Spinoffs are companies based on university intellectual property established to commercialize university technology to the marketplace. The objective of this study was to examine the reasons for the rapid diffusion of spinoffs in the UK, as well as the potential effects of these companies on university resource acquisition. The study used two broad theoretical perspectives from the sociology of organizations: institutional theory and organizational ecology. It blended elements from other related perspectives such as organizational evolution and social exchange theory. Driven by the need to establish a full database of spinoffs for the first time, quantitative data collection and analysis techniques were predominantly employed. The emerging database comprised of nearly 9 million datapoints capturing the full population of university spinoffs (and their demographics) by all English and Scottish universities over a period of 15 years (1993-2007). Qualitative exploratory data collection methods were also used to supplement the design and structure of the study, including hypothesis formation. In total, 6 in-depth interviews with Technology Transfer Managers were conducted at a representative number of universities across England and Scotland. The study identified the role of certain environmental, institutional factors in shaping the decision by universities to adopt spinoff formation as a standard practice. Such factors were the role of networking, social compliance, industry associations, and media information providers. It also demonstrated that spinoff formation gradually but significantly enhanced university financial resources over time. The study finally discussed the process of coevolution of universities and spinoffs as distinct populations of organizations within the community of academic entrepreneurship. Specifically, the discussion moved towards building a new theory of “reciprocal legitimacy”