the foundation of ASOs. Originality/value The authors enrich the on-going debate about the connections between knowledge transfer and organizational performance. This paper combines the concepts of patents and ASOs by providing evidence on the role of patenting processes as a transfer mechanism of explicit knowledge in ASOs. Furthermore, the authors contribute to the literature on costs and benefits of patents by hinting at unexpected findings.