I: INTRODUCTION
Traditionally, the commercialisation of university intellectual property has occurred through licensing. University spinout companies (USOs) have become increasingly popular as a result of the problems of licensing and the desire to maximize the returns to intellectual property. For purposes of this study, a USO is a new company founded by employees of the university around a core technological innovation which had initially been developed at the university. Exploitation of academics' inventions, in what has historically been a non-commercial environment, raises new entrepreneurial challenges beyond those faced by new high tech ventures in general. This paper examines the commercialisation of technology through the university working with existing outside firms to create joint venture spinout companies. We term these companies joint-venture spinouts (JVSOs).
While universities are capable of generating intellectual property (IP) they typically lack the resources and capabilities to commercialise successfully the IP through USOs. Furthermore, academic entrepreneurs involved in creating USOs generally have little commercial awareness and/or experience in how to go about the process. One potential way to overcome these problems is to collaborate with and industrial partner in an equity joint venture (EJV). A JVSO is a new venture in which technology is licensed into a new company that is jointly owned by the university and the industrial partner The academic scientist is commonly given an equity stake in the JVSO as a reward for discovering the new technology, and as an incentive to participate in the development of the technology into a marketable product. Although this paper focuses on the advantages of using JVSOs to overcome resource constraints we acknowledge that collaboration is not a panacea for firms with limited resources.
We compare the creation, and development, of JVSOs and USOs. The approach taken is to study the evolution of four high-tech university spinout companies, two of which are venture capital backed and two that were formed as a result of a joint venture between the university and an industrial partner.

II: DEVELOPMENT OF PROPOSITIONS
In this section we develop propositions relating to the relative attributes of JVSOs and USOs in meeting the challenges they face in each stage of their development.

Opportunity Recognition
Within universities, the academic's pre-eminence in a research field may be important in providing the basis for an opportunity to be recognised. However, previous research suggests that academic entrepreneurs involved in creating USOs may not be the best people to champion the venture. One reason is that they may not have the necessary commercial awareness and/or experience to go about the process. Furthermore, it is only recently that universities are beginning to provide incentives for the scientists to think and behave entrepreneurially. Working in a non-entrepreneurial culture has the effect of reinforcing the non-commercial mindset of academics. This point is exemplified by the common use of 'surrogate' entrepreneurs in USOs.
These factors suggest that universities might develop links with industry if they are to be successful at commercialising technology through USOs. The JVSO model of intellectual property commercialisation employs cooperative strategies to achieve this. A university academic's new information about a technological discovery might be complementary with an industry partner's prior information about how markets operate, leading the discovery of the technological opportunity to require prior information about those markets. Important prior information about those markets might include information about supplier relationships, sales techniques, or capital equipment requirements that differ across markets. This prior information enables him or her to discover an opportunity in which to use the new technology. The above arguments suggest the following proposition:

Proposition 1: Cooperative links with potential industrial partners facilitate opportunity recognition as a precursor to the formation of a spin-out company.

Entrepreneurial Commitment
For USOs, once an entrepreneurial opportunity has been identified, there is an imperative to deal with the uncertainty surrounding the technology in its primitive state and the application of that technology to serve particular customer needs. The uncertainty arises in part due to a lack of information and the lack of an obvious market in which to exploit the technology. This absence of information creates decision uncertainty and decision complexity. There is a need for an individual to be committed to resolving this uncertainty and intense complexity through championing the venture beyond start-up to commercial operation. Entrepreneurial commitment is necessary for a potential venture to be taken forward. Furthermore, the commitment of the academic may be particularly important to ensure a continued flow of innovations to enable the venture's product portfolio to develop.
However, this does not necessarily make the scientist the best candidate for the role of venture champion. First, developing the technology into a marketable product or service requires capabilities derived from prior industry and entrepreneurial experience, which the academic scientist may not possess sufficiently. Second, the academic scientist may be unable or reluctant to commit to the venture through either a lack of personal motivation or an institutional culture, which discourages commercial behaviour. Leaving an academic post and committing to the venture full time would mean going against accepted convention.
In some cases, a surrogate entrepreneur may provide the solution. This occurs by enabling the academic to remain in their university role whilst contributing some effort to developing the technology into a product whilst the surrogate entrepreneur manages day-to-day management of the business and coordinates transactions with suppliers and customers. Universities can have difficulties in luring people to champion new ventures in the absence of any funds and the ability of the university to identify suitable people to assume the role of a surrogate entrepreneu. In the case of a JVSO, the industrial partner is potentially a rich source of such surrogate entrepreneurs and can supply managerial and marketing expertise to fulfil this requirement. Alernatively, the support of the industrial partner may make it easier to attract outside surrogate entrepreneurs who will be committed to the venture. The above arguments suggest the following proposition:

Proposition 2: JVSOs are more likely than USOs to find a committed entrepreneur with the necessary commercial expertise to champion the venture.

