Knowledge-intensive entrepreneurship and young engineering graduates in Greece:

The case of the National Technical University of Athens

Y. Caloghirou, A. Protogerou, A. Tsakanikas and I. KastelliLaboratory of Industrial and Energy Economics,

National Technical University of Athens Technology Transfer Annual Conference 2015

College of Business, Dublin Institute of Technology, 28-30 October 2015

The Greek context: How to grow out of the crisis

• One main challenge is related to the position of the Greek Economy in the new emerging division of labour at a global level (the problem of structural competitiveness).

• How to regenerate the production and entrepreneurial system. – Upgrade technologically existing firms (technology transfer is

important, engineering education to train and retrain engineers in a way that combine their technical knowledge background with business and market understanding)

– Enrich the entrepreneurial system (new blood from newly established knowledge intensive firms)

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Aim of the paper The point of departure: By encouraging the pool of human capital that is most exposed to scientific and technological knowledge towards entrepreneurship may increase the specific weight of KIE to the overall new entrepreneurship creation, which is important for a new growth model for the Greek economy based on innovation and entrepreneurship.

This paper attempts to explore what kind of entrepreneurship undertake the young graduates of the National Technical University of Athens, which is the older (est. 1836) and most research active technology and engineering academic institution in Greece.

It provides some empirical evidence on:• The characteristics and innovative performance of the entrepreneurial ventures undertaken by

young engineering graduates in Greece;• The role of education and especially that of Universities’ Innovation and Entrepreneurship

Units in supporting them to become entrepreneurs.

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The National Technical University of Athens: Strong long-term presence as participant, coordinator and central actor in the emerging research networks

Top 20 organizations in Framework Programmes based on centrality measures (FP1-FP7, 1984-2009)

(FP1/1984 - FP7/2009)Organisation Name Type Country Participations Participations

as CoordinatorCentrality

score

FRAUNHOFER GESELLSCHAFT ZUR FÖRDERUNG DER ANGEWANDTEN FORSCHUNG EV Research GERMANY 1404 (2) 261 (1) 3 (1)

CENTRE NATIONAL DE LA RECHERCHE SCIENTIFIQUE (CNRS) Research FRANCE 1620 (1) 250 (2) 7 (2)

NETHERLANDS ORGANISATION FOR APPLIED SCIENTIFIC RESEARCH - TNO Research NETHERLANDS 877 (3) 129 (3) 8 (3)

VTT - TECHNICAL RESEARCH CENTRE OF FINLAND Research FINLAND 715 (5) 99 (6) 12 (4)

NATIONAL TECHNICAL UNIVERSITY OF ATHENS Education GREECE 731 (4) 75 (18) 15 (5)

CONSIGLIO NAZIONALE DELLE RICERCHE (CNR) Research ITALY 695 (6) 99 (6) 18 (6)KATHOLIEKE UNIVERSITEIT LEUVEN Education BELGIUM 587 (10) 94 (11) 21 (7)COMMISSARIAT À L'ENERGIE ATOMIQUE (CEA) Research FRANCE 637 (7) 110 (4) 29 (8)CONSEJO SUPERIOR DE INVESTIGACIONES CIENTIFICAS Research SPAIN 597 (9) 99 (6) 30 (9)IMPERIAL COLLEGE OF SCIENCE, TECHNOLOGY AND MEDICINE Education UK 564 (11) 82 (16) 32 (10)RHEINISCH-WESTFÄLISCHE TECHNISCHE HOCHSCHULE AACHEN Education GERMANY 499 (13) 43 (34) 34 (11)UNIVERSIDAD POLITÉCNICA DE MADRID Education SPAIN 434 (19) 32 (58) 34 (12)UNIVERSITÄT STUTTGART Education GERMANY 436 (18) 39 (38) 36 (13)SIEMENS AKTIENGESELLSCHAFT Industry GERMANY 605 (8) 109 (5) 38 (14)LUND UNIVERSITY Education SWEDEN 426 (20) 47 (31) 43 (15)ECOLE POLYTECHNIQUE FEDERALE DE LAUSANNE Education SWITZERLAND 453 (17) 13 (197) 52 (16)CENTRO RICERCHE FIAT (C.R.F.) SCPA Research ITALY 503 (12) 91 (13) 54 (17)ARISTOTLE UNIVERSITY OF THESSALONIKI Education GREECE 294 (36) 27 (77) 59 (18)KUNGLIGA TEKNISKA HOEGSKOLAN Education SWEDEN 397 (23) 31 (63) 59 (19)DEUTSCHES ZENTRUM FÜR LUFT- UND RAUMFAHRT EV (DLR) Research GERMANY 463 (16) 72 (19) 61 (20)

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Why the importance of KIE is increasing?

