1. Privatizing the intellectual commons: Universities and the commercialization of biotechnology Nicholas S. Argyres and Julia Porter Liebeskind Journal of Economic Behavior & Organization (1998) Presented by Carla Fernández-Corrales, Fall 2014 1

2. Research purpose Why do universities have difficulties commercializing new technologies? Organization boundaries  Why is it challenging to manage activities that are different? Motivation: income from technology transfer from universities to industry have not had a significant impact on budgets Social-contractual commitment to create ‘intellectual commons’ vs incentives and contracting policies for biotechnology

3. Social commitments and standards in universities Universities’ mission  ‘open science’ Governance arrangements that support this mission: incentives for academic research, self-governance, autonomy, separation of hiring and promotion from budgetary processes and prohibitions to establish private contracts. Enforcement by external parties (e.g., alumni and donors)

4. Biotechnology Highly patentable Pressures to re-contract for property rights because of relative prices and preferences Regulatory changes  Who owns rights to IP funded by federal sources?

5. Adaptive efforts: Privatization of intellectual property Privatization (patenting and licensing): concern about erosion of standards of open science. Decision is held by University administrators. Other motive, to facilitate the transfer of knowledge to useful products. Ownership: faculty ownership  conflict of interest, standard agency problem Licensing: ‘bench rights’ instead of exclusive licensing. Restrictions to firms’ sponsorships. Narrowly-based rights. Royalties as incentive. Effects of envy and inequities.

6. Adaptive efforts: Commercialization Technology transfer offices: more than patenting, even marketing. University-owned ventures: potential envy problems. University-based research institutes: selective intervention (e.g., contracts with researchers).

7. Reactive adaptation: Controlling faculty behavior Conflicts of interest due to faculty members holding management positions in firms (i.e., outside management). Faculty consulting that diverts attention from teaching and research.

8. Conclusion “Barriers to privatization of a public good can arise from historical social-contractual commitments and supporting internal standards of organizations seeking or possessing property rights” (p. 452)