Do exploration and exploitation in university research drive early-stage equity financing of university spin-offs?

An emerging theme in the entrepreneurial university (EU) literature is how universities should evolve to best reconcile their different missions, particularly research and commercialization, which often require different sets of resources. This tension is evident in the development of university spin-offs (USOs). In particular, the EU literature has generally overlooked how characteristics of university research affect USO's early-stage access to external equity. In this study, we embrace the characterization of university research offered by literature in terms of patterns, specifically, exploration and exploitation. Through the lens of the imprinting perspective, we study the effect of exploration and exploitation in university research on the early-stage equity financing of USOs on a unique dataset that covers a sample of 739 USOs from 39 Italian public universities founded from 2011 to 2019. Our results indicate that exploration (exploitation) in research has an overall positive (negative) impact on the likelihood of USOs obtaining early-stage external equity financing. Additionally, this exploratory study offers several conceptual and practical contributions to the EU literature. Using a unique dataset of 739 university spin-offs (USOs) from 39 Italian public universities, in this paper we show how USOs' early development in terms of early-stage equity financing is affected by research patterns in their parent universities. Entrepreneurial universities (EUs) face pressing challenges regarding the balance of different missions, particularly research and commercialization, which often require different sets of resources. To provide a better understanding of how EUs can tackle this tension, we explore how university research affects USO's early-stage access to external equity. Our results indicate that exploration and exploitation in originating universities' research have different and opposite effects on USOs' likelihood of getting early-stage external equity financing (overall positive for exploration and negative for exploitation). Hence, besides advancing research on the EU, our study offers practical implications to higher education institutions on how to better align university research and commercialization activities.