Commercialisation of scientific research: spin-off companies from Industrial Research

Abstract

The 1992 science reforms can be seen as constituting one of the greatest revolutionary periods in the Crown science research sector in New Zealand. Massive upheaval resulted in the state monopoly in scientific research being split into ten Crown Research Institutes (CRIs), and separate entities for the administration and monitoring of all scientific research in New Zealand. One of the results of these reforms was to create an environment that empowered CRIs to operate as commercial entities and use a range of approaches that would aid in the development and commercialisation of research and technology. One such approach, that is the subject of this thesis, was the formation of spin-off companies. One of the first to publicly recognise the use of new venture spin-off formation was Industrial Research Limited which displayed an aptitude for forming spin-off companies in their 1996 Annual Report. In documenting this phenomenon this research catalogues the process by which Industrial Research Ltd. nurtured its spin-off companies and the process through which the Institute came to focus on spin-off creation as a strategy. The research involved interviews with eight senior managers in Industrial Research and one sector official, a literature survey of CRI Annual Reports, and a review of industry documentation. The results generated from this research were analysed using an evolutionary model developed during this research. The research found that the spin-off option used by Industrial Research was almost inevitable. The evolution of the strategy was initiated by entrepreneurial staff within the organisation who became focused on the idea of managing and developing their own technology. Given the freedom of the new operating environment and Industrial Research's commitment to its clients these unintentional spin-offs were nurtured to flourish. Recently Industrial Research's senior management has become proactive in seeding the thought of spin-off in activities of lower strategic value to the company. With a recent change in government and the Crown's new focus on nurturing new high tech company formation, Industrial Research has placed itself in a strong position for evolving towards the final stage of the spin-off evolution process and exploiting and gaining value from these companies.