National laboratories as business incubators and region builders

Public sector labs do not appear to have generated as much regional business spinoff as universities and research-intensive businesses. This difference may be explained in large part by the disparate capabilities for and attitudes toward new-firm incubation on the part of parent institutions and other anchor tenants. We believe that federal lab personnel systems, research cultures, geographical isolation, management preferences, and complex public interest issues are responsible. These phenomena are explored in an intensive case study of startups associated with Los Alamos and Sandia National Laboratories in New Mexico. Interviews conducted with 33 firms confirm many barriers to incubation, but also reveal some advantages offered by public labs and suggest that changes in attitude, culture, and policy can make a difference. We explore the difficult issues of property rights assignment, public employee conflict-of-interest rules, and the use of public sector equity in spinoffs, and we conclude that startup efforts have been underfunded. Lab partnerships with large corporations in comparison are expensive, hoard labor, and are less effective at transferring technology. Recommendations for improvement of the incubation process include entrepreneurial leave and training, streamlining of conflict-of-interest, patent, and licensing procedures, and lab based efforts to connect would be entrepreneurs with sources of business assistance, space and capital.