• Over the past three decades the share of scientifically educated work force is rising continuously in almost all European countries (Malerba, 2010).

• This additional supply of highly qualified human capital cannot be fully absorbed only in the existing businesses, and thus the need for new entrepreneurial activity becomes more significant.

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The role of education in supporting entrepreneurial culture

• The need to strengthen the culture of entrepreneurship and risk-taking by fully mobilising human resources - through the improvement of entrepreneurship education- is acknowledged among top policy priorities worldwide (OECD, 2010; European Commission 2013).

• In this respect, the role of educational systems can be decisive in increasing the prevalence and quality of entrepreneurial learning and thus in creating entrepreneurial mindsets that help entrepreneurs transform ideas into action.

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The survey in numbers (2)

• The survey was conducted through telephone interviews using a

structured questionnaire (5 sections, 50 main questions)

• 3219 NTUA graduates were reached on the phone,

– 352 (11%) are currently (working or studying ) abroad

– 1429 questionnaires were finally completed (high response rate: 44.4%)

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The questionnaire’s parts

1. Filter questions 2. General firm characteristics3. Founder(s) characteristics 4. Founding and operation of the firm 5. The contribution of postgraduates studies in

undertaking entrepreneurial action

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Distribution of population and sample per school

School Population distribution

Sample distribution

% % #

Electrical and Computer Engineering 19.39 19.52 279

Civil Engineering 17.84 17.63 252Architecture 14.49 13.23 189Mechanical Engineering 13.36 13.79 197

Chemical Engineering 11.91 11.90 170

Rural & Surveying Engineering 8.11 7.28 104

Applied Mathematical and Physical Science 6.70 6.37 91

Mining Engineering and Metallurgy 4.56 6.09 87

Naval Architecture and Marine Engineering 3.64 4.20 60

Total (NTUA) 100.00 100.00 1429

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1/3 of graduates (2000-2010) undertakes some kind of entrepreneurial activityThe engineering schools involved in construction have the highest entrepreneurial activity rates over time

Entrepreneurship rate (% per school)

School 1991-1995* 1996-2001* 2000-2010*

Architects 56.4 46.6 65.6Civil Engineering 39.3 35.3 50.0

Rural & Surveying Engineering 27.1 27.9 46.2

Mechanical Engineering 32.3 16.1 32.0

Mining Engineering and Metallurgy 14.3 17.6 19.5

Electrical and Computer Engineering 12.5 13.7 17.6

Naval Architecture and Marine Engineering -- 22.9 15.0

Applied Mathematical and Physical Science -- -- 14.3

Chemical Engineering 13 9.8 9.4Total (NTUA) 28.0 24.1 32.4

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* Year of professional registration at the Technical Chamber of Greece

1 out of 5 graduates undertaking entrepreneurial activity are continuing a family business

Continuing a family business (% per school)

School 1991-1995 1996-2001 2000-2010(Ν=102)

Architects 24.3 11.422.6

Civil Engineering 24.2 28.425.4

Rural & Surveying Engineering 20.0 7.316.7

Mechanical Engineering 26.1 32,119.0

Electrical and Computer Engineering 12.5 20.614.3

Mining Engineering and Metallurgy30.0 5.3 17.6

Naval Architecture and Marine Engineering 33.3Chemical Engineering 22.2 18.8Applied Mathematical and Physical Science -- --

46.2

Total (NTUA) 23.4 19.1 21.9

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The main findings

More than half of the graduates (56%) have not undertaken any entrepreneurial activity up to now

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Employees of the private or public sector, unemployed or people who are not currently seeking employment

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• Entrepreneur – employer• Self-employed

Ν=1429

32%

9%

56%

3%

Entrepreneurs (N=465)Ex-entrepreneurs (N=124)Non-entrepreneurs (N=801)Dual employment (N=39)

Most businesses are sole proprietorships, based in the Attica region

17

Legal form Headquarters

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Ν=465

72.3%

17.2%

10.5%

Sole proprietorship

Limited partnership

LTD/SA 67.2%

32.8%

Attica region Other regions

8 out of 10 firms do not have full-time employees (founders excluded)

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Full time employees

• Only 11% of the firms have part-time employees

Ν=465

• 6 out of 10 firms have external partners on a regular basis (3 on avg.)