Venture Credibility
A new USO has no track record, and hence there is a justifiable lack of confidence on the part of customers, distributors, and suppliers that the venture will survive and therefore little reason to provide patronage. There may also be doubts internally by the academic or the university about the credibility of the new venture. Thus the venture faces a credibility crisis, and has to somehow create the impression of viability and legitimacy before it will receive support in acquiring resources.
Without this initial legitimacy / credibility, new high tech ventures in general, will not be able to overcome sceptical customer perceptions, gain access to product and financial markets and successfully achieve the transition from a "concept" to a "business" engaged in transactions in the market.
Through cooperative strategies, universities can partner with established firms in industry to pool resources, build credibility and co-opt legitimacy in order to start the new venture. Based upon a networked form of governance, the JVSO model should lead to easier access to resources, with which to initiate and develop the venture as all the necessary ingredients are supplied by both parents - the university and the established industry partner. The above arguments suggest the following proposition:

Proposition 3: JVSOs are more likely to establish credibility much faster than USOs through a greater ability to gain access to resources and capabilities.

Venture Sustainability
For a USO, the challenges for growth are particularly high because intangible inputs need to be translated into tangible market returns by weak management teams that are largely untested. The venture's development is thus highly turbulent because the weak resource and capability position from which the USO starts from must constantly be restructured to cope with the challenges of growth. Routines and procedures need to be continuously redefined to cope with the need to adapt to market demands, whilst striving to develop further new products to secure future revenue streams.
Unless the USO's inexperienced entrepreneurial team can acquire or develop the skills to manage the turbulence created by these challenges of growth, the venture will not have the infrastructure or capacity to continue to transfer a technological competitive advantage into a market competitive advantage. Over time, weaknesses of the new venture to cope with emergent conditions will become exposed and hence it will fail to become established as a sustainable rent generating business.
In contrast, new ventures founded by industry experienced individuals may be advantaged in the creation of favourable organisational outcomes, including the speed with which first products are developed and reach the market. A greater ability to access resources, capabilities and expertise leads to comparatively faster professionalisation of the new venture that transforms a start-up, consisting of a few founders with an idea, in to a modern corporation.
In the case of USOs, the notion of professionalisation can be extended beyond human capital resources to the accumulation of capabilities related to product development, manufacturing, marketing, sales and distribution, ensure that the venture can become established in the marketplace without delay. However, developing these organisational processes, routines and capabilities from scratch is costly and time consuming. Consequently, the ability to professionalise and therefore attain speed to market is the fundamental handicap which prevents USOs from engaging in sufficient revenue generating transactions. Hence, many USOs begin to stagnate and fail to develop as sustainable businesses. It is at this juncture that a JVSO becomes a more effective vehicle for commercialising university intellectual property.
An industrial partner may be able to provide existing factors of production (FOPs) resources and capabilities to the spinout. The industrial partner will already have an existing customer base and identifiable brand that provides a ready made route to market for the spin-out activity. The business and managerial expertise provided by the industrial partner is of significant importance to the professionalisation and therefore success of the JVSO. By not adopting cooperative strategies in creating non-joint venture USOs, universities experience greater difficulties in identifying and attracting credible managerial expertise to join the venture full time. The above arguments suggest the following proposition:

Proposition 4: JVSOs become sustainable more quickly than USOs through the ability of both parents to professionalise the venture.

III. DATA AND METHODS
Data were collected in a total of 24 in-depth face-to-face and telephone interviews with the management teams of the four spinouts, the joint venture partners and representatives from the universities during the period April 2001 to April 2002. The cases were drawn from universities ranked among the top ten research elite universities in the United Kingdom as measured by research income earned, and who are actively pursuing a programme of university technology transfer, through both licensing and spinout mechanisms. The data were augmented by information provided by the spin-out company as well as publicly available information gathered from on-line data sources and press releases. For each of the cases, structured interviews were carried out with the head of the Technology Transfer Office (or equivalent), a number of business development managers (BDMs), managers at the joint venture partner, and the members of the USOs.
By using a number of key actors from each university, USO, and JV partner, we ensured that we elicited views on the universities' role in the spinout process to cross check our interpretation of events. Less formal telephone interviews were used to clarify and enrich previous points raised. Triangulation was also aided by the collection of archival data, at the level of the university, and the USO.

