University-industry links: Government as blacksmith

Technouation, 1 (1981) 85-95 Elsevier Scientific Publishing Company,

UNIVERSITY-INDUSTRY

GEORGE

85 Amsterdam

-

Printed

LINKS: GOVERNMENT

E. BROWN, Jr.a and THOMAS

in The Netherlands

AS BLACKSMITH*

C. O’BRIENb

%!hairman, Subcommittee on Science, Research and Technology, Committee on Science and Technology, U.S. Gouse of Representatives, Washington, D.C. 20515 (U.S.A.) bScience and Technology Fellow, Subcommittee on Science, Research and Technology, Committee on Science and Technology, U.S. House of Representatives, Washington, D.C. 20515 (U.S.A.)

(Received

August

25, 1980)

ABSTRACT With continuing high inflation, declining productivity, negative trade balances and other indicators pointing to diminishing technology leads in the United States, considerable emphasis is being placed on the role of technology innovation in increasing productivity and international trade competitiveness and in combatting inflation. One element in creating an environment more receptive to technology innovation is establishing appropriate linkages between universities, industry and government. Traditional linking mechanisms between universities and industry may not be adequate or flexible enough to meet the challenges of the next several decades. Based upon findings at several Congressional hearings, there is a need to encourage new mechanisms linking universities and industry. Several legislative initiatives have been proposed in the 96th Congress which would encourage such university-industry linkages. INTRODUCTION

We are now experiencing a critical period in confronting both the weakening of the economic structure of our nation and the diminishing of our technological leads. A key component of our national strategy in countering our economic difficulties and in meeting the challenges of increased foreign competition is technological innovation. Technical innovation associated with the development of new products, processes, and services is central to the stability, growth, and renewal of our economy, domestically and in international trade [l]. It is the responsibility of the Government to develop a coordinated approach to the spectrum of requirements for successful innovation and to provide the necessary linkages between the various phases in the innovation process. It will be necessary to develop the appropriate incentives and a research and development infrastructure that will encourage linkages between good ideas and people, between institutions in the R&D enterprise, and be*Presented at AAAS Symposium on “Government/Industry January 5, 1980. Paper has been updated to reflect changes sals mentioned in this paper.

Relations”, San Francisco, in status of legislative propo-

86

tween R&D policies and economic realities. The Government’s role in forging appropriate university-industry linkages will be an integral element in the success of our innovation and productivity endeavors and in meeting the challenges of the future. In this article, we provide some of our perceptions of the changing environment for innovation which may encourage more industry-university linkages, describe some of the results of the Subcommittee on Science, Research and Technology hearings on university-industry relations, and discuss some possible Government initiatives to encourage such linkages in the future. ROLES:

UNIVERSITY

AND

INDUSTRY

To provide the appropriate framework for the following discussion, we should keep in mind the roles of universities and industry. Universities are primarily concerned with providing education and maintaining an environment which fosters freedom of investigation in extending the base of fundamental knowledge. Industries, on the other hand, are primarily concerned with the utilization of existing knowledge in the commercialization of new and improved products and in improving industrial processes. Although we must recognize from the outset that the objectives of universities and industry are different, we are obliged to explore where complementary objectives between universities and industry exist, to identify areas where appropriate linkages can be made, and to foster those university-industry cooperative efforts which can realistically be achieved. TRADITIONAL

LINKING

MECHANISMS

Traditionally, several mechanisms have been used for transferring knowledge and ideas from the university sector and in communicating industrial problems to university researchers. Some of these mechanisms include: (1) use of university faculty as consultants in industry; (2) unrestricted research projects at universities funded by industry; (3) students hired by industry; (4) professional society publications and technical meetings; (5) visiting professorships filled by industry scientists; (6) advisory committee membership to universities or industries; and (7) universities providing special courses for training industrial people [2] . Other university-industry coupling initiatives in the 1950’s and 1960’s included: (1) a rather loose arrangement between industries and universities called the Industrial Associates Program, exemplified primarily by efforts at the Massachusetts Institute of Technology and Stanford University; (2) industrial coupling or liaison programs; and (3) direct Federal involvement, via contract support, of joint university-industry research projects [ 31.

