Determining factors in founding university spin-offs

Abstract

Focusing on university spin-offs, this article examines the question of why some nascent entrepreneurs are successful in creating new firms, while others quit their projects and abandon their business ideas. The frame of reference is derived from Sarasvathy (2001, p.243ff), who described two distinct approaches to the new-venture-creation process: causation and effectuation. The effects of these two decision-making strategies on the emergence of university spin-offs have not been previously studied. Thus, this study enters into new territory. In an exploratory setting, empirical data from 171 nascent spin-offs of German universities are analysed. The variables related to team characteristics, aspects of the business idea and the intensity of perceived problems have a good explanatory power. The fit of a multivariate model considering causation and effectuation, however, is very poor, which means that none of the indices representing the two types of decision-making processes is a significant determinant of spin-off creation. Furthermore, no significant effects of these decision strategies can be detected for different subgroups.