of state, regional, and federal efforts to facilitate technology transfer was also discussed. Workshop discussions centered specifically on technology transfer within the biotechnology and automotive electronics industries. Participants also examined the federal government's role in facilitating technology transfer.

Four factors emerged as central to the discussions: the pace of technological change in each sector; the structure of the industry in question; private sector needs in spurring the commercialization of new technologies; and the relative competitive position of U.S. industry in international markets.

This summary synthesizes ideas expressed at the workshop. It does not represent a consensus opinion of participants in the discussions, members of the Panel on the Government Role in Civilian Technology, the National Academy of Sciences, National Academy of Engineering, Institute of Medicine, or National Research Council. This summary does not contain conclusions or recommendations.

INTRAFIRM TECHNOLOGY TRANSFER

Technology transfer that occurs within a single company is most commonly associated with large corporations, which often have organizationally and geographically separate research and development groups. Discussions during the workshop made it clear, however, that lessons from intrafirm technology transfer in large organizations may also be relevant to small firms.1 In addition, the methods firms use to transfer ideas and information internally may prove effective for technology transfer between firms and among industry, academia, and government. Whether technology transfer takes place within a single firm or between two companies, the conditions for success often remain the same. Customer-supplier links are key to the process. They are needed both to facilitate technology transfer and to maintain competitive leadership, quality, and financial stability.

Mechanisms for In-House Technology Transfer

Corporations with in-house laboratory facilities face the challenge of moving technology between different operating divisions, as well as adopting technologies developed outside the company. This process, as it occurs at several large electronic firms, was outlined at the workshop. Technology transfer at one firm is aided by a "product and process development team" to a group of staff engineers, and other scientific and technical personnel. These individuals are the channels through which customers provide information on improvements in the firm's products and manufacturing processes.

Even when research laboratories and product or process development groups are in close proximity within a company, transferring technology



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The Government Role in Civilian Technology: Building a New Alliance of state, regional, and federal efforts to facilitate technology transfer was also discussed. Workshop discussions centered specifically on technology transfer within the biotechnology and automotive electronics industries. Participants also examined the federal government's role in facilitating technology transfer. Four factors emerged as central to the discussions: the pace of technological change in each sector; the structure of the industry in question; private sector needs in spurring the commercialization of new technologies; and the relative competitive position of U.S. industry in international markets. This summary synthesizes ideas expressed at the workshop. It does not represent a consensus opinion of participants in the discussions, members of the Panel on the Government Role in Civilian Technology, the National Academy of Sciences, National Academy of Engineering, Institute of Medicine, or National Research Council. This summary does not contain conclusions or recommendations. INTRAFIRM TECHNOLOGY TRANSFER Technology transfer that occurs within a single company is most commonly associated with large corporations, which often have organizationally and geographically separate research and development groups. Discussions during the workshop made it clear, however, that lessons from intrafirm technology transfer in large organizations may also be relevant to small firms.1 In addition, the methods firms use to transfer ideas and information internally may prove effective for technology transfer between firms and among industry, academia, and government. Whether technology transfer takes place within a single firm or between two companies, the conditions for success often remain the same. Customer-supplier links are key to the process. They are needed both to facilitate technology transfer and to maintain competitive leadership, quality, and financial stability. Mechanisms for In-House Technology Transfer Corporations with in-house laboratory facilities face the challenge of moving technology between different operating divisions, as well as adopting technologies developed outside the company. This process, as it occurs at several large electronic firms, was outlined at the workshop. Technology transfer at one firm is aided by a "product and process development team" to a group of staff engineers, and other scientific and technical personnel. These individuals are the channels through which customers provide information on improvements in the firm's products and manufacturing processes. