International Council for Small Business 47th World Conference San Juan, Puerto Rico June 16-19, 2002

ICSB 2002-046

Business + Physics = Entrepreneurship Education John Todd and Ken Vickers Abstract This paper describes an educational alliance between business and physics faculty that was initiated with the aim of fostering high-tech entrepreneurship. One course (Intra/Entrepreneurship of Technology) has been implemented, and the paper focuses on that course and the insights gained from its first two offerings. Its unique features and special challenges are described. The paper also briefly describes curriculum changes now being implemented that are expected to further enhance student understanding and competencies for technology development processes. The course is an innovative undertaking that attempts to close the gap between business and technology by connecting faculty and students from multiple disciplines. The course is designated a graduate management class in the College of Business, and it has been team-taught by professors from the Physics Department and the Department of Management. Faculty and staff from other parts of the university have also collaborated as important resources. Graduate students have been drawn from various technical and professional programs, approximating onefourth business and three-fourths technology students. Formation of multidisciplinary student teams for class assignments has created opportunities for entrepreneurial skills development. Promotion of students’ capability and commitment for technology-based ventures is the primary purpose of the course. Transforming technology research at the university into successful products and businesses is an ancillary goal. The educational approach utilizes a combination of conceptual learning, case analysis, and a major field project. That project assesses the feasibility and creates a preliminary business plan for new technological products that have been invented by university faculty and students. The project also enhances the affective dimension of the

course, exposing the students to the excitement and frustration of real-life entrepreneurs. Positive results from the first class offering include three new businesses started by students of the class, as well as reports of successful intrapreneurship by others employed by technology companies. Revisions in the second offering of the course created more positive evaluations by the participants, and other planned course revisions are described.

High-tech entrepreneurship has created spectacular successes such as Microsoft, Dell Computer, and Amgen. More recently, the mass failure of dot-com companies and the Enron bankruptcy vividly demonstrated the perils of high-tech entrepreneurship. In the context of this high riskreward environment, how can a university education program improve the odds for successful high-tech entrepreneurship? What entrepreneurial skills can be developed that equip students to start and build technology-based ventures? These questions were the initial catalyst for the creation of a new education program at the University of Arkansas. In 1998, the existing entrepreneurial program focused primarily on businesses in fields that were not technology-intensive. Even though “low-tech” and “high-tech” fields share many common entrepreneurial principles and techniques, the faculty believed that education for leadership in emerging new technology fields needed a different approach from the traditional program. The business students involved in the traditional program usually had limited knowledge of the current emerging technologies or the technology creation process. Across campus, engineering and science students were typically not even introduced to concepts of product commercialization for the technologies that they were studying. Bringing together these two diverse groups of students offered a potential synergy that might foster effective high-tech entrepreneurship.

The Entrepreneurial Alliance A new Microelectronics-Photonics (microEP) graduate program, spanning multiple science and engineering departments, offered a special opportunity for a new initiative in entrepreneurship 2

education. Microelectronics-Photonics, the study of the microscopic and nanoscopic materials and devices that are used extensively in such products as computers and optical communications, is a rapidly expanding technology-driven market space.

In the last two decades, startup

companies such as Cisco, JDS Uniphase, and Dell Computer have achieved market dominance in their fields. At the same time, the growth of existing companies such as Hewlett-Packard, Intel, Lucent, and Texas Instruments have all depended on product developments based on these research fields. The Director of the new graduate program came from Texas Instruments, where he was extensively involved in the technology commercialization process. In order to enhance the microEP graduate students’ potential entrepreneurial success, he wanted them to not only develop technical skills but also an understanding of the technology commercialization process. Preliminary contacts between the Director of the microEP program and a management professor (who taught entrepreneurship) identified a mutual interest for pursuit of a cross-functional education program. Informal conversations between the two principals and university officials determined that there was latent support to pursue this initiative. The chancellor envisioned it contributing to his strategies of making the university a center of entrepreneurial activity and a catalyst for economic advancement through technology development, as well as a means of attracting top graduate students. Professors from various engineering and science fields also foresaw potential benefits for their students to be gained from the proposed integration of technical and non-technical knowledge areas in the graduate curricula. In addition, it was envisioned that the new program might also contribute to the university mission by promoting commercialization of technology that had been developed on campus. This technology often languished because faculty members never considered that their technology advance could result in a commercialized product or because they preferred to invest their time in new research rather than in the commercialization process.

