Commercializing Science: Is There a University "Brain Drain" from Academic Entrepreneurship?

When academic researchers participate in commercialization using for-profit firms, there is a potentially costly trade-off--their time and effort are diverted away from academic knowledge production. This is a form of brain drain on the not-for-profit research sector that may reduce knowledge accumulation and adversely impact long-run economic growth. In this paper, we examine the economic significance of the brain drain phenomenon using scientist-level panel data. We identify life scientists who start or join for-profit firms using information from the Small Business Innovation Research program and analyze the research performance of these scientists relative to a control group of randomly selected research peers. Combining our statistical results with data on the number of university spin-offs in the United States from 1994 to 2004, we find the academic brain drain has a nontrivial impact on knowledge production in the not-for-profit research sector.