Rules for Growth: The US Kauffman Foundation, a
leading entrepreneurship think-tank, on Tuesday published a comprehensive
collection of essays which focuses on startups, universities and improving both
strategies and legal rules that would boost job creation.
Last week, the Obama administration launched the
Startup America program, in conjunction with the Foundation.
Entrepreneur Steve Blank
says in Fortune Magazine that the program is dead-on-arrival, because:
"There are three problems. First, an entrepreneurship initiative needs to be an
integral part of both a coherent economic policy and a national innovation
policy – one that creates jobs for Main Street versus Wall Street. It should
address not only the creation of new jobs, but also the continued hemorrhaging
of jobs and entire strategic industries offshore.
Second, trying to create Startup America without understanding and articulating
the distinctions among the four types of entrepreneurship means we have no
roadmap of where to place the bets on job growth, innovation, legislation and
Third, the notion of a public/private partnership without giving entrepreneurs a
seat at the policy table inside the White House is like telling the passengers
they can fly the plane from their seats. It has zero authority, budget or
influence. It's the national cheerleader for startups."
The Kauffman Foundation said on Tuesday that the
United States economy is struggling to recover from its worst economic downturn
since the Great Depression. After several huge doses of conventional
macroeconomic stimulus—deficit-spending and monetary stimulus—policymakers are
understandably eager to find innovative no-cost ways of sustaining
growth both in the short and long runs.
In response to this challenge, the Kauffman
Foundation convened a number of America’s leading legal scholars and social
scientists during the summer of 2010 to present and discuss their ideas for
changing legal rules and policies to promote innovation and accelerate U.S.
economic growth. This meeting led to the publication of Rules for Growth:
Promoting Innovation and Growth Through Legal Reform, a comprehensive and
groundbreaking volume of essays prescribing a new set of growth-promoting
policies for policymakers, legal scholars, economists, and business men and
women. Some of the top Rules include:
- Reforming US immigration laws so that more
high-skilled immigrants can launch businesses in the United States - -
foreigners are responsible for about 25% of startups .
- Improving university technology licensing
practices so university-generated innovation is more quickly and efficiently
- Moving away from taxes on income that
penalize risk-taking, innovation, and employment while shifting toward a
more consumption-based tax system that encourages saving that funds
investment. In addition, the research tax credit should be redesigned and
- Overhauling local zoning rules to facilitate
the formation of innovative companies.
- Urging judges to take a more expansive view
of flexible business contracts that are increasingly used by innovative
- Urging antitrust enforcers and courts to
define markets more in global terms to reflect contemporary realities,
resist antitrust enforcement from countries with less sound antitrust
regimes, and prohibit industry trade protection and subsidies.
- Reforming the intellectual property system
to allow for a post-grant opposition process and address the large patent
application backlog by allowing applicants to pay for more rapid patent
- Authorizing corporate entities to form
digitally and use software as a means for setting out agreements and bylaws
governing corporate activities.
Rules for Growth: Promoting Innovation and Growth Through Legal Reform(pdf)
Download the Rules for
Growth in ePUB format (compatible with the Apple iPad
The essay on the role of universities and
innovation, says that more recent accounting of the importance of university
generated innovations is reflected in an analysis of the top 100 “most
technologically significant new products” listed each year in R&D
magazine. Fred Block and Matthew Keller report that universities and federal
laboratories have become much more important sources of the top 100 innovations
over the last thirty five years. In 1975, for example, they note that private
firms accounted for over 70% of the R&D 100, while the academic institution
share was just 15%. By 2006, just three decades later, these two shares were
reversed: academia contributed over 70% of the top 100 innovations, while
private firms accounted for about 25%.
The authors say that the real story is more likely, however,
that the huge growth of federal funding for research over the six decades after
World War II took a couple decades to begin to translate into commercially
significant innovation, and such federal funding for research will continue to
be a crucial federal policy affecting the national innovation system.
In 2009, the various federal agencies channeled approximately
60% of the $147bn they spent on research and development—or roughly
$90bn—directly to US universities.
According to the Association of University Technology Managers
(AUTM), which compiles these data for most universities annually, universities
earned $1.9bn in licensing revenues from faculty-generated IP in 2008, up from
just $221m in 1996, when these data were first available. The top ten university
earners over the entire 1996-2008 period are listed in table 1.
The authors acknowledge that many impacts do not show up in market
transactions or prices and they cite an MIT study of the number of firms and
jobs associated with its faculty and alumni and found that MIT alumni had
founded 25,800 active companies that employed 3.3m people, generating annual
world sales of $2trn. This production is equivalent to the eleventh-largest
economy in the world.
Nevertheless, it is argued that the rates of
return reported in table 1 are quite low. Collectively, they indicate either
that most research by most universities has very little commercial value, or
that the commercial potential is there but is far from being fully realized.
There is the problem of what is termed back-door
commercialization where one research team found that almost 38% of the more than
5,800 patents in their sample were not assigned solely to the university, even
though it was a term of employment.
The authors also raise the efficiency of Technology Transfer
Offices in commercialization.
Research productivity in one particular field where
university research is amply supported by the federal
government—pharmaceuticals—has been declining.
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