a7 POST-WW

II R & D CLIMATE

These mechanisms for establishing closer university-industry ties generally met existing demands for such linkages based upon the prevailing R&D climate following World War II through the mid-1960’s. During this time, the magnitude of the Federal investment in basic research increased substantially. Not only was there a change in the magnit.ude of Federal support but also in its nature - from primarily in-house support of research to a substantial involvement in support of extramural or university-based R&D activities. This change provided the basis for the dependency of universities on the Federal Government and the independence of academic institutions and investigators from societal needs and indust.ry R&D research requirements. Increased Federal support of basic research also hastened the trend toward reallocation of industry R&D basic research resources to more applied and development research activities. STRAINS

ON UNIVERSITY-INDUSTRY

COOPERATION

The change in R&D support patterns of the past 25 years has resulted in a severe constraint on our ability to foster industry-university cooperation. Forces supporting the resulting estrangement included the following: (1) government-supported university-based projects competed aggressively for available scientific talent; (2) education and research training in universities focused on preparing individuals for careers in teaching and research in academia; and (3) the accountability of federally supported research was more acceptable to university researchers than economic accountability measures for successful performance dictated by industry supported R&D [ 41. VIABILITY

OF THE R&D

ENTERPRISE

Several factors affecting the viability of the university research enterprise have become prominent recently. These factors include: (1) the weakening financial condition of universities; (2) the stagnation in constant dollars of Federal research support levels combined with greater competition for Federal research funds; (3) downward trends in graduate enrollment; (4) reduced opportunities for career growth of new investigators and the growing “unfaculty” situation; (5) obsolescence of research equipment and the need for increasingly sophisticated research equipment and for improved equipment management and sharing; (6) the impact of Federal regulations; and (7) the burden of accountability associated with Federal support. Several concerns revolving around inflation and Government actions have also been raised by industry regarding their R&D research capabilities. These concerns include: (1) reduced R&D investment caused by rising costs for capital; (2) an environment of investment uncertainty; (3) industry R&D focus on cost-cutting activities leading to a strategy that concentrates on in-

88

cremental innovations; (4) adjustments in R&D investment levels in response to changing government R&D priorities; (5) increased risk for investment in new business, industrial expansion, and new plant development; and (6) increased burdens of regulation, license requirements, and controls [ 1, 4-61. CHANGING

ENVIRONMENT

In the mid-1960’s, there were substantial changes in the direction of Federal support of R&D research. These trends reflected the emergence of problems with important social consequences. Where formerly the bulk of Federal support of R&D went to defense, aerospace, and atomic energy, increased amounts were now being directed to the civilian sector in areas of social concern, i.e., environment, health, transportation, energy, and urban issues. As these areas began competing for tax dollars, political decisions were made as to the magnitude of Federal R&D investment, the purpose of that investment, and the R&D performers. During this period, also, some common grounds for forging new relations between industry and academia were being nurtured. The basis for this includes the following: (1) the goals of academia in industry were becoming closer and different from the historical position of counter goals, mutual distrust, and antagonism; (2) there was an emerging recognition of the need in academia to relate more closely with the complex issues associated with industry, financing, production, and social acceptance; and (3) there was greater awareness of the need in industry to maintain close ties with sources of scientific talent, scientific and technological developments, and the social inventiveness existing in academia [ 71. In the mid-1970’s encouraging signs of the increased partnership between industry and universities are provided by the following examples: (1) Monsanto and Harvard University joint exploration of the chemical factors linked to the growth of solid tumors, and (2) W.R. Grace and Carnegie-Mellon Institute research efforts to develop classes of polymers as anti-corrosive agents. These highly publicized joint interactions, however, primarily involved major corporations and leading universities. SOME CURRENT

