Chapter

Economic Development

Dean O. Smith

in Managing the Research University

Published in print July 2011 | ISBN: 9780199793259
Published online September 2011 | e-ISBN: 9780199896813 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199793259.003.0016
Economic Development

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This chapter examines the university’s role in economic development. The chief research officer’s responsibilities at most research institutions include economic development as a corollary to his or her authority over technology transfer. The mechanisms for establishing and financing spinoff companies based on university-owned patents are examined in depth. With a business plan in hand, the start-up company’s management raises money in three basic investment rounds: angel, venture, and mezzanine financing. The financing amount increases and the investment risk decreases with each round. Two federal grant programs boost commercialization of university-associated technological innovation, the Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer (STTR) program, which are discussed in detail. Fledgling companies often rely on university personnel, and this can raise an ethical conflict of commitment or conflict of interest that must be resolved. Also, allowing private businesses to use university facilities such as a building through a lease or other arrangement can have significant tax consequences, especially if tax-exempt bonds were used for financing the facility. University-affiliated research parks and business incubators offer an attractive alternative for start-up company development.

Keywords: economic development; spinoff companies; financing; SBIR; STTR; conflict of commitment; conflict of interest; tax; research parks; incubators

Chapter.  8288 words. 

Subjects: Economic Systems

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