The creation of spinoff companies is often promoted as a desirable mechanism for transferring knowledge and technologies from research organizations to the private sector for commercialization. However, when university spinoffs involve an employment transition by a researcher out of the not-for-profit sector, the creation of a university spinoff is likely to impose a higher social cost than the creation of an industry startup. To offset this higher social cost which arise from the lost knowledge accumulation and disclosure in the not-forprofit research sector, university spinoffs must produce a larger stream of social benefits than industry startups, a performance premium.

Using data on new ventures founded in knowledge intensive industries in Germany and controlling for survivor bias, this paper finds that university spinoffs generally show greater employment growth than industry startups. For the overall group of university spinoffs, which are defined as new companies started by former or current university employees, the performance premium is 3.4 percentage points higher employment growth. This premium is higher for research academic entrepreneurs than non-research academic entrepreneurs. We also find performance differences by academic discipline, with higher employment growth for spinoffs with academic founders from law & social science or natural sciences. By creating more new jobs than industry startups, university spinoffs are offsetting their higher social cost, at least to some degree.