• 3 out of 10 full-time employees have a university degree

Mean 13.1

Median 3.0

18%

82%

Yes No

The average firm age is 7 years

19

Firm age*

• 56% of the firms are more than 6 years old

• More than 80% have surpassed the 3 years threshold

Ν=351

*Family firms are excluded from the analysis

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(0-3] [4-6] >6

18.2%

25.6%

56.2%

Sector of economic activity : 1 out of 2 offer engineering services

20

Ν=465

• 1 out 4 offer is in construction industry • Very small business activity in manufacturing (2,4%)• More manufacturing activity in larger firms

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Sector of economic activity

Tourism

Creative industries

Other consulting services

Manufacturing

Trade

Energy/Enviroment

ICTs

Construction

Engineering services

0% 10% 20% 30% 40% 50% 60%

1.2%

1.5%

2.4%

2.4%

4.5%

6.2%

6.7%

26.5%

48.6%

The founding team is composed, on average, by 2 persons

21

Ν=129

Founding team size *

*Family firms are excluded

The founding team does not change significantly over time

Limited participation of women in the founding team

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1 2 3 4 >4

14.7%

52.7%

20.9%

6.2% 5.5%

76%

24%

Yes No

89%

11%

Men Women

Characteristics of the engineer-entrepreneur

31.6% have master’s degrees

5.7% hold PhDs

60% have professional experience in the same

sector (72% of those have more than 3 yrs)

70% males30% females

only 4.7% have also founded another firm

before

postgraduate studies: 61% closely related to

their core undergraduate studies

18% economics and management

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Ν=465

Where did the founding idea originate in?

more than half of them have exploited a specific opportunity

20% are continuing a family firm

the idea of firm founding is closely related to their

subject/field of studies (62%)

knowledge of technology in the specific sector is the most

significant founding factor (37%)

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Ν=465

For approx. 8%, the idea of firm founding was more or less related to exploitation of recent research activity

Decisive factors to firm creation

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Access to finance

Existence of a large customer

Initiatives for promoting entrepreneurship

Market knowledge

Professional experience in the same sector

Professional relationships

Technology knowledge

0% 10% 20% 30% 40% 50% 60% 70% 80%

17%

19%

20%

43%

49%

49%

69%

Funding sources: on average, 76% of funding comes from own sources

25

average funding(%)

Only 4 firms have used crowdfunding or venture capital funding Family members (58%) and bank loans (17%) are significant funding sources for family businesses

% of firms

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Ν=465

crowdfunding

venture capital

bank loans

national/EU subsidy

family members

personal savings

0 10 20 30 40 50 60 70 80 90 100

0.4

0.4

7.7

17.6

41.2

81.1

Yes No

crowdfunding

venture capital

bank loans

national/EU subsidy

family members

personal savings

0 10 20 30 40 50 60 70 80 90

80

27.5

41.8

47.3

61.4

76.5

4 out of 10 firms innovate, very few have some kind of intellectual property protection

26

Most innovative sectors/activities:• Engineering services • Information and Communication Technologies• Energy/environment

Ν=465

Innovative products/services represent on avg. 34% of sales

Intellectual property rights protection Introduction of new or improved products/services

9 patents

9 copyrights

28 trademarks

2 industrial designs

3 creative commons

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40%

60%

YesNo

11%

89%

YesNo

2 out of 10 firms exhibit some export activity

27

Ν=465

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Major customers

Sales in international and national markets (2013-2014)

13%

29%

47%

11%

Big firms (B2B)Small firms/SMEs (B2B)Final consumers (B2C)Pubic organizations (B2G)

81%

19%

National International

At undergraduate level:32% have not been offered any course related to economics & management

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Entrepreneurship

Marketing & market research

Risk analysis

Business strategy

Technology & innovation management

Finance

Operational research

Business administration

Project management

Economics

None

6%

7%

9%

9%

11%

13%

27%

28%

38%

52%

32%

At postgraduate level:• 1 out of 7 were offered at least one course on economics and management• 1 out of 4 were not offered any course

