This section will discuss some of the key terms used in connection with research commerciali-sation and the provision of government support.
3.1.1 Commercialisation and related terms
Commercialisation is in Norwegian public documents defined as “the exploitation of a re-search results in the form of a product or process that yields a net economic benefit” (NOU 2002:11). This NOU furthermore states that commercialisation may be the result of a project defined specifically for this purpose, or the unintended consequence of a project with another goal. The definition is not without problems, as it may indicate that the goal of commercialisa-tion activities should be net economic benefits. A research organisacommercialisa-tion’s efforts to commerci-alise a certain idea will in most cases aim to get an economic benefit, but this does not mean that maximisation of the financial gains should be the central goal of the organisation. Note that this definition is very close to the main goal of the FORNY programme.
In many cases of public support, commercialisation is related to the public research system, as in the FORNY case. In Norway, the public research sector encompasses universities, various types of colleges, research institutes, and hospitals and other public health organisations. For commercialisation policy, the aim will often be to maximize the social benefits rather than the economic benefits of each single project.
33 For practical purposes, “commercialisation of research results” refers to the process whereby research results – an idea, a technology, a relationship etc. – are transformed into something that can be sold in a market. This most often happens through patenting, licensing, creation of a spin-off company or product and technology development. A patent is a publicly granted monopoly on the production, use and sales of an invention for a limited period of time. A li-cense is the right to use a technology that may have been protected through patenting or in other ways. When a company is started based on research from a university and/or based on faculty members leaving the university to work for the company, it is often referred to as an academic spin-off company.
Technology transfer can widely be defined as the application of information to use (Rogers, 2002). In a research setting the term is normally defined as the process of developing practical applications from the results of scientific research. Thus, in the context of this report, techno-logy transfer is the process through which the outputs of academic research are conveyed to those who make use of the research results. It is therefore closely related to university-indus-try relations. Technology transfer can occur in a variety of ways. Indirectly, technology can be transferred through education and research based teaching, through publication of articles, books, and reports, through seminars and conferences, but also through informal contacts and researchers acting as consultants (Cohen et al., 2002). More directly, technology transfer may occur through contract research and industry collaboration and through licensing and the creation of new spin-off firms to exploit new technologies (Rogers et al., 1999). Even though licensing and spin-off firm formation stands for a relatively modest share of technology trans-fer from academic research (D'Este and Patel, 2007), these channels can be very efficient and in some cases the only way to transfer new inventions into application. Therefore, a significant potential for increased technology transfer might be realized if there exists a well developed competence and infrastructure to use these mechanisms for technology transfer.
Universities and other organisations have often set up technology transfer offices (TTOs) that deal with the identification of practically applicable results from science and with the support that is needed to make this happen.
Entrepreneurship is most commonly used to refer to the process of starting up a new organi-sation, usually a private firm. In a wider sense the term is also used when talking about cham-pioning of a creative idea until its fruition. The Austrian economist Schumpeter discussed the importance of entrepreneurs for economic and social renewal, defining them as people (or later organisations) who are able to convert an invention into an innovation. Many universities see entrepreneurship as an important channel for technology transfer (Markman et al., 2005;
Siegel et al., 2003). In this view, university spin-offs can be a channel for overcoming some of the obstacles in the technology transfer process by using entrepreneurship as a mechanism.
This is in line with the argument presented by Audretsch et al. (2005, p. 70), who claims that entrepreneurship is the missing link between investments in new knowledge and economic growth.
In the previous Norwegian government’s “Plan for a holistic innovation policy”, the following definition of innovation was used: “innovation can be seen as a new product, a new service, or a new production process, utilization or organisational form that has been launched in a market or implemented in production of economic value”. Invention is the first time an idea for such a product or process (improvement) appears, and commercialisation may thus be seen as the path from invention to innovation.
Two different forces drive technological innovation: market forces and the forces of scientific and technological development (see Kline & Rosenberg 1986). There may be a tension bet-ween the focus on technological or scientific “success” or “quality” in research organisations and the success criteria of innovations, which are decided in the marketplace. This implies that in a competition, it is not necessarily the technologically most sophisticated product that wins the highest market share.
Commercialisation of research results is an activity that differs from many other processes of scientific and economic development. First, this may often be related to fundamental and technologically complicated inventions. Second, the distinction between innovation and in-vention can sometimes be blurred, as has been seen in biotechnology where the inin-vention in itself is the innovation. Third, there is often a considerable time lag between invention and innovation due to both technological and economic circumstances.