FEDERAL

EFFORTS

During the mid-1970’s also, the National Science Foundation (NSF) began to experiment with and develop institutional mechanisms for coupling academic research capabilities to industrial needs and to fund joint industryuniversity projects in the hope of accelerating the production and use of new knowledge. Several mechanisms are being used by NSF: (1) University Industry Cooperative Research Centers for example, the MIT Polymer Processing Center, the North Carolina State University Furniture R&D Applications Institute, and the New England Energy Developments System Center; (2) Cooperative Research Projects carried out jointly by academic and in-

89

dustrial researchers in various fields of science and engineering; (3) The Small Business Innooation Program, frequently involving university participation, where the attempt is to increase the number of small-business performers capable of conducting R&D for government and industry and of developing innovative products and services; (4) University Based Innouation Centers, for example, the Utah Innovation Center, where the focus is on small businesses and new business start-ups, on putting new ideas to work, and on training technology oriented entrepreneurs; (5) The Science Faculty Professional Development Program where undergraduate faculty is exposed to industry research needs; and (6) Technology Centers, for example, the Westinghouse Automated Programmable Assembly System, which include university pa~icipation. In addition to NSF activities, the National Aeronautics and Space Administration (NASA) and the Department of Defense (DOD) have been involved for several years in technology transfer activities which have required their participation in bringing together interested parties from academia and industry. Further, the Department of Commerce through its Office of Productivity, Technology and Innovation, has recently initiated a Cooperative Technology Program which will involve a cooperative effort between industry and the government in establishment of generic technology centers. SCIENCE,

RESEARCH

“GOVERNMENT

AND TECHNOLOGY

AND INNOVATION:

SUBCOMMITTEE

UNXVERSITY-INDUSTRY

HEARINGS

ON

RELATIONS”

In July and August, 1979, the Subcommittee on Science, Research and Technology held three days of hearings on university-industry relations [ 8,9] . We were particularly interested in the role of the Federal government in improving those relations. As a result of these hearings, the following points became apparent: (1) The importance of interactions between academia and industries is widely recognized. However, the traditional mechanisms for linking universities and industries may not be adequate to meet the changing situations of both industries and academia and to address the more complex economic, social, and technological problems critical to our future national welfare. (2) Although closer linkages between segments of the intellectual, industrial and technical communities are critical in optimizing the application of their collective talents, ideas, and resources to our national research effort, the relationships developed must still recognize each other’s goals, interests, and capabilities, both in financial and structural terms. (3) There is a need to maintain a viable and energetic science base. Although basic research is not usually a direct source for industrial innovation, it plays a crucial role in deveioping new knowledge, in the education of scientific and technological talent, and in understanding problems and opportunities of applied research and development.

90

(4) Defining and evaluating directions for applications of technology require substantive involvement of industrial, academic, and government individuals, since the Federal Government does not generally have a good appreciation of the economic and market factors which drive technology development. National technological priorities which are developed need to be carefully related to economic realities. There is also a requirement to show that the goals and policies developed are complementary to other national goals, in order that available Federal resources can be distributed fairly. (5) To provide the degree of credibility necessary to evoke sustained commitment and cooperation from academia and industry, the government needs to develop a coordinated, holistic approach to innovation. Concurrently, for the academia-industry coupling to be effective, there has to be a commitment of resources and talent on the part of industry and academia. This will require innovative approaches to management and changes both in attitudes and in organizational structure. (6) Although it is generally agreed that there is a need for Federal participation in this coupling effort, there are questions concerning the extent of this participation and mechanisms which can be employed to foster and enhance academia-industry linkages. In part, the extent to which the Federal Government participates will depend upon the nature of the problem to be addressed, the magnitude of the technological risk, and the national economic stakes. The Federal government can: (a) simply adjust Federal rules and regulations to remove disincentives or add incentives to academia-industry coupling; (b) act in an intermediate role in facilitating communication between the various sectors; and/or (c) it can form a partnership, sharing the costs and the risks with both industry and academia. NEW LINKAGES

