Faculty as Entrepreneurs

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Although entrepreneurship is a term seldom associated with educational institutions, faculty entrepreneurial activities are not a recent development. Known as consulting, sponsored research, knowledge commercialization, academic capitalism, or moonlighting, the multifaceted phenomenon of faculty entrepreneurship has existed for some time on campuses. Nevertheless, little research has been undertaken on this topic. In part, this reflects the lack of consensus on what constitutes faculty entrepreneurship as well as the secrecy that often surrounds outside activities of faculty members. The objectives of this chapter are threefold. First, the reasons underlying the growth of faculty entrepreneurship are addressed. Second, a definition of what constitutes faculty entrepreneurship is provided. Finally, advantages and disadvantages of faculty entrepreneurship are discussed.

Growth of Faculty Entrepreneurship

Traditionally, faculty members have provided industry, communities, governments, and other entities with their professional expertise and research findings. Faculty entrepreneurial activities date back to the medieval period when members of law and medical faculties engaged in professional practice to supplement their university salaries. Later, in the seventeenth century, university faculty played an important role in the formation of the pharmaceutical industry in Germany. In the initial decades of the twentieth century, the growth of the service element in the university mission, coupled with technological advancement, provided a strong impetus for faculty entrepreneurship by linking research to the needs of businesses. The railroad industry, petroleum refining, and polymer industries are just a few examples of commercial endeavors that benefited from these linkages. In the second half of the twentieth century, entrepreneurial activities of university faculty played an instrumental role in the development of the computer industry and also contributed to the emergence and rapid growth of biotechnology.

What is new at the start of the twenty-first century is the rapid increase in the scope and intensity of faculty entrepreneurial activities as well as the normative shift towards an emerging academic culture that values equally the intellectual and commercial potential of faculty expertise and research. The growth of faculty entrepreneurship is spurred by the synergetic interaction of pull and push factors. The pull factors include the rise of the knowledge-based economy, technological advancement, and globalization, which generate demands for faculty expertise, thus creating new opportunities for scholars and scientists to engage in commercial activities. The push factors, such as waning public support for higher education, increasing research costs, institutional reward systems that tend to encourage faculty to generate external revenues, and state pressures on institutions to become more active actors in economic development, motivate faculty to engage in paid outside activities, thus augmenting the supply of academic entrepreneurship. Widely publicized successes of university entrepreneurs in biotechnology and new legislations permitting the commercialization of knowledge further encourage faculty entrepreneurship.

What Is Faculty Entrepreneurship?

Faculty entrepreneurship involves efforts to transform individual academic expertise and research results into intellectual property, marketable commodities, and economic development, thereby enhancing faculty remuneration and professional status. An essential characteristic of a faculty entrepreneur is entrepreneurial expertise, which is described by Sheila Slaughter and Larry L. Leslie as the ability to recognize the market potential of faculty research and other intellectual property, to cultivate commercial partnerships, and to negotiate contracts.

Historically, faculty entrepreneurship has followed two basic patterns. The first represented the application of specialized expertise to solve specific industrial problems by chemical and electrical engineering faculty in the late nineteenth century. Contractual research, consulting, and external teaching generally followed this pattern. The second pattern, which originated at the Massachusetts Institute of Technology in the 1920s, involved the patenting, development, and commercialization of faculty discoveries. In many instances, this involved the formation of firms by researchersespecially in the engineering and life sciences.

Magnus Klofsten and Dylan Jones-Evans suggest the following typology of contemporary faculty entrepreneurial activities: (1) large-scale science projects funded through public grants or industrial sources; (2) research contracted to solve specific problems; (3) consulting or the sale of personal expertise directed towards the resolution of identifiable problems; (4) patenting/licensing; (5) the formation of new firms or organizations to exploit the results of academic research; (6) external teaching; (7) commercial selling of research products; and (8) provision of testing and calibration services to external entities.

The most common types of entrepreneurial activities undertaken by faculty members appear to be consulting, contractual research, large-scale science projects, and external teaching. Although types and levels of entrepreneurial activities vary by academic fields, faculty in the disciplines of engineering, computer science, medicine, agriculture, chemistry, and biotechnology are the most likely to be engaged in entrepreneurial activities, followed by social scientists, natural scientists, and humanists. Traditional activities such as consulting appear to be distributed evenly across the disciplines while activities such as the formation of private firms, including those involved in the patenting or commercialization of new products and processes, are dominated most often by the life sciences and engineering.

