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Are public research spin-offs more innovative?


The main purpose of this paper is to analyse whether research spin-offs, that is, spin-offs from either public research institutes or universities, have greater innovation capabilities than comparable knowledge-intensive firms created in other ways. Using a sample of about 2,800 firms from highly innovative sectors, propensity score matching is used to create a sample group of control firms that is comparable to the group of spin-offs. The article provides evidence that the 121 research spin-offs investigated have more patent applications and more radical product innovations, on average, compared to similar firms. The results also show that research spin-offs’ superior innovation performance can be explained by their high level of research cooperation and by location factors. An urban region location and proximity to the parent institution are found to be conducive to innovation productivity. The article also finds evidence that research spin-offs are more successful in attracting support from public innovation support programmes in comparison to their peers.

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  1. Examples of such programmes are TBU, FUTOUR and EXIST; see Egeln et al. (2002), Pleschak et al. (2002). Overall, 112 different innovation promotion programmes were covered in the survey and the results show that participation by the research spin-offs in the programmes is widespread. Note that only programme participation 2 years prior to the survey in 2004 is covered. Many innovation programmes focussed on stimulating network and cooperation activities of SMEs in East Germany, but some also gave a general subsidy to R&D wage costs (Belitz et al. 2001).

  2. Studies using PSM are Cantner et al. (2011) and Egeln et al. (2009), and, in the context of evaluating R&D subsidy effects, Czarnitzki et al. (2007).

  3. For the PSM method description, I closely follow Gantumur and Stephan (2012).

  4. Note that this data set has also been used in a previous study, see Lejpras and Stephan (2011).

  5. The survey questions are available from the author upon request.

  6. The STATA procedure psmatch2, version 4.0.6 17, May 2012, was used. For details on this procedure, refer to Leuven and Sianesi (2003).

  7. The results of the three probit models are shown in the "Appendix".

  8. As one reviewer pointed out, Models I and II could have been omitted in the analysis because they are unnecessary if Model III turns out to be the correct model. On the other hand, Models I and II enable us to study the effects from including cooperation activities and location factors on the observed differences between treated (spin-offs) and their controls. For this reason, I report these benchmark results. However, when major results for university and research institute spin-offs are analysed later on, I omit Models I and II and directly present results from Model III.

  9. Model I is based on 123 spin-offs, but due to missing values this drops to 121 observations for Model III.

  10. It has been noted by one reviewer that the number of observations is rather low for this group. Therefore it is difficult to find robust effects, and the results should be interpreted with some caution.


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I thank Anders Broström, Michael Fritsch, Karl Wennberg, and two anonymous reviewers for their helpful comments and suggestions. I’m also very grateful to the guest editor Helmut Fryges for his guidance through the revision process. The usual disclaimer applies.

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Correspondence to Andreas Stephan.



See Appendix Tables 7 and 8.

Table 7 Industries of spin-offs and matched sample
Table 8 Probit estimates from first step of PSM

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Stephan, A. Are public research spin-offs more innovative?. Small Bus Econ 43, 353–368 (2014).

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  • Spin-offs
  • Innovation performance
  • Propensity score matching
  • Location factors
  • Cooperation
  • Public R&D subsidies

JEL Classifications

  • M13
  • O18
  • R3