University spin-offs vs. other NTBFs: Total factor productivity differences at outset and evolution

• We present a longitudinal analysis comparing the capabilities (total factor productivity) of University Spin-offs and other NTBFs.
• University spin-offs report lower substantive capabilities but larger dynamic capabilities.
• In the long term, University spin-offs are more productive than other NTBFs.
• Of the alternative explanations considered, the argument that academic entrepreneurs learn faster is the most consistent with the evidence presented.

Previous empirical research suggests that university spin-offs under-perform in economic terms compared to other new technology-based firms (NTBFs) in their early years. The usual explanations suggest a lower capabilities endowment of university spin-offs compared to other NTBFs. Using a longitudinal Spanish dataset we compare the evolution of firms′ total factor productivity (capabilities endowment) in both kinds of firm. Productivity grew faster in university spin-offs and their initial underperformance disappeared after 2 or 3 years of operation. The evidence therefore suggests that university spin-offs have lower initial substantive capabilities but greater dynamic capabilities than independent NTBFs. Possible explanations are discussed.