Therefore, in spite of

tight budgets and traditional discipline boundaries that would deter most new cross-functional initiatives, there were enough potential benefits and interest across disciplines to justify this one. With informal support garnered by the concept of a proposed multidisciplinary alliance, the principals proceeded toward formalization of a proposal. 3

Fostering entrepreneurship of

emerging new technologies was identified as the long-term purpose.

Intrapreneurship,

sometimes described as internal entrepreneurship, was also identified as a closely related goal. Within that scope, promotion of students’ competencies and commitment for technology-based ventures was identified as the primary educational goal. The primary “target markets” for the new program were graduate students enrolled in either the Walton College of Business or in science and engineering programs. Specific graduate programs included the M.B.A., Master of Accountancy, Master of Information Systems, M.S. in Microelectronics-Photonics, M.S. in Electrical Engineering, M.S. in Mechanical Engineering, and the M.S. in Physics, and students from those areas provided informal support for the proposed new program. In addition to the two principal professors, the University Office of Technology Transfer also provided assistance in the planning stages.

This intrapreneurial

alliance of faculty, administration, and students was forged for the development of a new hightech entrepreneurship program aimed at closing the gap between business and technology and at preparing students for leadership in emerging technology fields

The Strategic Plan Taking into account resource constraints, a multi-phase plan for the new program was developed. Creation of a new graduate course, titled MGMT 5383 Intra/entrepreneurship of Technology, was the first step. The combination of intrapreneurship and entrepreneurship into the title reflected a dual objective of not only starting new technology-intensive businesses but also facilitating sustained growth of existing businesses through technology innovation.

The

remainder of this section will describe the organization and contents of the course. Course Objectives--The official course description (that was approved by the university faculty with the course itself) read as follows:

“A multidisciplinary review of managing the

development of new technical products and services in startups and in existing companies. The course includes examination of the search and evaluation for new technical products; development of business plans, resources, and prototypes; and managing the launch and business development of new products.”

Specific learning objectives that supported this course

description included the following: 4

•

To increase understanding about the creation and evolution of high-tech entrepreneurial ventures, including the importance of interdependencies between business and technology expertise in generating competitive advantages.

•

To practice planning and decision-making techniques related to technology selection, concept evaluation, product design, market and financial analysis, and equity valuation.

•

To develop leadership skills for identifying and exploiting technological opportunities, building entrepreneurial teams, finding resources, leveraging initial success, facilitating change, and managing growth of emerging technology ventures.

•

To develop communication and interpersonal skills, with special attention to the challenge and importance of communicating between business and technology participants.

•

To develop cross-functional collaboration skills that can be deployed in structuring and implementing interdisciplinary team-based technology projects.

•

To increase the personal confidence level and desire for starting technology-based ventures and practicing intrapreneurship.

Collectively, these objectives were expected to enhance students’ abilities to contribute to the value chain, starting with technology advances and migrating through product development and commercialization to satisfaction of customer needs. An ancillary projected outcome of this course was the creation of new technology-based industry, either through direct commercialization of course projects or through independent student startups based on their own research or developmental ideas. The enhancement of the entrepreneurial climate at the University of Arkansas was also adopted as one of the long-term measures of success of this course. The metric to be used in judging this success would be the creation of new technology-based startups, or the sharp acceleration of existing technology-based businesses above their prior growth projections. Unique Features-- Besides the emphasis on developing product technologies, the course differed from the traditional entrepreneurship courses in three major ways. First, a key part of the learning experience was created within six multidisciplinary student teams, which were utilized extensively in case analyses and class projects. 5