IV. RESULTS
Opportunity Recognition
In the case of the two USOs, the drive for commercialisation was more technology led than in the two JVSOs where a clear customer need had been identified which the technology could fulfil. For example, in the early stages of both Nano-Technology Co. and 3G Wireless Co., these ventures had numerous ideas for applications of their respective technologies in a number of different markets. It was more of a challenge for these USOs to focus upon who their customers were and what sort of business they should become in order to best serve these customers. In contrast, the JVSOs were customer oriented even before these ventures were formed. In the case of Automotive Co., even whilst the technology was in the university laboratory, the marketing director of the joint venture parent Auto-Assembly Co. knew precisely how much revenue could be derived from each potential customer and also how much money the product could save these customers.
Likewise, Broadband Co., the JVSO parent of Telecom Co. had spotted a changing trend in their own market which made the technology created from research they had sponsored, very valuable to their own success. This recognition stemmed from greater market intelligence than the scientists in the university had access to.
Unlike these two JVSOs, the academic and surrogate entrepreneurs in Nano-Technology Co. and 3G Wireless Co., could not sufficiently pin-point a precise market need by defining a value proposition for customers. The surrogate entrepreneurs in both USOs each had sales, product development and marketing experience in the relevant industries and were able to shape the potential of each technology in its early state in the university labs, into applications that were relevant to new or existing markets. However, and surprisingly, in both cases they believed that the technology was sufficiently compelling that a customer need could be created in new markets or that customer preferences in existing markets would change in their favour once their products were on offer. To date both of these 'platform technologies' have only managed to find limited demand from a small niche of customers.
The results provide evidence that prior knowledge of the industry, its customers and suppliers, as well as manufacturing and sales techniques etc. are all necessary to recognise an opportunity. However, the results also suggest that there are benefits from being an established operator within a market in order to better recognise opportunities. These findings provide support for Proposition 1 that cooperative links with potential industrial partners facilitate opportunity recognition as a precursor to the formation of a spin-out company.

Entrepreneurial Commitment
In all cases examined the academic entrepreneurs did not leave their university posts. As shareholders in the new ventures, they acted as technical advisors on a part time basis. In the case of the Nano-Technology Co. and 3G Wireless Co., a surrogate entrepreneur met the scientific academic and in recognising the market potential of the technology, agreed to start a USO with them in order to transfer the technology out of the university laboratory.
In the JVSOs, the industry partner is also able to supply managerial and marketing expertise in order to bring a keen focus to the process of commercialisation. By their own admission, the academics all knew where their strengths lay and that they could best contribute the venture's success as technology experts at the forefront of scientific research.
Clearly the commitment of a full-time CEO becoming the venture champion is essential to starting the new venture, giving it direction and building momentum. Our case study evidence shows that an industrial partner is able to add more value in this area than a surrogate entrepreneur. These findings provide support for Proposition 2 that JVSOs are more likely than USOs to find a committed entrepreneur with the necessary commercial expertise to champion the venture.

Credibility
For USOs, the credibility of the venture is the key issue in obtaining the necessary financial resources to allow the business to operate commercially. In turn, financial resources are essential to attracting and acquiring other resources such as premises and equipment. The issue of demonstrating credibility in acquiring financial resources becomes more significant for USOs when compared to JVSOs.
The industry partners in both JVSOs contributed significant amounts of resource to the new ventures, including finance to develop products for market, as well as facilities in which the venture could operate in a commercial environment. Both USOs that received seed venture capital funding have not enjoyed the same access to resources and are still located in the university.
In addition, in both JVSOs, the industry partner allocated significant managerial, marketing, and project management capabilities. For example, Broadband Co. the industrial parent of the Telecom Co. JVSO managed to entice industry experts in product development and manufacturing away from competitors, to come and work for the new venture. The chairman of a stock market listed company was also brought in on a part time basis to provide strategic advice and access to influential networks of people.
Our results show that credibility for the new venture also derives from the university supplying intellectual property. The know-how supplied by academic scientists brings scientific credibility to the venture which the industrial partner cannot otherwise attain. In both Automotive Co. and Telecom Co. "strong academic backing" was an important signal to the market that the technology was proven and the product could be considered technologically superior to competitor's products.
In comparison, both USOs have still not reached a point where their technology is market ready. Interestingly, during the final interviews, the surrogate entrepreneur from Nano-Technology Co. revealed that they were in discussions with two companies, looking to form co-development partnerships and distribution licenses for the technology. The example clearly shows the difficulties USOs experience in gaining access to market through a lack of resources, capabilities and credibility.
These results provide evidence in support of Proposition 3 that JVSOs are more likely to establish credibility much faster than USOs through a greater ability to gain access to resources and capabilities because their legitimacy is derived from the university, the track record of the industry partner that operates in the market as well as the reputation of the academics involved in the venture. This legitimacy enables the new venture to interact with the business environment, to access resources more easily and acquire and build capabilities to transform itself into a large complex organisation. Hence the risk to survival is comparatively lower for JVSOs.

