Academic Entrepreneurship: Bayh-Dole versus the 'Professor's Privilege'

Should society encourage scientists at universities to become entrepreneurs? Using data on U.S. university-employed scientists with a Ph.D. in STEM disciplines leaving their university to become entrepreneurs during 1993-2006 and similar data from Sweden we show evidence suggesting that owning your idea outright (the “Professor’s Privilege”) rather than sharing ownership with your university employer (the Bayh-Dole regime) is strongly positively associated with the rate of academic entrepreneurship but not with apparent economic gain for the entrepreneur. Further analysis show that in both countries there is too much entry into entrepreneurship, and selection from the bottom of the ability distribution among scientists. Targeted policies aimed at screening entrepreneurial decisions by younger, tenure-track academics may therefore produce more benefits for society than general incentives.