Sole proprietorships’ founders have been offered less courses on economics & management compared to founders of firms of more organized forms (at a postgraduate level)

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Ν=465

Entrepreneurship

Project management

Technology & innovation management

Marketing & market research

Business strategy

Operational research

Finance

Business administration

Economics

None

10%

10%

12%

13%

14%

15%

16%

16%

19%

19%

4%

8%

10%

5%

4%

7%

5%

5%

6%

27%

Sole proprietorship More organized form

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The larger firms

Split of the firms’ sample based on sales (2014)

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Firm sales for 2014

398 out of 46567 firms out of 465

100.000€ to 35.000.000€Up to 99.999€

Although larger firms seem to have a more organized form, 2 out of 10 are sole proprietorships

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39% (26 out of 67) of larger firms have more organized legal form, compared to 6% (23 out of 398) of the rest of the firms

64% (43 out of 67) of the larger firms have employees on a permanent basis, compared to 11% (43 out of 395) of the rest of the firms

Full-time employees

Ν=67 Ν=398

Mean 23 3

Median 5 2

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Sole proprietorship Limited partnership Ltd/SA

81%

13%6%

21%

40% 39%

N=395 N=67

Founders of larger firms have followed to a larger extent economics and management programmes in their postgraduate studies

33

Economics and management

N=67

N=398

50%

59%

7%

9%

33%

18%

10%

13%

Combination of more engineering specialties Economics and management Other engineering specialty Series5

Founders of larger firms: Family tradition and previous experience are decisive factors for undertaking

entrepreneurial action

34

They have a businessman in their narrow family

circleThey continue a family

business They have founded another firm

N=398 N=67 (larger)

13.8%

44.8%

N= 398 N=67 (larger)

3.8%

10.4%

N=398 N=67 (larger)

41.2%

70.1%

Important factors for undertaking entrepreneurial activity: identification of a significant opportunity and exploitation of

market knowledge

35

(38.% vs.70.1%)

(48.0% vs. 58.2%)

Ν=465

)

N=398 N=67

41.5%

62.7%

20.6%

4.5%

Opportunity entrepreneurshipNecessity entrepreneurhip

Market knowledge

Professional experience in the same sectorTechnology knowledge in the specific sector/activity

N=398N=67

(69.8% vs. 62.7%)

Larger firms : better export and innovative performance

36

More than 50% of larger firms have introduced new or improved products /services during the last 2 years

InnovationThe major client for 58% of larger firms are other businesses (Β2Β), while, the same applies only for 39% of the rest of the firms

Export activity

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Engineers entrepreneurs holding PhDs

Engineers entrepreneurs with PhD:In their majority, they are electrical and computer engineers

18 out of 26 hold a PhD in the main field of their undergraduate studies

38

• Sector of Economic activity • Engineers entrepreneurs with PhD (per school)

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Manufacturing

Trade

Construction

Energy-Environment

Engineering Services

Information and Communication Technologies

0 1 2 3 4 5 6 7 8 9

1

2

4

5

5

8

Elect.

Eng.

Chem. E

ng.

Mec

h. Eng.

Civ. Eng.

Min. E

ng.

Nav. E

ng

A.M.P.S

Rur. Eng.

0

2

4

6

8

10

12

10

54

3

1 1 1 1

Founder’s (or founding team’s) field of studies

19 out of 26

Engineers entrepreneurs with PhD: the firm’s founding is closely related to technological and research knowledge on their major field of studies

39

Where did the idea of firm founding originate in;

Exploitation of recent research activity results

7 out of 26

Opportunity Entrepreneurship

14 out of 26

Technology knowledge on the specific sector

17 out of 26

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Engineers entrepreneurs holding a PhD: firm profile (Ν=26)

40

Young firms: avg. age 5.7 years (median: 4 years)

More than 40% (11 out of 26) founded their firms before acquiring their PhDs

The majority of firms does not have full-time employees (18 out of 26)

4 out of the 26 firms had sales ≥ 1 million € (2014)

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42%

19%

39%

Sole proprietorship Limited partnershipLTD/SA

Legal form

Firms founded by engineering graduates holding PhDs exhibit better export and innovation performance

41

Major customer: other firms (17 στους 26) (68%)

4 firms have patents (out of the 9 firms which have patents in

the total sample)

Export Activity

9 out of the 26 firms exhibit export activity (34,6%) (vs. 19% of

the firms in the total sample)

11 out of the 26 firms have introduced new or improved

products the last 2 years (42,3% )

Innovation Customers

Patents

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The role of the Innovation and Entrepreneurship Unit at the NTUA

The specific role of the Innovation and Entrepreneurship Unit (IEU)

• Promote the development of innovation and entrepreneurship, especially by facilitating the interconnection of research and technological activities with the economy and the market.