As indicated previously, traditional linkages between industry and academia may no longer be adequate for the advancement of technology in today’s complex environment. We need to decide upon the newer types of linkages which should be encouraged, the various incentives which can be provided to encourage these linkages, and the disincentives which can probably be reduced or eliminated by Federal action. We must also exercise caution across the entire range of such decisions in order that there can be a complete understanding of the balance created by the actions taken. Some new linkages which should be considered are the following: (1) Instrument and Facility Sharing It is well recognized that the costs for scientific equipment, particularly in advanced areas of research, are substantially more than they were in the past. The usual mechanisms for supporting research, such as the project grant, are no longer adequate to provide funds for purchases of expensive, specialized scientific instrumentation. It is important that increased funding for major shared research facilities is pro-

91

vided. Types of expensive research instrumentation which could be shared include electron microscopes; computer assistance for statistical data reduction, mathematical analysis, research modeling, systems development, artificial intelligence experimentation, and graphics; resources for microprocessing technology; and mass, nuclear magnetic resonance, and electron spin resonance spectrophotometers. We need to expand and increase access to the National Institutes of Health’s Division of Research Resources Biotechnology Resources programs, to NSF’s research instrumentation programs, and to national laboratory instruments. Through these programs, academic, industry, and small business researchers can extend their own experimental capabilities. In addition, the importance of having certain types of high technology research facilities and equipment in industry laboratories available to university-based researchers and the appropriate incentives for linking industry’s facilities with university researchers’ needs require further exploration. (2) Manpower There is a need to identify gaps in existing and projected manpower pools for industry R&D. We need to collate our economic goals and to define the appropriate Federal role in the support of human resource development. We have to examine closely the response of universities to changes in technology and industry manpower needs, universities’ ability to provide multi-disciplinary research training, and their ability to respond to social needs. We need to provide training in entrepreneurship. There also is a need for academia, government, and university interaction to provide an environment for educating labor and management in those instances where new technologies and processes are being developed, to examine possible labor and management resistance to implementing new technologies, and to provide opportunities for training of the workforces required. (3) Communication and Technology Transfer There is a need to consider communication and technology transfer in terms of encouraging interchanges between academia and industry researchers and forecasting industry technological goals or strategies. Further, information systems supported by the Federal Government need to be more responsive to the needs of universities, industry, and small businesses. (4) Interdisciplinary Cooperation Universities will need to become more responsive to cooperative industry initiatives focused on societal needs. There needs to be encouragement for interdisciplinary and interdepartmental interaction within universities and for industry interaction with university departments. There is a requirement for a commitment on the part of top university management to cooperate and to provide the framework for encouraging entrepreneurship and innovation, for attracting the best students, and for obtaining high-quality faculty. (5) Planning and Priority Setting Linkages There is a need for a visible government commitment to enhancing innovation and productivity, As part of this commitment, there are requirements for a degree of national planning, for articulation of domestic and foreign market goals, and for integration of economic realities in Federal planning and decision-making for technology

92

policy and strategies. There is also a need in this planning and priority setting process for industry to play a primary role in establishing the R&D research agenda for technology innovation. (6) Small Business In university-industry interactions. we need to recognize the significance of R&D small business and their role in our national technological and economic development. Universities can help small business by providing technical advice. In some states there are organizations that provide a brokerage service between small business and universities. Pennsylvania’s PENNTAP program is a good example. Programs of this type should be put in place in many more states and regions. DOMESTIC

