Knowledge-intensive entrepreneurship and young engineering graduates in Greece: The case of the National Technical University of Athens Y. Caloghirou, A. Protogerou, A. Tsakanikas and I. Kastelli Laboratory of Industrial and Energy Economics, National Technical University of Athens Technology Transfer Annual Conference 2015 College of Business, Dublin Institute of Technology, October 2015

The Greek context: How to grow out of the crisis One main challenge is related to the position of the Greek Economy in the new emerging division of labour at a global level (the problem of structural competitiveness). How to regenerate the production and entrepreneurial system. – Upgrade technologically existing firms (technology transfer is important, engineering education to train and retrain engineers in a way that combine their technical knowledge background with business and market understanding) – Enrich the entrepreneurial system (new blood from newly established knowledge intensive firms) 29/10/20152

Aim of the paper The point of departure: By encouraging the pool of human capital that is most exposed to scientific and technological knowledge towards entrepreneurship may increase the specific weight of KIE to the overall new entrepreneurship creation, which is important for a new growth model for the Greek economy based on innovation and entrepreneurship. This paper attempts to explore what kind of entrepreneurship undertake the young graduates of the National Technical University of Athens, which is the older (est. 1836) and most research active technology and engineering academic institution in Greece. It provides some empirical evidence on: The characteristics and innovative performance of the entrepreneurial ventures undertaken by young engineering graduates in Greece; The role of education and especially that of Universities’ Innovation and Entrepreneurship Units in supporting them to become entrepreneurs. 29/10/20153

The National Technical University of Athens: Strong long-term presence as participant, coordinator and central actor in the emerging research networks Top 20 organizations in Framework Programmes based on centrality measures (FP1-FP7, ) (FP1/ FP7/2009) Organisation Name TypeCountryParticipations as Coordinator Centrality score FRAUNHOFER GESELLSCHAFT ZUR FÖRDERUNG DER ANGEWANDTEN FORSCHUNG EVResearchGERMANY1404 (2)261 (1)3 (1) CENTRE NATIONAL DE LA RECHERCHE SCIENTIFIQUE (CNRS)ResearchFRANCE1620 (1)250 (2)7 (2) NETHERLANDS ORGANISATION FOR APPLIED SCIENTIFIC RESEARCH - TNOResearchNETHERLANDS877 (3)129 (3)8 (3) VTT - TECHNICAL RESEARCH CENTRE OF FINLANDResearchFINLAND715 (5)99 (6)12 (4) NATIONAL TECHNICAL UNIVERSITY OF ATHENSEducationGREECE731 (4)75 (18)15 (5) CONSIGLIO NAZIONALE DELLE RICERCHE (CNR)ResearchITALY695 (6)99 (6)18 (6) KATHOLIEKE UNIVERSITEIT LEUVENEducationBELGIUM587 (10)94 (11)21 (7) COMMISSARIAT À L'ENERGIE ATOMIQUE (CEA)ResearchFRANCE637 (7)110 (4)29 (8) CONSEJO SUPERIOR DE INVESTIGACIONES CIENTIFICASResearchSPAIN597 (9)99 (6)30 (9) IMPERIAL COLLEGE OF SCIENCE, TECHNOLOGY AND MEDICINEEducationUK564 (11)82 (16)32 (10) RHEINISCH-WESTFÄLISCHE TECHNISCHE HOCHSCHULE AACHENEducationGERMANY499 (13)43 (34)34 (11) UNIVERSIDAD POLITÉCNICA DE MADRIDEducationSPAIN434 (19)32 (58)34 (12) UNIVERSITÄT STUTTGARTEducationGERMANY436 (18)39 (38)36 (13) SIEMENS AKTIENGESELLSCHAFTIndustryGERMANY605 (8)109 (5)38 (14) LUND UNIVERSITYEducationSWEDEN426 (20)47 (31)43 (15) ECOLE POLYTECHNIQUE FEDERALE DE LAUSANNEEducationSWITZERLAND453 (17)13 (197)52 (16) CENTRO RICERCHE FIAT (C.R.F.) SCPAResearchITALY503 (12)91 (13)54 (17) ARISTOTLE UNIVERSITY OF THESSALONIKIEducationGREECE294 (36)27 (77)59 (18) KUNGLIGA TEKNISKA HOEGSKOLANEducationSWEDEN397 (23)31 (63)59 (19) DEUTSCHES ZENTRUM FÜR LUFT- UND RAUMFAHRT EV (DLR)ResearchGERMANY463 (16)72 (19)61 (20) 4