There were more science and

engineering students than business students, approximately a three-to-one ratio among the twenty-five students, but each team included at least one business student. Approximately one-half of the overall course grade was based on team performance, giving the students a strong incentive to engage productively with their team mates. Differences in student backgrounds, learning styles, skills, and values created a significant challenge for team communication and collaboration. In fact, development of student skills for partnering with diverse counterparts was one of the important outputs gained from the required intense interaction within the teams. Deployment of these skills is expected to be significant in the students’ future industry project assignments, as indicated by a recent survey of University of Arkansas microEP graduates’ supervisors in industry. In this survey of the level of importance for 15 job characteristics, “effective in communication with coworkers” and “group problem solving” were among the four most important, along with “independent problem solving” and “innovative problem solving.” This finding was consistent with prior industry reports. For example, Betty White, The Boeing Company’s director of engineering and technology support stated: “We need engineering graduates with a broader perspective. Beyond discipline-specific needs, our engineers need communication skills, the ability to work in teams…and a basic understanding of the context in which engineering is practiced.” (ASEE Prism, November, 1998, pp.36-37) The second unique characteristic of this course was to bring both the business and technology perspectives into each class session. To accomplish this dual perspective, the class was team taught with both professors (from the Department of Management and the Physics Department) in the classroom. Tricia Bisoux promoted this cross-disciplinary instructional approach recently in her article “Connecting the Dots”: “For students to think across disciplines, they must be taught across disciplines.

As a result, the familiar image of a lone professor lecturing

authoritatively to a passive group of students may soon be the exception rather than the rule.” (BizEd, January/February 2002). Other faculty members, researchers, and business leaders with special expertise also contributed to specific sections of the course such as intellectual property and venture financing.

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The third unique characteristic of this course was the application of entrepreneurial concepts and methods to a “live” product technology development project. A primary output created by the students was a business plan that included a feasibility study and product commercialization plan for a technology product that had been generated from state-of-the-art research at the university. Selection and study of commercialization candidates was done with the cooperation of the Office of Technology Transfer and the originating researchers. The students, working under nondisclosure agreements, gained hands-on experience in evaluating and translating cutting-edge technology into marketable products, as well as in establishing a collaborative working relationship with inventors. Course Content-- The course was divided into modules, each composed of reading assignments, lecture and class discussion, case analysis, and application of appropriate theory to assigned oncampus technology. As reflected in the outline of the course topics (Exhibit 1), the sequence generally mirrored the entrepreneurial process for starting and building a business. Starting with an overview of entrepreneurship and entrepreneurs, the course then focused on the search for technology-based opportunities, technology and market assessment, development of financial projections and valuation, and the acquisition of resources. Preparation of business plans was used as an integrating mechanism for the various functional topics, and the development of an organizational infrastructure. The special leadership responsibilities for growing organizations and intrapreneurship were addressed later in the course. In addition to the cognitive component of the course that was covered in assigned readings, cases, and class projects, the affective component was an important complement as students observed and experienced the excitement, fun, satisfaction, and frustration associated with entrepreneurship and multidisciplinary teams. Exhibits 2-4 show the daily work assignments, grading components, and instructions for the commercialization project. The textbook Technological Entrepreneurism by Mario W. Cardullo was used the first two times the course was offered. (A change in textbooks was made the third time: Engineering Your Start-up by Michael L. Baird, supplemented by a set of readings.)

In each module, the

professors first led discussion on one or two book chapters, that material was then related to one or more Harvard Business School case studies by student teams, and finally the 7

commercialization project application were discussed. With this theory-to-practice approach, the students were led through a clear sequence of events from terminology, to understanding theories, to skill building. At the end of the semester, the students further deployed their newfound skills and knowledge by formally presenting their business plans and participating in a detailed discussion of their analyses with the inventors. Parts of this process simulated what occurs when an inventor approaches a venture capital firm for early developmental funding, and students’ learning was significantly enriched as they experienced both the role of the venture capitalist and the role of a technology venture owner in an entrepreneurial environment. Implementation Support The two faculty members believed that their course objectives aligned well with the goals of the privately funded National Collegiate Inventors and Innovators Alliance (NCIIA), an organization that supports college level development of courses training students in technology entrepreneurship. The NCIIA was approached in 1998 with a course development proposal, and it awarded a $2000 course development grant to the two faculty members for summer 1999 support. This allowed sufficient time for course planning and submission to the University approval process, followed by the first offering of the course in spring 2000. Because of the unique nature of the course, including the plan for the students to actively support commercialization of research, another funding proposal was submitted to the NCIIA to support class implementation. A three-year grant of $22,500 was awarded in 1999, primarily for support of student activities in research commercialization. The course development also received support through the NSF EPSCoR research grant to Dr. Greg Salamo, University Professor of Physics, for development of Ultra Fast Electronic Materials and Devices. In his proposal, he foresaw the need for a course such as this to support the economic development of the State of Arkansas and included budget for a graduate assistant to work in developing and teaching such a course.