POLICY REVIEW

ON INDUSTRIAL

INNOVATION

Early in 1979, the Secretary, Department of Commerce, presented the President for his consideration the findings of the Department’s Domestic Policy Review on Industrial Innovation. The President made known his recommendations stemming from this review on October 31st [lo] , and Congress held joint hearings on that same day to discuss the President’s specific recommendations on industrial innovation [ 111. It should be recognized that the President’s recommendations represent only an initial step in fostering a national climate which hopefully can rekindle both our competitive ability and our entrepreneuri~ spirit for the technological, economic and social challenges of the future. It should be noted also that, although several Executive branch reviews on industrial innovation had been developed previously, this is the first review on industrial innovation which a President has acted upon. Recommendations which are of particular importance to the Subcommittee on Science, Research and Technology and its NSF oversight responsibilities include: (a) expansion of NSF’s industry-university cooperative research programs by $20 million in fiscal year 1981; (b) extension of this program to other Federal agencies such as DOD, Department of Energy (DOE), Environmental Protection Agency (EPA), and NASA; (c) expansion of NSF and the Department of Commerce Cooperative (generic) Technology Centers by four centers at a cost of $8 million in fiscal year 1981; and (d) uniformity in Federal patent policies and retention of patent ownership by universities and businesses. Unfortunately, as a result of the President’s efforts to balance the Federal budget in fiscal year 1981, plans to expand NSF’s industry-university cooperative programs were reduced by about 50 percent and funds for an NSF supported Cooperative Technology Center were eliminated. In addition to the Subcommittee’s responsibilities for NSF, several of the recommendations of the Domestic Policy Review on Industrial Innovation and related issues are also being considered concurrently with our ongoing studies of innovation and productivity and of industry-university linkages. Some of these broad ranging initiatives and legislative proposals now under consideration by the Subcommittee are discussed below.

93 SUBCOMMITTEE

ON SCIENCE,

RESEARCH

AND TECHNOLOGY

ACTIVITIES

(1) Mr. Brown introduced H.R. 4672, National Science and Technology Innovation Act, on June 28, 1979, patterned after Sen. Stevenson’s S. 1250, Stevenson Technology Innovation Act. H.R. 4672 would authorize the support of Centers for Industrial Technology by NSF and the Department of Commerce and would establish an “Office of Industrial Technology” in the Department of Commerce. Three sessions of hearings held last summer on university-industry relations by the Subcommittee included testimony on this bill [8]. Following hearings on S. 1250 by Sen. Stevenson’s Subcommittee on Science, Technology and Space on November 21, 1979, the Full Committee on Commerce, Science, and Transportation reported S. 1250 on April 29, 1980, and this bill was passed by unanimous consent of the Senate on May 28, 1980. Following addition of amendments to S. 1250, which would stimulate better use of Federally funded technology by the private sector and State and local governments, would encourage private and public sector exchange of scientific personnel, and would encourage recognition of outstanding contributions in technology, the Subcommittee on Science, Research and Technology reported S. 1250 to the full Science and Technology Committee on June 17, 1980. The full Committee reported S. 1250 on July 2,198O [12]. (2) On March 25, 1980, Mr. Brown introduced H.R. 6910, the National Technology Foundation Act. In essence the bill would create an independent agency to promote technology for the national welfare and unite and coordinate key elements within the Federal sector involved in innovation and productivity, university-linkages, high technology small business, technical information and data acquisition, and transfer of technology and information to the private sector. The bill would incorporate all of the substance of H.R. 4672. Hearings on H.R. 6910 were scheduled for September 9,lO and 16-18, 1980. (3) To encourage the commercialization of innovative ideas and technologies developed as a result of Federal sponsorship of university and industrybased R&D projects, legislation proposed in the 96th Congress would extend beyond the Institutional Patent Agreement concept, would provide uniformity in Federal patent policy, and, most importantly, would increase the opportunity for the results of federally sponsored R&D to reach the consumer in the form of tangible benefits. On October 16-17, 1979, the Subcommittee on Science, Research and Technology held hearings on the proposed patent policy legislation and its predicted impact on innovation and productivity [13]. OnFebruary 8,1980, the Subcommittee held a hearing on H.R. 5715 and an unintroduced version of the Administration’s patent policy proposal. The Subcommittee reported H.R. 5715 on April 1,198O. In April and May 1980, the House Judiciary Subcommittee on Courts, Civil Liberties and the Administration of Justice held hearings on several patent related bills including H.R. 5715 and the Administration’s proposal (H.R. 6933). H.R. 6933

94

was marked-up by the Subcommittee in July 1980 and reported to the Full Judiciary Committee on July 24,198O. On February 26, 1980, Congressman Vanik introduced legislation, the Research Revitalization Act (H.R. 6632), which would give favorable tax treatment to industry support of university research. Hearings on various tax proposals including H.R. 6632 were held by the House Ways and Means Committee on July 3X,1980.