The key role of Knowledge-intensive entrepreneurship (KIE) A mechanism that converts technological, scientific and market knowledge into economic activity. It offers opportunities (Malerba, 2010; Malerba and McKelvey, 2015) to amplify the channels through which new knowledge is transferred and eventually transformed into commercial applications and thus to find and enter new market niches; to accelerate the exploitation of technological, market and institutional opportunities; to create new employment opportunities in new small firms which might even have the potential to grow; to attract and engage highly educated human capital into the process of adapting new theoretical and scientific knowledge to practical applications 529/10/2015

Why the importance of KIE is increasing? Over the past three decades the share of scientifically educated work force is rising continuously in almost all European countries (Malerba, 2010). This additional supply of highly qualified human capital cannot be fully absorbed only in the existing businesses, and thus the need for new entrepreneurial activity becomes more significant. 629/10/2015

The role of education in supporting entrepreneurial culture The need to strengthen the culture of entrepreneurship and risk-taking by fully mobilising human resources - through the improvement of entrepreneurship education- is acknowledged among top policy priorities worldwide (OECD, 2010; European Commission 2013). In this respect, the role of educational systems can be decisive in increasing the prevalence and quality of entrepreneurial learning and thus in creating entrepreneurial mindsets that help entrepreneurs transform ideas into action. 729/10/2015

Links between engineering education and entrepreneurship Enriching the human capital of a social group that is most exposed to scientific and technological knowledge, i.e. engineers, early enough (i.e. during their undergraduate studies), towards entrepreneurship will increase the specific weight of a particular kind of opportunity entrepreneurship i.e. technological entrepreneurship. But, how enriching this type of human capital can happen? “Technical thinking” and “engineering feeling” can be complemented during engineering education studies with a knowledge background on market and business environment understanding, managerial and strategic thinking and entrepreneurial feeling. 829/10/2015

The survey in numbers (1) Field research: January - May 2015 Population: NTUA graduates – graduates from 8 schools who were registered as professional engineers at the Technical Chamber of Greece between 2000 and 2010 – 942 graduates from the School of Applied Mathematical and Physical Science who acquired their degree between 2004 and 2010 Sample: 1429 NTUA graduates – Stratified random sampling based on engineering specialty 29/10/20159

The survey in numbers (2) The survey was conducted through telephone interviews using a structured questionnaire (5 sections, 50 main questions) 3219 NTUA graduates were reached on the phone, – 352 (11%) are currently (working or studying ) abroad – 1429 questionnaires were finally completed (high response rate: 44.4%) 29/10/201510

The questionnaire’s parts 1.Filter questions 2.General firm characteristics 3.Founder(s) characteristics 4.Founding and operation of the firm 5.The contribution of postgraduates studies in undertaking entrepreneurial action 29/10/201511

Distribution of population and sample per school School Population distribution Sample distribution %# Electrical and Computer Engineering Civil Engineering Architecture Mechanical Engineering Chemical Engineering Rural & Surveying Engineering Applied Mathematical and Physical Science Mining Engineering and Metallurgy Naval Architecture and Marine Engineering Total (NTUA) /10/201512

1/3 of graduates ( ) undertakes some kind of entrepreneurial activity The engineering schools involved in construction have the highest entrepreneurial activity rates over time Entrepreneurship rate (% per school) School * * * Architects Civil Engineering Rural & Surveying Engineering Mechanical Engineering Mining Engineering and Metallurgy Electrical and Computer Engineering Naval Architecture and Marine Engineering Applied Mathematical and Physical Science Chemical Engineering Total (NTUA) /10/2015 * Year of professional registration at the Technical Chamber of Greece

1 out of 5 graduates undertaking entrepreneurial activity are continuing a family business Continuing a family business (% per school) School (Ν=102) Architects Civil Engineering Rural & Surveying Engineering Mechanical Engineering , Electrical and Computer Engineering Mining Engineering and Metallurgy Naval Architecture and Marine Engineering 33.3 Chemical Engineering Applied Mathematical and Physical Science Total (NTUA) /10/2015

15 The main findings

More than half of the graduates (56%) have not undertaken any entrepreneurial activity up to now 16 Employees of the private or public sector, unemployed or people who are not currently seeking employment 29/10/2015 Entrepreneur – employer Self-employed Ν=1429

Most businesses are sole proprietorships, based in the Attica region 17 Legal formHeadquarters 29/10/2015 Ν=465

