DP1991 How and Why Does Knowledge Spill Over? The Case of Biotechnology

Author(s): David B Audretsch, Paula E Stephan
Publication Date: October 1998
Keyword(s): biotechnology, Entrepreneurship, Knowledge Spillovers, science, start-ups
JEL(s): L0, O1, O3
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1991

This paper sheds light on the questions, Why does knowledge spill over? and How does knowledge spill over? The answer to these questions lies in the incentives confronting scientists to appropriate the expected value of their knowledge considered in the context of their path-dependent career trajectories. In particular, we focus on the ability of scientists to appropriate the value of their knowledge embedded in their human capital along with the incentive structure influencing it and how scientists choose to commercialize their knowledge. We use a hazard model to estimate the duration over a scientist's career to starting a new biotechnology firm. We conclude that the spillover of knowledge from the source creating it, such as a university, research institute, or industrial corporation, to a new-firm start-up facilitates the appropriation of knowledge for the individual scientist(s) but not necessarily for the organization creating that knowledge.