The Federal Government needs to initiate and to sustain a coordinated effort to encourage and to facilitate the positive trends for expanding industry-academia interactions and for fostering a climate receptive to technology innovation and entrepreneurship. We must be diligent in this effort in order to overcome some rather ingrained behavior patterns developed over a period which has seen a divergence in objectives and incentives between the academic and industry technical communities. We have to counter views that consider applied and developmental research (with profit motives) solely an area for industry study and inappropriate research in the university setting. We need to recognize that the applied researcher is as important to society as is the basic scientist, We have to reduce barriers to communication between these two groups. We need to allocate our resources to those researchers more receptive to bridging the gap between the basic and apphed sciences. We cannot simply use our finite Federal R&D resources to support more basic research exclusively without providing funds or encouraging efforts for more interdisciplin~y studies in applied and technical scientific areas. The critical task is to link good people with good ideas. Creating these links does not necessarily require waiting for the Government to act. To paraphrase comments made by John Gardner, we cannot afford to develop a national technology policy which allocates a disproportionate share of our R&D resources to basic studies in philosophy and in the process support mediocre philosophers at the expense of ~cientific~~y excellent and innovative ideas in plumbing, because plumbing is a humble profession and philosophy and basic science are thought to be noble professions. Such a national policy is doomed to failure, since neither its pipes, nor its theories, will hold water 1141.

The Deputy search on this

authors thank Thomas Moss and Thomas Kramer, Staff Director and Staff Director, respectively, of the Subcommittee on Science, Reand Technology for their critical review of and constructive suggestions manuscript.

95

REFERENCES 1 Hannay, N.B., 1977. Technological innovation and national priorities, Proc. National Conference on the Advancement of Research, University of New Mexico, pp. 40-45. 2 Prager, D.J. and Omenn, G.S., 1980. Research, innovation, and university-industry linkages. Science, 207: 379. 3 Roy, R., 1972. University-industry interaction patterns. Science, 178: 955. 4 Drucker, P.F., 1979. Science and industry, challenge of antagonistic interdependence. Science, 204: 806. 5 David, E.E., Jr., 1979. Science futures: the industrial connection. Science, 203: 837. 6 Nason, H.K., 1979. Risk, uncertainty and innovation in industry. National Conference on the Advancement of Research, Hershey, Pennsylvania. 7 Swalin, R.A., 1976. Improving interaction between the university and the technical community. Research Management, 19: 25. 8 Government and Innovation: University-Industry Relations. Hearings before the Subcommittee on Science, Research and Technology of the Committee on Science and Technology, U.S. House of Representatives, July 31; August 1, 2, 1979, Government Printing Office 53-863, 522 pp. 9 Summary of House and Senate Hearings on Government-University-Industry Relations. Report prepared by the Subcommittee on Science, Research and Technology of the Committee on Science and Technology, U.S. House of Representatives, June 1980, Government Printing Office 64-250, 75 pp. 10 The President’s Industrial Innovation Initiatives, Fact Sheet, Office of the White House Press Secretary, Washington, D.C., October 31, 1979. 11 Industrial Innovation. Joint Hearings before the Committee on Commerce, Science and Transportation and the Select Committee on Small Business, United States Senate and the Committee on Science and Technology and the Committee on Small Business, U.S. House of Representatives, October 31, 1979, Government Printing office 55-623, 67 PP. 12 Stevenson Technology Innovation Act of 1980. Committee on Science and Technology, U.S. House of Representatives Report, July 1980, Government Printing Office, 65-509, 68 PP. 13 Government Patent Policy. Hearings before the Subcommittee on Science, Research and Technology of the Committee on Science and Technology, U.S. House of Representatives, October 16 and 17, 1979, Government Printing Office 56-320, 221 pp. 14 Goldman, J.E., 1972. Toward a national technology policy. Science, 177: 1078.