8 out of 10 firms do not have full-time employees (founders excluded) 29/10/ Full time employees Only 11% of the firms have part-time employees Ν=465 6 out of 10 firms have external partners on a regular basis (3 on avg.) 3 out of 10 full-time employees have a university degree Mean13.1 Median3.03.0

The average firm age is 7 years 19 Firm age* 56% of the firms are more than 6 years old More than 80% have surpassed the 3 years threshold Ν=351 *Family firms are excluded from the analysis 29/10/2015

Sector of economic activity : 1 out of 2 offer engineering services 20 Ν=465 1 out 4 offer is in construction industry Very small business activity in manufacturing (2,4%) More manufacturing activity in larger firms 29/10/2015 Sector of economic activity

The founding team is composed, on average, by 2 persons 21 Ν=129 Founding team size * *Family firms are excluded The founding team does not change significantly over time Limited participation of women in the founding team 29/10/2015

Characteristics of the engineer-entrepreneur 31.6% have master’s degrees 5.7% hold PhDs 60% have professional experience in the same sector (72% of those have more than 3 yrs) 70% males 30% females only 4.7% have also founded another firm before postgraduate studies: 61% closely related to their core undergraduate studies 18% economics and management 2229/10/2015 Ν=465

Where did the founding idea originate in? more than half of them have exploited a specific opportunity 20% are continuing a family firm the idea of firm founding is closely related to their subject/field of studies (62%) knowledge of technology in the specific sector is the most significant founding factor (37%) 2329/10/2015 Ν=465 For approx. 8%, the idea of firm founding was more or less related to exploitation of recent research activity

Decisive factors to firm creation 2429/10/2015

Funding sources: on average, 76% of funding comes from own sources 25 average funding(%) Only 4 firms have used crowdfunding or venture capital funding Family members (58%) and bank loans (17%) are significant funding sources for family businesses % of firms 29/10/2015 Ν=465

4 out of 10 firms innovate, very few have some kind of intellectual property protection 26 Most innovative sectors/activities: Engineering services Information and Communication Technologies Energy/environment Ν=465 Innovative products/services represent on avg. 34% of sales Intellectual property rights protection Introduction of new or improved products/services 9 patents 9 copyrights 28 trademarks 2 industrial designs 3 creative commons 29/10/2015

2 out of 10 firms exhibit some export activity 27 Ν=465 29/10/2015 Major customers Sales in international and national markets ( )

At undergraduate level: 32% have not been offered any course related to economics & management 29/10/ At postgraduate level: 1 out of 7 were offered at least one course on economics and management 1 out of 4 were not offered any course

Sole proprietorships’ founders have been offered less courses on economics & management compared to founders of firms of more organized forms (at a postgraduate level) 2929/10/2015 Ν=465

29/10/ The larger firms

Split of the firms’ sample based on sales (2014) 31 Firm sales for out of firms out of € to € Up to €

Although larger firms seem to have a more organized form, 2 out of 10 are sole proprietorships 32 39% (26 out of 67) of larger firms have more organized legal form, compared to 6% (23 out of 398) of the rest of the firms 64% (43 out of 67) of the larger firms have employees on a permanent basis, compared to 11% (43 out of 395) of the rest of the firms Full-time employees Ν=67Ν=398 Mean233 Median52 29/10/2015

Founders of larger firms have followed to a larger extent economics and management programmes in their postgraduate studies 33 Economics and management

Founders of larger firms: Family tradition and previous experience are decisive factors for undertaking entrepreneurial action 34 They have a businessman in their narrow family circle They continue a family business They have founded another firm

Important factors for undertaking entrepreneurial activity: identification of a significant opportunity and exploitation of market knowledge 35 (38.% vs.70.1%) (48.0% vs. 58.2%) Ν=465 ) (69.8% vs. 62.7%)

Larger firms : better export and innovative performance 36 More than 50% of larger firms have introduced new or improved products /services during the last 2 years Innovation The major client for 58% of larger firms are other businesses (Β2Β), while, the same applies only for 39% of the rest of the firms Export activity

29/10/ Engineers entrepreneurs holding PhDs

Engineers entrepreneurs with PhD: In their majority, they are electrical and computer engineers 18 out of 26 hold a PhD in the main field of their undergraduate studies 38 Sector of Economic activity Engineers entrepreneurs with PhD (per school) 29/10/2015

Founder’s (or founding team’s) field of studies 19 out of 26 Engineers entrepreneurs with PhD: the firm’s founding is closely related to technological and research knowledge on their major field of studies 39 Where did the idea of firm founding originate in; Exploitation of recent research activity results 7 out of 26 Opportunity Entrepreneurship 14 out of 26 Technology knowledge on the specific sector 17 out of 26 29/10/2015