Advantages of Faculty Entrepreneurship

Individual faculty members, their institutional employers, clients, and the society at large share in the benefits of faculty entrepreneurship. The obvious benefit for the individual faculty member is supplemental income, which improves faculty economic status and sometimes contributes to additional research funding. Furthermore, outside activities often enhance the continuing education of faculty, help to ensure currency of teaching and research, and provide faculty with external affirmation of their expertise and greater peer recognition.

The primary benefit of faculty entrepreneurship for clients is efficient access to sources of specialized expertise. Moreover, sponsors often have first access to research findings and privileged positions with respect to exclusive patent licenses. Involving faculty researchers in product commercialization also enables clients to gain a competitive edge in the marketplace by accelerating new product development and launching. Another important benefit is the cross-fertilization of ideas between industry and institutions of higher education. Synergies with respect to the training and development of staff may be significant as well.

Faculty entrepreneurial activities also benefit institutions. External funds secured by faculty entrepreneurs may supplement monies available to institutions for conducting basic research and offering improved grants or assistantships to graduate students. Permissive policies regarding faculty entrepreneurship enable institutions to recruit professors who otherwise would be inclined to opt for employment in private industry or government. Additionally, successful faculty entrepreneurs improve institutional visibility and reputation.

Faculty entrepreneurs take an active part in solving various social or community problems by providing their expertise to non-profit organizations and governmental agencies. Furthermore, academic entrepreneurship, especially efforts that involve start-up companies, plays an increasingly important role in regional and national economic development. On the whole, faculty entrepreneurial activities promote technological advancement and accelerate the transfer of knowledge from discovery to utilization, thus contributing to social progress.

Disadvantages of Faculty Entrepreneurship

On the negative side, faculty entrepreneurial activities may lead to situations involving conflicts of interest, commitment, or internal equity. Conflicts of interest are usually of a financial nature and may lead to biases in the design of research, the interpretation of results, publication delays and/or secrecy, as well as conflicts with student interests.

Conflicts of interest may arise when faculty entrepreneurs engage in activities to advance their own financial interests that might harm their institutional employer. The potential for conflicts of interest exists, for example, when faculty entrepreneurs use institutional resources for their outside activities or have financial interests in entities that do business with the institution.

A faculty entrepreneur may manipulate research design or fail to present accurate research results if the findings do not yield a profit or desired result for the sponsoring entity, and the dissemination of research findings may be unduly delayed or prevented on the grounds that proprietary information has to be protected in order to secure the competitive edge of the client. Another important, but often over-looked, conflict of interest involves student interests. Potential exists for faculty entrepreneurs to abuse their positions by using students as inexpensive labor or to exploit students' ideas without giving them credit. More subtle conflicts that also represent significant risks include steering student research toward topics that reflect the priorities of a faculty entrepreneur or corporate sponsor, or delaying student publications because of proprietary interests.

Conflicts of commitment between the role of the faculty entrepreneur and the role of teacher, researcher, or public servant merit attention. The central issue to consider when assessing possible conflicts of commitment is whether particular entrepreneurial activities negatively influence faculty teaching, research, and service productivity. Existing research provides mixed results and suggests that the relationships between entrepreneurial activities and faculty productivity are nonlinear, may vary across academic disciplines, and depend on the time spent on outside activities.

Conflicts of internal equity involve conflicts between the values of faculty as entrepreneur and faculty as collegian. Internal institutional practices increasingly favor academics engaged in entrepreneurial activities. These individuals tend to receive higher salaries and benefits as well as lower workloads than their nonentrepreneurial peers. These considerations, coupled with the unequal positioning of disciplines and institutions relative to the market, are potentially detrimental to collegiality and may exacerbate existing stratification between faculty, disciplines, and institutions.


Faculty members are increasingly pushed, encouraged, and provided with opportunities to take on new entrepreneurial roles. At a time when "entrepreneurship is the key to present and future institutional and cultural preference, approval, and legitimacy" (Slaughter and Leslie, p. 200), the ignorance of faculty entrepreneurship or attempts to hinder its development may contribute to intellectual stagnation or a loss of talent and knowledge from academia. Faculty entrepreneurial activities should be studied carefully and managed cautiously in order to maximize their benefits and minimize disadvantages.

See also: University-Industrial Research Collaboration.


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Alexei G. Matveev