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The graduate assistant position’s funding was continued through a NSF Integrative Graduate Education and Research Training (IGERT) grant won by the microEP graduate program in 1999. This five-year grant assures that a specifically assigned graduate student will support the class through the 2003-2004 academic year. The developmental funding from the NCIIA, the operational funding from the NCIIA, and graduate assistant funding from the NSF have strongly benefited this course. While it would have been possible to implement the class without this funding support, it certainly would have been more difficult and required a much higher time commitment from the faculty members.

Effectiveness and Benefits The outcomes of the class have been generally positive although it too early to measure the true impact on the students’ entrepreneurial and intrapreneurial successes. Three students from the first year’s class have started technology-based businesses, primarily through the establishment of technology consulting practices. Other students have expressed their belief that they have gained understanding, skills, and confidence in leading strategically sound processes for the development and marketing of new technology. Student ratings of the course were slightly above average for the first class, reflecting both the extra learning they gained over other courses and their concerns about the extra workload and time pressure of the class. With a reduced number of cases and individual projects, as well as better scheduling, student ratings increased significantly the second time the course was offered. In adapting to the dynamic classroom and team discussions, the students developed different communication techniques and vocabulary than they had previously used in their academic careers. Technology students discovered that their business student colleagues saw a leadingedge technology product as primarily a mechanism for market exploitation. At the same time, the business students found their non-technical knowledge of technology product development was inadequate to deal effectively with the complex technology that their technology colleagues navigated with complete confidence. But in working together, they formed a new common understanding of the knowledge and skills needed to drive successful venture companies and 9

how individuals with widely divergent skills and backgrounds are needed for project success. All of these elements combined to create a vibrant learning atmosphere for the students, both during the class periods as well as during team interactions. Inventor interaction with the students improved from the first to the second teaching of the course, primarily through better class schedule management. There was also better screening of potential research commercialization candidates, including a higher emphasis on inventors prepared to push forward into commercialization. Although the inventors resisted embracing student business plans that differed significantly from their prior intentions, they received significant benefits from their interaction with the class. They received formal analyses from the student teams on six areas of commercialization: Intellectual Property, Technology Space, Market Space, Production Modeling, Financial, and Business Plan. While these analyses started with knowledge of the inventor’s own preliminary opinions in these areas, the

student

assessments went far beyond the inventor’s views and identified many new commercialization opportunities and/or limitations. The inventors also received an independent analysis of their technology and commercial potential through the NCIIA supported Wisconsin Invention Service Center (WISC).

The

WISC reports were delivered to the class near the end of the semester in time for the students to use them as a learning comparison to their own analyses. Copies of the WISC report were delivered to the inventors, along with the student reports and assessments. While the course has not yet achieved all of its goals, the Decision Sciences Institute selected it as the winner of its 2001 National Award for Instructional Innovation at its national convention in November 2001 (see http://www.decisionsciences.org).

Future Directions The course content and class scheduling have been slightly modified for the third teaching of the course in the spring 2002 semester. The modifications were made partially to adapt the outline

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to the new textbook used and also to increase the interaction between the inventor and the students to an even higher level. The modifications implemented were: •

Earlier implementation of interaction between the class and WISC in order for more timely comparison of the WISC reports to students’ assessments.

•

Modification of WISC interaction, now to be led by inventor instead of by students.

•

Addition of a compilation of recent articles on entrepreneurism to the course materials.

•

Creation of a summer 2002 commercialization project class, followed by a fall 2002 commercialization laboratory, to support continued student interest in working with the inventors.

•

Adoption of this course as the first non-law school course allowed as an elective in the JD degree curriculum of the University of Arkansas Law School.

The creation of the two follow-up courses is designed to provide a faculty-monitored deeper student engagement with the inventors. While the analyses produced by the class activities are provided free gratis to the inventors, further student interaction with any business derived from the evaluated technology is expected to bring financial benefit to the student if the business becomes successful. The method by which financial benefit is received by the student will necessarily be individually crafted with each inventor, and will depend heavily on the guidance of the Technology Transfer Office of the University. The last item, adoption of MGMT 5383 by the Law School, is a necessary administrative action for the course to attract students interested in patent law or other legal fields associated with high-tech businesses. The addition of these law students is expected to bring additional benefit to other students in the class.

