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with the state company or research institute in a written agreement—a contract. This agreement must answer the following questions:

  • Are you separate entities and merely renting space? This is the relationship we saw when we visited RSTR Technologia. It has a clearly defined rental contract, with separate private and state companies, which is ideal for mutual interest and very professional.

  • Are you partners? Does the research institute own a share of the private company? If so, are you sharing expenses and profits? The agreement must clearly define how.

  • Define the duties of the private company and research institute or state company. Who is providing equipment, labor, technology, and capital?

  • Try to avoid too many partners. It is often best to be small and simple. We saw an excellent example in the firm Eridan-1.

  • If using technology or selling technological products coming from a university or research institute, you need to have a licensure agreement. Resolve whether you pay a fee or share profits. A fee agreement is preferable because it is simpler and will result in fewer disputes.

  • If sharing managers, you must define their roles and the time resources they will devote to each project. It is preferable to have separate management for the private company or research institute or center. Medbiopharm produces great technological products but needs to work on this question.

  • If sharing labor between a private company and a research institute or center, you need to clarify the worktime devoted to each and where the salaries come from. You need to have separate budgets. In visiting Medbiopharm, I observed a need to address this question.

It is not sufficient to handle these questions informally, (e.g., by approximating that half the time workers and managers will work for the company and by agreeing we'll use the institute's technology, sell products, and then decide how we will divide the profits—later when we are profitable). This is a recipe for disaster, and the sad thing is that the more profitable you become, the more complications and disputes arise.

RELATIONSHIP WITH LOCAL GOVERNMENT

A company needs to define its relationship with the regional and city administrations. Preferably government regulates you and taxes you fairly, provides necessary licenses quickly, and lets you run your business. Is the regional administration a partner? Are regional administrators partners? Preferably not. Having government as a partner leads to complications and conflicts of interest. Governmental entities are almost never partners



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