Student startups and local economic development

Earlier research on the role of universities in creating local economic development almost exclusively covers licensing and start-ups by faculty and staff. Our hypothesis is that the major impact by universities instead is in the form of startups created by former students. We review the evidence on student spin-off activity and provide new case study data. It turns out that this activity is probably order of magnitudes larger than faculty spin-offs, at least in terms of number of startups. Maybe as much as 80 percent of all student spin-offs are and remain locally situated and a dominant fraction of these spin offs are located extremely close to their parent university. The recent transformation of university goals and practices toward increasing spinoff rates and new firm creation by faculty and researchers thus might be called to question