Conclusions The course MGMT 5383, Intra-Entrepreneurship of Technology, has been summarized for the readers of this paper. The information presented allows the reader to understand the intent of the course, the broad elements implemented to achieve the course goals, current goal attainment, and future anticipated directions and modifications. 11

The course’s educational objectives are being well met in its current configuration, according to its primary stakeholders.

Faculty, students, and researchers from across the University have

come together to form a dynamic learning community.

The students are increasing their

understanding and competencies for creating and building technology-based ventures. The class is also facilitating the development of students’ communication and project team skills, particularly enhancing their ability to establish collaborative working relationships across business and technology disciplines. Continued tracking of course alumni over the next five years is planned to provide more quantitative assessment of the course effectiveness, along with measurement of the course’s impact on increasing the importance of entrepreneurship in the University of Arkansas culture. The authors of this paper welcome correspondence with any person interested in implementing a similar class at their University. Full course details can be viewed through assignment of a specific guest access to the University of Arkansas WebCT ™ system upon request.

Exhibit 1 – Outline of Course Topics 1. The Entrepreneurial Process a. Introduction of entrepreneurship concepts b. Introduction of intrapreneurship concepts c. Supporting and restraining forces, including values and skills required 2. The Search for Entrepreneurial Opportunities a. Entrepreneurial strategies b. Creativity and innovation c. The process of identifying opportunities for new products and services d. Globalization of entrepreneurship e. Technology transfer for new business opportunities 3. The Evaluation of Entrepreneurial Opportunities a. Product/market feasibility assessment b. Financial result projections 12

4. The Business Plan a. The components of an entrepreneurial venture b. The written document 5. Acquisition of Resources for Entrepreneurial Ventures a. Identifying financial and physical resources b. Recruiting human resources c. Strategic Alliances d. Incubators 6. The Startup a. Legal issues b. Special characteristics and requirements c. Special problems of managing small operations d. Building an organizational culture 7. Managing Growth a. New requirements for systems and structure b. Leadership transition Exhibit 2 - MGMT 5383 Semester Calendar Spring 2002 Course Introduction Grading Team formation Calendar January 15

Course objectives Introduction to WebCT Commercialization Project Non-disclosure agreements Introduction to potential projects

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The Entrepreneur Commercialization Project: Select class projects Assign team elements January 17 Introduce WISC Text discussed today: Engineering Your Start-Up: Chapters 1 & 2 Entrepreneurship 01/02: Readings 5, 7, 8, & 10 The Entrepreneur Text discussed today: January 22 Engineering Your Start-Up: Chapter 3 Entrepreneurship 01/02: Readings 4, 15, 14, & 39 Text discussed today: Engineering Your Start-Up: Chapters 7 & 8 January 24 Homework due: Team technological entrepreneur report and 5 minute presentation Intellectual Property Special presentation from a local patent attorney on patent law Text discussed today: January 29 Engineering Your Start-Up: Chapter 19 Entrepreneurship 01/02: Reading 18 Online Intellectual Property article

14

Commercialization Project January 31

Technology Transfer Office presentation Commercialization inventors’ presentations The Search for Technological Opportunities Introduction to SWOT and TOWS

February 5 Text discussed today: Engineering Your Start-Up: Chapter 4 The Search for Technological Opportunities Text discussed today: Engineering Your Start-Up: Chapter 5 February 7 Entrepreneurship 01/02: Reading 11 Homework due: Team 5 led discussion of Alpha-Beta The Search for Technological Opportunities Homework due: February 12 Team 2 led discussion of Vermeer Technologies (A) Team 1 led discussion of Vermeer Technologies (B) The Search for Technological Opportunities Class discussion: February 14

Case studies from February 7 and February 12 discussed Text discussed today: Engineering Your Start-Up: Chapters 9 & 10

15

The Evaluation of Technological Opportunities Text discussed today: Entreprenuership 01/02: Readings 3 & 24 February 19 Homework due: Team 4 led discussion of Firefly Network (A) Team 6 led discussion of Medical Foods, Inc. The Evaluation of Entrepreneurial Opportunities Homework due: February 21 Team 3 led discussion of Oxo Class discussion of case studies The Evaluation of Entrepreneurial Opportunities February 26

