Do royalties really foster university patenting activity? An answer from Italy

Even though universities routinely share revenues with the inventors and their departments to foster patenting activities, royalties’ incentive effect is largely unexplored, especially using panel data. Using a unique dataset of Italian universities’ patents between 1988 and 2002, I fill this gap, using estimators that account for the potential endogeneity in the data. Both the royalties shared with the inventors and their departments are associated with greater patenting activity. Several other organisational arrangements have significant positive impact, from the use of prompt administrative procedures, to the university’s commitment to exploit the inventions, to the availability of a technology transfer office.