Science Spin-offs Create More Jobs than Other Start-ups

The annual job growth in science spin-offs is on average about 3.4 percentage points higher than that of other start-ups in knowledge-intensive economic sectors (research-intensive industry and knowledge-intensive service providers). This is the result of an analysis conducted by the Centre for European Economic Research (ZEW) in Mannheim. The study analyses more than 20,000 business start-ups in knowledge-intensive economic sectors from 1996 to 2000. Science spin-offs are start-ups with at least one person involved who had worked at a university or a non-university research institution, or who had been employed at a scientific institute during the firm foundation.

Due to their higher growth, science spin-offs contribute more to the creation of new jobs: not only do they increase their employment level much faster during the first years, they also have a larger number of employees right from the beginning, according to the ZEW study. They employ on average 6.8 persons in the first business year (full-time jobs, including the owner); other start-ups in knowledge-intensive business sectors, however, employ 5.1 persons. In the sixth year of operation, this difference already amounts to 4.4 full-time jobs due to the larger job growth in science spin-offs. Some 1,200 science spin-offs in Germany per year hence account for an additional 5,300 jobs per cohort of spin-offs.

ZEW examined the job growth of more than 20,000 start-ups in knowledge-intensive economic sectors during their first years of operation to explore if science spin-offs show a better performance. The samples were taken from the Mannheim Start-up Panel of ZEW, a dataset which is based on information provided by commercial credit agency Creditreform and which comprises nearly all start-ups in Germany since 1989. The impact of other variables on business growth, for example patents, the conduct of R&D in newly founded businesses, or the qualification of staff was also considered within the model calculations conducted by ZEW.

Science spin-offs are frequently considered an effective way to commercialise research results and to employ them successfully in business environments. The fact, however, that science spin-offs produce higher social costs than start-ups by employees in the private sector receives only little attention. The point at issue with science spin-offs is that the knowledge gathered in science can be lost: private usage replaces the publication of research results generating positive spill-over effects. To compensate for these higher social costs, science spin-offs would need to produce higher social yields by performing better.

Contact

Dr. Christian Rammer, Phone 0621/1235-184, E-mail rammer@zew.de