Sustainability
We found that JVSOs were better at integrating resources, finance and expertise in order to add value to the intellectual property that underpinned the existence of the venture. The results suggest that JVSOs are able to become established in the marketplace through a greater ability of both parent shareholders to professionalise the venture.
First, the industrial partner is able to provide physical resources such as space, facilities and capital equipment. Being located away from their university departments legitimised both Automotive Co. and Telecom Co. as business entities, whilst being close enough to access expertise and specialist laboratory equipment, accelerated product development. In contrast, both USOs felt commercially constrained in not having access to their own facilities and having to share resources with scientists in their university.
Second, the industrial partner is able to provide the JVSO with managerial resources allocated from its own personnel. Together with the academic scientists transferred into the venture from the university, a well-balanced team can be assembled quickly and with low transaction costs. Instead, both Nano-Technology Co. and 3G Wireless, had to rely upon pro-bono work from surrogate entrepreneurs, friends and part-time use of university researchers.
Third, organisational routines and procedures to manage the growth of the venture are transferred from the industrial partner. Establishing cross-functional teams, health and safety procedures, human resource management, project management and systems for ensuring quality control, management accounting and payroll are all examples recognised in the JVSO cases. In contrast, in both USO cases organisational routines, procedures and systems were either ad hoc, build from scratch or non-existent. It was also clear in both USOs that the seed funding raised was only sufficient to support the development work necessary to transfer the technology discovered in the university labs into a working prototype.
Fourth the industrial partner is able to provide social resources such as access to networks of expertise, suppliers and customers with whom it has already established, business relationships, trust through previous transactions.
These findings emphasise that in order to professionalise these new high tech ventures, it is necessary to obtain new capabilities associated with recognising opportunities and threats, acquiring resources, and integrating them with existing resources and capabilities. JVSOs can have advantages over USOs in this process of professionalisation in relation to the ease and speed of access to resources and capabilities.

V. DISCUSSION AND CONCLUSIONS
This paper has provided evidence that JVSOs can offer a faster, more flexible, less risky and less costly business venturing route to commercialising university intellectual property in comparison to venture backed university start-ups. JVSOs can allow universities and industrial partners to pool their resources and improve the competitive position of the new venture in a way that they could not do alone. The study has shown that USOs in comparison to JVSOs faced problems in resolving four key challenges regarding their transformation from ideas into complex organisations: (1) opportunity recognition, (2) attaining entrepreneurial commitment by a venture champion; (3) attaining credibility in the business environment; and (4) achieving sustainability through the ability of these new venture to become established firms within their respective markets.
The determinants of success and failure have also become more recognisable. First, given their prior knowledge of their industries and the superior market intelligence of the industrial partner, the JVSOs pursued opportunities, which better served markets, and customer needs. Second, the industrial partner and the university were able to cooperate in assembling a well balanced team with the necessary background to successfully commercially exploit the technology. Third, the credibility acquired from both parent organisations enabled the JVSOs to access and acquire resources more readily and gain organisational momentum and access to markets. Finally, a more rapid process of professionalisation enabled the JVSOs to be transformed into firms that had become established in their markets and sustainable.
Cooperative strategies such as JVSOs provide a platform for organizational learning, giving new ventures access to knowledge of their parent firms. It appears that USOs lack the resources and organisational routines to perform organisational learning. In comparison, JVSOs acquire this capability much earlier in their organisational evolution. Through a shared responsibility for commercialisation, mutual interdependence and problem solving, and observation of activities and outcomes, the JVSO partners "co-incubate" the new venture.