Home > IP Topics Index > The Policy and Legal Environment for Innovation > Benchmarking of Technology Transfer Offices and What It Means for Developing Countries > Editor's Summary, Implications and Best Practices

Given the success of technology transfer in the U.S. and other developed countries, many efforts are underway across the globe to emulate the U.S. model. The expectations for such technology transfer programs, however, are usually grossly overestimated and misdirected. The author’s experience has been that when policymakers are asked to support their contention that setting up a technology transfer program would be a major income earner for their institution, the response is too often an annoyed repetition of “look how much Stanford and M.I.T. earn—this should be good!” This story is particularly too common for developing countries—they begin too optimistically and in a few years end up disillusioned.

Unless the central reasons for undertaking technology transfer (long-term social and economic benefits) are understood, a boom and bust cycle, replete with unrealistic financial expectations, is likely to repeat itself at considerable cost to those involved. Indeed, basic questions have yet to receive definitive answers. For example, what exactly is the nature of success in technology transfer? And what precisely are the elements that make this success possible? This chapter uses international technology transfer benchmark data to understand the implications of promoting technology transfer and the likely outcomes of a technology transfer initiative.

The analysis offers some original and important findings. Most importantly, while there are some financial benefits to the institution engaged in technology transfer, this is at best around 1-2% of research expenditure, and is generally nearer to 0.5-1.5%. The wide variation in benefits between different institutions within a single country, moreover, means that 95% of universities have returns of less than half the averages, while 50% earn only very small amounts from technology transfer; this is in developed countries. There is as yet little data available from developing countries, but there is no indication that it is likely to be better than in developed countries. In fact, there are many reasons why performance may be worse. For example, the similarity in performance between countries with different innovation systems and cultures indicates that the creative innovation process is inherently similar whatever the environment. Although the single biggest factor that dwarfs all others is expenditure on research, it appears that no innovation system is significantly different in respect to the “efficiency” with which ideas are generated and transformed.

The benchmarks indicate that average income to an institution, after eight to ten years of activity, is likely to be modest, one to two percent of annual research expenditure. The income is, moreover, highly uncertain and variable. Institutional and public sector mangers should understand the nature of this income and the dynamics of the technology transfer process in order to manage this emerging discipline effectively, because unrealistic expectations can lead to dysfunctional policy decisions.

Income generation from technology transfer is therefore clearly an inadequate reason for an institution to invest in it, and governments should not expect revenues from technology transfer to be able to fund research institutions. Indeed, the financial benefits of technology transfer activities are captured primarily at the national economic level through business creation, with national returns arising from direct and indirect economic impacts. The long time period required for individual institutions to derive benefits, and the fact that the benefits are largely to the national economy, suggest that appropriate national support measures are needed to encourage innovation development. To measure the success of such efforts, the data revealed in this study can be used to gauge their intermediate outputs. There is now no need to wait eight to ten years to quantify success through license revenues and the creation of spinouts.

Therefore, to sum up the message of this chapter, institutions and innovation systems need to take into account the skewness and inherent variability of innovation returns. In the early stages, more emphasis needs to be placed on intermediate benchmark measures and less on such traditional measures as license revenues and spinout company formation.

Key Implications and Best Practices

Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.

For Government Policymakers

• The transfer of knowledge through IP protection and licensing is in the public interest because it generates economic and social benefits. But technology transfer is difficult for smaller research institutions to budget for and justify. Public sector support for such institutions to undertake technology transfer is therefore justified and necessary.
• Government needs to engage and work with public research organizations to develop a program of action to build national capabilities and institutional capacity to manage technology transfer.
• The policy rationale for technology transfer in public sector institutions should not be based on anticipated revenue flows, but instead on long-term national, social and economic objectives, with public benefit as a key driver.

For Senior Management (university president, R&D manager, etc)

• Given the broader societal benefits of technology transfer, government support should be made available to promote the establishment of technology transfer capabilities. Such support is more likely, however, if the institution has demonstrated an interest and commitment to technology transfer. Budgeting for support, therefore, should go hand in hand with lobbying for national support.
• The institution should also actively seek and support partnerships with other economic development entities, such as local venture capital firms, incubators, and business development agencies.
• The effective transfer of the results of research through technology transfer is an important adjunct to the publication of research findings. It is not at the expense of publication, but in addition to it.

For Scientists

• As you are the creator of inventions, your involvement in technology transfer from beginning to end is important.
• The effective transfer of the results of research through technology transfer is an important adjunct to publishing research findings. This is not at the expense of publication, but in addition to it.
• The transfer of knowledge through IP protection and licensing is in the public interest because it generates economic and social benefits. It may also provide income to the institution and the researcher, but this is uncertain and should not be the primary motivation for engaging in a technology transfer program.
• The researcher should be aware of when their research results may have the potential to have a public impact, and she should work with the technology licensing office to disclose any relevant inventions by providing any assistance that may be required to file for IP protection and generate licensing opportunities.

For Technology Transfer Officers

• The financial benefits from technology transfer can take a number of years for the institution to realize, so it is important to be realistic when making forecasts about the expected income from technology transfer. International benchmark data indicate that a positive return can take eight to ten years to achieve. It is in fact prudent not to justify the cost of technology transfer functions on the basis of returns at all.
• Technology transfer should be seen as a social obligation undertaken for broader social and economic benefits and not for its (uncertain) income generating possibilities.
• The difficulties of managing and promoting technology transfer within a smaller research institution (compared to an M.I.T. or Stanford University) also need to be recognized, and the office should actively seek partnerships with other entities, such as local venture capital firms, incubators, and business development agencies.