Commercialization Project Team 5 report on Intellectual Property and Technology Analysis

February 28

The Evaluation of Entrepreneurial Opportunities Commercialization Project Team 2 report on Intellectual Property and Technology Analysis Enterprise Formation and Legal Issues Attracting and developing human resources

March 5

Text discussed today: Engineering Your Start-Up: Chapter 13 Entrepreneurship 01/02: Readings 16, 17, 2, & 15

March 7

Written Exam

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Financial Considerations Text discussed today: March 12 Engineering Your Start-Up: Chapters 6 & 12 Entrepreneurship 01/02: Readings 25, 26, & 29 Venture Capital Guest Text discussed today: March 14 Engineering Your Start-Up: Chapters 14 & 17 Entreprenuership 01/02: Readings 28 & 37 March 18 - 22

Spring Break Commercialization Project:

March 26

Team 6 report on Market Analysis Team 1 report on Market Analysis Acquisition of Financial Resources for Entrepreneurs Introduce factory modeling and production plan

March 28 The Business Plan Information packet distributed for mini-business plan analysis Business plan discussed Text discussed in class: April 2 Engineering Your Start-Up: Chapter 11 Entrepreneurship 01/02: Readings 22, 23, & 28 Homework due: April 4 Team 4 led discussion of Jim Sharpe (A)

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Team 3 led discussion of Jim Sharpe (B) Commercialization Project April 9

Team 1 report on Production Plan Team 6 report on Production Plan Commercialization Project Class critiques of presentations Business Plan

April 11 Discussion of results of mini-business plans Homework due: Mini-business plan Text discussed today: April 16

Engineering Your Start-Up: Chapter 15 & 16 Entrepreneurship 01/02: Readings 30 & 31 Homework due:

April 18

Team 2 led discussion of Vermeer Technologies (C) Team 5 led discussion of Vermeer Technologies (D) Text discussed today: Engineering Your Start-Up: Chapter 18 & 20 Entrepreneurship 01/02: Reading 36

April 23 Homework due: Team 1 led discussion of Trilogy Software Team 6 led discussion of "When the Boss Won't Budge"

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Commercialization Project April 25 Team 3 report on Integration and Finance Commercialization Project April 30 Team 4 report on Integration and Finance May 2

Open class day

May 7

7:30-9:30 a.m. Final Exam

Exhibit 3 - Grading The following point distribution will be used for the Spring 2002 semester. Technological Entrepreneur Report

25

Team

Case Study

25

Team

Exam

75

Individual

Case Study

25

Team

Mini-Business Plan

50

Team

100

Team

Commercialization Project Exam

75

Individual

Participation

75

Individual

Total Points:

450

Grades will be assigned on team activities, with half of the team grade equally distributed to all team members (unless there is a clear exception presented by the team to the professors). Each student will be required to submit a point distribution plan for the other half of his/her team points at the end of the semester to reflect differences in contributions by different team members. These distribution plans will be reviewed and consolidated by the class instructors for use in final team point compilations.

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The team led class discussions of case studies will require a one page outline of the key points in the case to be distributed to the class members at the beginning of the case discussion. Participation points will reflect the quality and consistency of contributions by each individual to the class learning process, class attendance, and demonstration of classroom leadership. Each student will start with 50 points of a possible 75. Points may be lost in accordance with the guidelines set forth in the attendance policy and gained by participation in class. Exhibit 4 - Commercialization Sequence Each team will investigate a possible commercialization opportunity based on research being conducted at the University of Arkansas. The Technology Transfer group in the Office of Research and Sponsored Programs will identify these commercialization opportunities. Students who wish to further pursue researched commercialization opportunities at the end of the semester will be allowed to continue as a group under a 12-week, three-semester hour summer entrepreneurship of technology seminar. The group efforts will continue in the fall semester under a three-hour entrepreneurial lab course. Financial support for fast track patent and market searches is provided by a grant from the National Collegiate Innovators and Inventors Alliance (www.nciia.org).

About the Authors Author: John Todd Company or Institution: University of Arkansas Department of Management, The Sam M. Walton College of Business Country: USA Email: [email protected] Author: Ken Vickers Company or Institution: University of Arkansas Department of Physics, The Fulbright College of Arts and Sciences Country: USA Email: [email protected] 20