Engineers entrepreneurs holding a PhD: firm profile (Ν=26) 4029/10/2015 Legal form

Firms founded by engineering graduates holding PhDs exhibit better export and innovation performance 41 Major customer: other firms (17 στους 26) (68%) 4 firms have patents (out of the 9 firms which have patents in the total sample) Export Activity 9 out of the 26 firms exhibit export activity (34,6%) (vs. 19% of the firms in the total sample) 11 out of the 26 firms have introduced new or improved products the last 2 years (42,3% ) Innovation Customers Patents 29/10/2015

42 The role of the Innovation and Entrepreneurship Unit at the NTUA

The specific role of the Innovation and Entrepreneurship Unit (IEU) Promote the development of innovation and entrepreneurship, especially by facilitating the interconnection of research and technological activities with the economy and the market. Act as a “breeding mechanism” for the development of knowledge- intensive entrepreneurship by students, graduates, postgraduates and researchers. Promote the culture, teaching and study of entrepreneurship and its implications on economic activity, firms, employment and society in large. 29/10/201543

Coaching activities at the Innovation and Entrepreneurship Units Entrepreneurship Week in collaboration with So Kwadraat (non for profit organization for Coaching Tech Starters based on the Science Park of the University of Leuven, Belgium, established in 2005): tracking ideas and research efforts with high potential. Individualized coaching to persons or teams: from the idea to the market. Individualized information on issues related to innovation and entrepreneurship. Integration of teams into incubating schemes where they are offered more specialized support. During the last 4 years, 92 teams corresponding to 233 individuals have been supported from IEU-NTUA – 11 of these teams have founded a start up, – 22 present a high potential to start up, – 28 are at an initial stage 44

29/10/2015 Coaching activities – IEU/NTUA ΝΙΚΟΣ ΛΕΒΕΝΤΑΚΗΣ PRODUCT DESIGN

29/10/ Concluding remarks and challenges

The survey: concluding remarks NTUA engineering graduates can be assessed as a group of people of increased capacity that can potentially undertake knowledge- based entrepreneurial activity. 1 out of 3 young NTUA graduates undertake some kind of entrepreneurial activity. Among those that pursue entrepreneurial activity: – in their majority, they are self-employed (72%) – some others undertake entrepreneurial activity in a more organized way (mainly micro firms) – some continue an already existing family business (1 out of 3 of these firms have a considerable size) 4729/10/2015

The survey: concluding remarks A special focus in the analysis : – Larger firms in terms of sales More organized, but still micro or very small firms Market knowledge, previous entrepreneurial experience, and family entrepreneurial tradition appear to be crucial to founding They have better innovative and export performance related to the smaller sample firms – Firms founded by young graduates holding PhDs Most promising ventures in terms of growth and innovation potential Closely related to technological and research knowledge acquired during studies Mainly active in ICTs, energy/environment and other engineering services and much less in traditional construction activities. 4829/10/2015

Main results and challenges In general terms, the entrepreneurial activity undertaken by young NTUA graduates is rather conventional, although there are some interesting promising cases. Despite the knowledge content of the specific activities undertaken and the knowledge background of founders, it appears to be dependent: – on the existing production trajectory that have been followed by the Greek economy – i.e. a pattern of self employment and micro firms related to the traditional professional practice of engineering and technology activity Entrepreneurial activity of young engineering NTUA graduates cannot be considered as a mere quantitative issue, i.e. encouraging more engineering graduates to set up a firm, although numbers still matter provided they reflect an increased quality of new entrepreneurial activity. – Nevertheless, having a critical mass of knowledge-intensive entrepreneurs might be important to raise the probability of ending up with some successful, high-potential firms with significant impact on economic growth and industrial upgrading. 4929/10/2015

Main results and challenges The focus on the promotion of Entrepreneurial activity of young engineering graduates is rather a qualitative issue, i.e. it is largely related to the type of newly-established ventures that emerge from the specific selection pool of these high-capacity graduates. Specifically, it is an issue of: – promoting high-growth knowledge intensive, innovative entrepreneurship, either in the form of newly-established ventures or by contributing to corporate entrepreneurship and the technological upgrading of existing firms; – upgrading the average level of engineering practice in the productive system, in order to become more innovative and more responsive to changes at the technological, institutional and market level. 5029/10/2015

51 Thank you very much for your attention