(written by: Willy Yanto Wijaya)
The lecture about University Entrepreneurship and Social Innovation by Prof. Shigeo Kagami coincided with current situation of employee slash by many companies in the world. One interesting point of Japan that I had noticed for a long time is about the tendency of the most university graduates to only have one choice in their mind: working in a company. Why this phenomenon happens? We’ll see through this again after going through several notable points of lectures delivered by Prof. Shigeo Kagami from University of Tokyo.
Prof. Kagami started the lecture by posing the most exciting and notably successful university entrepreneurship, i.e. Hewlett-Packard, Genentech, and Google. All these companies were founded by the professors and students of Stanford University. Google is one interesting and up-to-date example. Stanford University tried to license out the technology and Intellectual Property (IP) of Google to some companies such as Netscape, Yahoo, but failed. The university eventually helped Larry Page and Sergey Brin to found Google in 1998 and just in 10 years, the market capitalization of Google has reached $150 billion (August 2008). Since Google used its equity to pay royalty for the licensed technology from Stanford University, Stanford gained $400 million just by selling its 1% of ownership of Google1.
Here we can see how, as a matter of fact, universities could get considerable benefits by the entrepreneur spin-off. In Japan itself, since 2004, a policy by the Monbukagakusho, had start reforming the corporate national universities (including University of Tokyo, Tokyo Institute of Technology, etc) to gain more autonomy, at the expenses of continuous deduction of operational grants from the government (1% deduction per annum)2. Such a condition like this should have pushed the universities to diversify and restructure the composition of their income. One way is to increase the external funding which comes from the sponsored research and donations. In this case, the sponsored research could be accelerated by the university spin-off companies.
However, Japan universities are still facing several problems regarding this entrepreneur spin-off. Annually, the number of university start-up companies is about 100 companies3. This number might look big enough, but there’s still no clear definition about how to count those companies, or whether they are really ignited by the technology license from the universities. Therefore, for now, only low output of university ignited-companies could be expected. This phenomenon goes along with low willingness of university graduates to become entrepreneurs.
Then, coming back to our previous question of why most students after their graduation from universities in Japan, would prefer choosing to work at companies? This is rather a tough question. One main reason, in my opinion, is caused by the rather already-established of Japan’s economy. Big companies are established and agglomerated in Keiretsu4, and it’s just not easy to compete with such companies. The other reason is that the entrepreneurship education is not nurtured sufficiently in most Japanese universities. Students, after undergoing their deep academic research, will feel further and further away from the sense of entrepreneurship.
How to solve the problems then? One of the possibilities is to create the entrepreneurship-related education as well as university business incubators. One example conducted by University of Tokyo is to create DUCR (Division of University Corporate Relations) which could handle the IP-related problems, entrepreneurship and enterprise development and education, as well as even holding the business plan competition. By this kind of education, hopefully, the courage to create new business entrepreneurship, amidst the Keiretsu dominance, could be accelerated. As a saying goes, “Smart people are people who dare to take the risks”.
4 Willy Yanto Wijaya. 公器 and Japanese Shareholder Orientation, Report no. 7, Managerial Perspective for Sustainable Engineering, Tokyo Institute of Technology, Tokyo, 2008.