1. Privatizing the intellectual commons: Universities and the commercialization of biotechnology
Nicholas S. Argyres and Julia Porter Liebeskind
Journal of Economic Behavior & Organization (1998)
Eva Herbolzheimer

2. Motivation and Background
Emergence of Biotech with very different aspects of value of basic research, in contrast with traditional ‘intellectual commons’ produced by universities
Organizational boundaries  Challenge for universities to engage in commercializing activities
Social-contractual commitment to create ‘intellectual commons’ vs incentives and contracting policies for biotechnology
Income from technology transfer from universities to industry have not had a significant impact on budgets

3. Mission and Standards of Universities
‘Open science’: disclosure, replication (versus secrecy in firms, competitive advantage)
University governance: incentives for academic research, self-governance, autonomy, separation of hiring and promotion from budgetary processes and prohibitions to enter into private contracts.
Enforcement by external parties (e.g., alumni and donors), prestige

4. The case of biotech Highly patentable
Pressures to re-contract for property rights because of relative prices and preferences
Regulatory changes  Who owns rights to IP funded by federal sources?
Shift in national priorities: Universities to help USA with competitiveness (1970s)

5. Adaptive Efforts: Privatization of IP
Task of establishing, allocating and administering IP rights in biotechnology was significant deviation from universities' historic mission
Privatization (patenting and licensing): concern about erosion of standards of open science, decisions by administrators, how well can knowledge be transferred to benefit the public?
Ownership: faculty ownership  conflict of interest, standard agency problem
Licensing: ‘bench rights’ instead of exclusive licensing, restrictions to firms’ sponsorships, narrowly-based rights (so firms can’t ‘choke-off’ research)
Royalties as incentive. Effects of envy and inequities

6. Adaptive Efforts: Commercialization
New organizational arrangement: technology transfer offices, responsible for patenting and marketing of inventions (MIT, Stanford…), long-term contracts with better incentives, but also criticism (introducing commercial goals)
University-owned ventures: potential envy problems, problem of judging tenure-cases
University-based research institutes: selective intervention, privileged access to information (e.g. Whitehead Institute), only minor organizational differentiation

7. Reactive Adaptation: Controlling Faculty Behavior
More vigorous organizational standards
Conflicts of interest due to faculty members holding management positions / equity ownership in firms that also fund their research
Faculty consulting that diverts attention from teaching and research, disclosure rules

8. Conclusion and Discussion
Historical mission of U can create barriers to the commercialization of technologies
Universities are discrete governance structures, difficult to support multiple social goals simultaneously, institutional mechanisms have been designed to develop and protect the intellectual commons, not to exploit them.
Discussion:
As Universities get more dependent on third-party funding, what can be done to prevent conflicts of interest or unethical behavior? (e.g., Wei-Hock Soon funding controversy).