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24 May 2017

Concept to Commercialisation

The best universities for technology transfer

Author: Ross DeVol, Joe Lee, and Minoli Ratnatunga, Milken Institute

Innovative activities – and their commercial applications – are driving long-term economic growth in America. While industry energizes innovation through research and development (R&D) initiatives, the main catalyst that fuels knowledge-based growth once again lies where it started: the American research university. As new, bi-directional information exchanges open up between academic and industry researchers – as opposed to past linear models – more commercially attuned knowledge exchange is shared, leading to a rise in entrepreneurial success and economic impact. In the 21st century, public and private research universities are the seed capital for creating knowledge that fosters scientific- and technology-based economic development. Yet there are key underpinnings required to promote success in knowledge-based economic development: creating the highly-trained human capital that industry requires; and capitalising on research by converting it for private-sector application. Creating human capital and conducting research, along with its efficiency as measured by output (patents, licenses executed, licensing income, and startups) relative to input (research expenditures), depict the production of good universities delivering on their mission.

Technology transfer, Commercialisation process, and Regional Economies 

The dissemination of university-developed intellectual property (IP) occurs through a variety of complex channels. In this study we focus on the primary channels of research conversion to IP as measured by patenting and licensing activity, which, in turn, leads to either academic start ups or externally-formed entrepreneurial entities, along with the income that accrues to a university from licensing its IP. There are many other potential metrics for evaluating the success of university IP dissemination to the marketplace. However, inconsistent availability of information across universities preclude including other measures. Most major US research universities support a technology transfer office (TTO) that actively seeks, registers, and patents IP, and manages the commercialisation of their discoveries. Professional TTO staff regularly engages with university researchers to assess whether there is potential commercial merit to early-stage research. The majority of these knowledge spillovers are highly localized. In a 2015 study, the Milken Institute described and documented this process as the supplier network, including research universities and government labs, that commercialize research in the form of spinout firms or via licensing to established firms.

Policy Recommendations

Research universities are one of the strongest assets America can use to compete in the age of innovation. Research funding should be a top priority for enhancing American economic growth. Universities that succeed at technology transfer and commercialisation include both public and private universities. They are spread across the country; 13 of the top 25 universities are based in red states, all are in major metropolitan areas, and all range in size. These universities can be leveraged to boost and spread middle class job creation in their home states. While innovation is not confined to blue states, blue states have been more successful in leveraging university research for economic benefit. University research funding can support the creation of both middleand high- skill industry jobs through innovation, commercialisation, and technology transfer. As products and services are created and licensed, there are a myriad of multiplier impacts felt across the economy. Universities are a source of competitive advantage; they create a skilled workforce and through R&D and tech-transfer help create new technologies and new industries.

Universities that lead the Milken Institute’s University Technology Transfer and Commercialization Index actively promote tech-transfer, allowing other universities to learn from their strategies.

The below articulates the Milken Institute’s recommendations based on our recent findings:

  • Maintain basic scientific research funding. Basic research provides longterm economic benefits by allowing universities to take on research that has a low probability of quick commercial success, but potential to deliver a high reward and to create whole new industries.
  • Incentivize technology transfer through a new federal commercialisation fund. The federal government should increase research funding under a special commercialisation pool. Universities demonstrating greater commercialisation success in the market should receive higher funding in this program.
  • Increase technology transfer capacity through federal matching grants. The federal government should commence a matching grant program with states to fund an increase in staff and resources in TTOs. Higher rates of academic entrepreneurship are essential to reviving declining startup rates and productivity across the economy. New firms have higher productivity as they are at the cutting edge of technology.
  • Increase technology transfer efficiency by adopting best practices. At the state level, policies should be implemented that incentivize the adoption of best practices in commercialisation at public universities, including TTOs. Efficiency gaps between universities outside of the top 25 in our Technology Transfer and Commercialization Index should be narrowed.

The University technology transfer and Commercialization Index

Development of an aggregate ranking of university technology transfer and commercialisation success is fraught with challenges; nevertheless, metrics-based benchmarking is helpful in assessing the relative position among peers and in recognizing best practices.

The University Technology Transfer and Commercialization Index (Index) is based on data collected by the Association of University Technology Managers (AUTM) via the AUTM’s Annual

Licensing Activity Survey. Four-year averages (2012-15) for four key indicators of technology transfer success are included in the Index: patents issued, licenses issued, licensing income, and start-ups formed. These were normalized based on a four-year average of research dollars received by each university to yield four additional variables, for a total of eight measures.

The University of Utah is first in our University Technology Transfer and Commercialization Index (an index score of 100), up from 14th in our original ranking released in 2006. The institution has quietly evolved into one of the most prestigious research universities in the United States with a strong emphasis on commercializing its research.

Columbia University is second on the Index. Columbia was not included in the original 2006 ranking as the university didn’t participate in the AUTM survey at the time. Columbia recorded stellar performances across indicators, and stood out in licensing income.

The University of Florida is third, up from fifth in 2006, close behind Columbia University. At 97.81, the University of Florida is just 0.12 points below Columbia. Many are aware of the tremendous source of income that Gatorade has provided the University of Florida, but the university’s overall success is due to much more than one product.

Brigham Young University (BYU) is fourth, up from seventh in 2006, with an overall score of 96.63. BYU performed admirably across all metrics, standing out in  its ability to spawn start-up companies and its efficiency relative to research spending. Stanford University’s high placement, coming in at fifth, isn’t a surprise to anyone who pays attention to initial public offerings  (IPOs) or tech stock market capitalizations. While Stanford’s rank edged down from fourth in  2006,  the  university didn’t fall as much as other universities rose. University of Pennsylvania ranked sixth, with an index score of 95.39, up from 12th in 2006.

University of Washington (UW) ranks seventh, a notable increase from 24th in 2006. The Massachusetts Institute of Technology (MIT), ranks eighth, down from first in the 2006 index. However, we should not assume MIT’s commercialisation prowess has diminished, as they are the top performer without a medical school. The California Institute of Technology (Caltech) ranks ninth, with an index score of 94.11. Patents were a particular strength – Caltech outperformed all its peers with more than 660 patents issued to the university between 2012 and 2015. Carnegie Mellon University rounds out the top 10 with an index score of 93.72.

New York University is ranked at 11th. Purdue is 12th, a leap from its 39th position in 2006 and the highest-ranking university in the Midwest. The University of Texas System is 13th, followed by the University of Minnesota at 14th. The University of California, Los Angeles (UCLA) is 15th, up 30 places from its 45th position in 2006. The University of Michigan is 16th, Cornell University is 17th and the University of Illinois is 18th.

The University of South Florida is 19th, a jump from 74th  in 2006. The university has stepped up its game in research and commercialisation. The University of California, San Diego is 20th.

Arizona State University (ASU) is 21st, an impressive improvement from 43rd in 2006. The University of Central Florida (UCF), based in Orlando, is 22nd. A sea change, of sorts, occurred at UCF after it was granted a medical school in 2006. Northwestern University is among the elite performers at 23rd, an advancement from 70th in 2006. The University of Pittsburgh is 24th, followed by North Carolina State at 25th.


Sources: Milken Institute, AUTM STATT Data Set, University of California Office of the President. * Indicate data was not in the AUTM data set.

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