3.1.2 Policy related terms
Commercialisation policy can be seen as the policy which regulates commercialisation of re-search results that public rere-search organisations have or will be granted ownership to and which will be processed with an aim to introduce the idea/technology etc. in the marketplace.
The overall goal should be socioeconomic benefits. Thus, commercialisation policy can be seen as a subset of innovation policy which aims to stimulate all kinds of commercialisation pro-cesses, also when the owner is a private company or another entity. It may still be useful to view commercialisation policy as part of a larger set of mechanisms to promote innovation, as many of them (seed capital, advice, support, tax deductions) may be relevant. Commerciali-sation policy is also related to research policy, as the priorities and organising of research acti-vities will have a strong influence on how inventions and ideas are created and how they can be commercialised.
Government policies to promote commercialisation of research also include support mes such as FORNY. The rationale for establishing this type of government support program-mes is to stimulate activities or behaviour that would be socially profitable, but where other actors do not perform the optimal level of these activities. This way of using government funds is widespread, but highly debated. Salmenkaita and Salo (2002) discuss different rati-onales for government intervention in the commercialisation of new technologies and outline four different policy rationales. First, the traditional market failure argument that private ac-tors would allocate less resources to commercialisation activities than socially optimal. This may be a result of high transaction costs, limited appropriability, high risk, or information
35 asymmetry (Bozeman, 2000; Martin and Scott, 2000). Second, they point at systemic failure due to coordination problems among the actors involved in commercialisation. The third fac-tor, structural rigidities, relates to path-dependencies which inhibit the flexibility of the actors in the innovation system. Fourth, Salmenkaita and Salo (2002) points at anticipatory myopia in the innovation system, which may occur when the actors are not acting on the basis of the in-formation they possess because this requires involvement with other actors.
There are several theoretical rationales for policy interventions (Bozeman, 2000), but the most common rationale for providing support to commercialisation of academic research has been related to the market failure argument. Market failure denotes a situation where the alloca-tion of resources of producalloca-tion or use by the free market is not efficient. Thus, market failure is often used as a justification for government intervention through financial support and other means, and basic research (maybe also other types of research) is generally accepted as something that would be underinvested in through a free market approach. Similar arguments can be made for the case of commercialisation of research. Especially its early phases will be characterised by many of the same aspects that are used to justify public support for basic re-search. Lockett et al. (2005) refer to the ‘knowledge gaps’ encountered by spin-off ventures from public research institutions as an extension of this. Moreover, Lockett et al. (2002) dis-cuss the ‘finance gap’ faced by these firms, related to obtaining early stage funding. The diffi-cult theoretical and political question is when private funding and support should take over for public support. Not least in the case of commercialisation of advanced research-based ideas and technologies – needing lots of time and resources to develop into a successful new business – there is much talk about a phase (a “valley of death”) in between public and private funding. Many are sceptical towards public subsidies in later phases of commercialisation, but others argue that public funding and support should take over in the case of weak private or-ganisations like a perceived lack of venture capital.
In the innovation system literature, this argument is often expanded to a justification of policy interventions based on system failure (Lundvall 1999, Schienstock and Hämäläinen 2001). The main focus of the systemic approach is the complex interactions between different actors and institutions, and from this perspective policy makers need to intervene in areas where the sys-tem is not functioning well (Edquist and Hommen 2006, Chaminade and Edquist 2006). It may be distinguished between a number of system failures, like the lack of important institutions or organisations, the mismatch between institutions and organisations, or missing links be-tween different parts of the economy. All systemic failures are potential targets for interven-tion, however, the state is legitimised to address the failure only if state intervention provides the most efficient solution.
A central evaluation criterion then often becomes additionality or subsidiarity – the extra efforts or benefits that would not have happened without the public support. Policy interven-tion may to lead to several different forms of addiinterven-tionality related to direct project support, competency building, and spillovers benefiting other participants in the innovation system.
As indicated, these discussions are extremely complicated. Increasing globalisation and inter-nationalisation make the matters even worse. In a commercialisation perspective, one might e.g. ask what should happen when systems failure like the availability of specific expertise is not available within a country’s borders. Can FORNY or similar initiatives support ideas and technologies that would not benefit Norwegian society and economic development in Nor-way– even if the commercialisation could help get important new products into the market-place?
This section has presented commonly used definitions of commercialisation of research and related terms. Justifications for public intervention are multifaceted and do not give clear di-rections about the type and level of support in different phases.