• Act as a “breeding mechanism” for the development of knowledge-intensive entrepreneurship by students, graduates, postgraduates and researchers.

• Promote the culture, teaching and study of entrepreneurship and its implications on economic activity, firms, employment and society in large.

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Coaching activities at the Innovation and Entrepreneurship Units

• Entrepreneurship Week in collaboration with So Kwadraat (non for profit organization for Coaching Tech Starters based on the Science Park of the University of Leuven, Belgium, established in 2005): tracking ideas and research efforts with high potential.

• Individualized coaching to persons or teams: from the idea to the market.• Individualized information on issues related to innovation and entrepreneurship.• Integration of teams into incubating schemes where they are offered more specialized

support.

• During the last 4 years, 92 teams corresponding to 233 individuals have been supported from IEU-NTUA– 11 of these teams have founded a start up, – 22 present a high potential to start up, – 28 are at an initial stage

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Coaching activities – IEU/NTUA

ΝΙΚΟΣ ΛΕΒΕΝΤΑΚΗΣPRODUCT DESIGN

http://web4thejob.org

http://tradescraper.com

http://www.e-nios.com

https://www.easykenak.gr

http://www.crowdpolicy.com

http://appraisify.com/en/

http://www.archoff.com/

http://www.thesarmproject.com

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Concluding remarks and challenges

The survey: concluding remarks

• NTUA engineering graduates can be assessed as a group of people of increased capacity that can potentially undertake knowledge-based entrepreneurial activity.

• 1 out of 3 young NTUA graduates undertake some kind of entrepreneurial activity.

• Among those that pursue entrepreneurial activity:– in their majority, they are self-employed (72%)– some others undertake entrepreneurial activity in a more organized way

(mainly micro firms)– some continue an already existing family business (1 out of 3 of these firms

have a considerable size)4729/10/2015

The survey: concluding remarks

• A special focus in the analysis:– Larger firms in terms of sales

• More organized, but still micro or very small firms• Market knowledge, previous entrepreneurial experience, and family entrepreneurial

tradition appear to be crucial to founding • They have better innovative and export performance related to the smaller sample

firms

– Firms founded by young graduates holding PhDs• Most promising ventures in terms of growth and innovation potential• Closely related to technological and research knowledge acquired during studies• Mainly active in ICTs, energy/environment and other engineering services and

much less in traditional construction activities.

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Main results and challenges • In general terms, the entrepreneurial activity undertaken by young NTUA graduates is

rather conventional, although there are some interesting promising cases . • Despite the knowledge content of the specific activities undertaken and the knowledge

background of founders, it appears to be dependent: – on the existing production trajectory that have been followed by the Greek economy– i.e. a pattern of self employment and micro firms related to the traditional professional

practice of engineering and technology activity• Entrepreneurial activity of young engineering NTUA graduates cannot be considered as

a mere quantitative issue, i.e. encouraging more engineering graduates to set up a firm, although numbers still matter provided they reflect an increased quality of new entrepreneurial activity.– Nevertheless, having a critical mass of knowledge-intensive entrepreneurs might be

important to raise the probability of ending up with some successful, high-potential firms with significant impact on economic growth and industrial upgrading .

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Main results and challenges • The focus on the promotion of Entrepreneurial activity of young

engineering graduates is rather a qualitative issue, i.e. it is largely related to the type of newly-established ventures that emerge from the specific selection pool of these high-capacity graduates. Specifically, it is an issue of:– promoting high-growth knowledge intensive, innovative entrepreneurship,

either in the form of newly-established ventures or by contributing to corporate entrepreneurship and the technological upgrading of existing firms;

– upgrading the average level of engineering practice in the productive system, in order to become more innovative and more responsive to changes at the technological, institutional and market level.

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Thank you very much for your attention