gests that Congress had in mind that prizes would be offered not only for what in the management and economics literature is considered “innovation” (namely, the commercialization of new products, services, or processes) but also for major advances in the core of scientific and engineering knowledge that can enable such useful technological advances in the future. We encourage NSF to adopt this broader notion of innovation.

NSF faces a further challenge in setting up an innovation inducement prize program to focus on problems of national importance because it has not generally been viewed as having a charter to support innovations intended to address societal needs. Such responsibilities have been given to agencies with specific spheres of responsibility, such as space exploration (NASA), defense (DOD), energy supply and utilization (DOE), health (NIH), and agriculture (USDA). By contrast, the rationale for the establishment and operation of NSF, going back to the arguments for a National Research Foundation advanced by the Bush report in 1945,15 has been that the financial support of undirected basic research in all major fields of the natural and social sciences and engineering would in the long run be the most effective way for the federal government to support innovation for national needs. To be sure, NSF is constantly aware of society’s needs and aspirations as it designs its research support programs. However, only rarely, and then usually with controversy, has NSF engaged in direct support of research intended to generate innovations of immediate use to society.16

Innovation inducement prizes are generally thought to have the greatest promise in encouraging scientific and technological advances to address national goals and opportunities. To some extent, then, an innovation inducement prize program that includes prizes for applied research


Bush, Vannevar. Science the Endless Frontier: A Report to the President. Washington, D.C.: Government Printing Office, 1945.


Perhaps the most well known such effort was NSF’s program of Research Applied to National Needs (RANN), which operated during the middle 1970s. While one can point to a number of important lines of research and innovation that were initiated and nurtured by RANN, including programs in solar energy and energy conservation that were transferred to the Department of Energy after its establishment in 1977, RANN was widely viewed in the academic research community as a misdirection of NSF’s resources away from NSF’s proper mission. NSF has approached such programs with great care since. In more recent times NSF has fielded a number of programs that have the indirect or very general support of innovation as one of their goals, including the SBIR (Small Business Innovation Research), ERC (Engineering Research Centers), STC (Science and Technology Centers), and PFI (Partnerships for Innovation) programs. None of these programs, however, has been organized around encouraging innovation toward specific societal goals or needs specified in advance by NSF.

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