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Corporate spin-offs as a proportion of all start-ups, 1994-95
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Corporate spin-offs as a proportion of all start-ups, 1994-95
Comparison of corporate spin-offs in eight EU Member States shows very wide variation in the level of activity. (Source: IPTS) |  ntil recently, policy-makers have focused attention on university-based start-up companies as a central factor in the exploitation of research results. Studies at IPTS, requested by the European Commission's Enterprise DG, are now showing that spin-offs from commercial companies have higher growth rates, a lower chance of failure (around 15%), and often produce more innovations than high-tech start-ups or university spin-outs. Corporate spin-offs benefit from greater business experience and better access to development capital and markets, and offer better job prospects. University start-ups, on the other hand, tend to grow slowly, with commercialisation hampered by bureaucracy and a less entrepreneurial approach. About 45% eventually fail.
In a spin
Corporate spin-offs may result from restructuring - typically when a company disposes of units which no longer match its core activities, or are too expensive. By contrast, entrepreneurial spin-offs enable technological potential that would never be realised by the parent company to be bought out and developed, either in collaboration with the parent or in competition with it.
The IPTS study collected information on corporate spin-offs from Denmark, France, Germany, Italy, Spain, Sweden and the United Kingdom. A survey of European manufacturing and service industry brought responses from 144 companies, with further input at an industry seminar from large companies such as Hoechst, Finmeccanica, Deutsche-Steinkohle, Ericsson, and Nestlé.
Where restructuring is involved, spin-offs often result from privatisation - as in the UK steel industry - or from deregulation in the telecommunications and energy sectors. Success frequently depends on support from the parent company, often in the form of management expertise and financial investment. Entrepreneurial spin-offs are also common in the service sector.
The French Thomson group has a strong spin-off policy. It has set up 51 restructuring-driven spin-offs since 1984, and 327 entrepreneurial spin-offs since 1993. Because they facilitate outsourcing, and allow restructuring without a reduction in employment, spin-offs produce economic benefits for the group. Philips, in the Netherlands, has a redesign centre which develops business units outside its core activities, allowing them to separate when they achieve profitability.
Improved environment
The IPTS is formulating advice for policy-makers who wish to intensify co-operation between research bodies and companies on both corporate and research-based start-ups. Recommendations are likely to include benchmarking and exchange of spin-off best practices - for example, better arrangements for secondment and leave of absence, tax harmonisation and concessions for temporary equity holdings in spin-offs, and improved access to capital. An IPTS expert workshop will this month investigate governments' role in fostering public and private spin-offs, and seek to raise awareness of their importance to innovation, employment and growth.
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CORPORATE SPIN-OFFS
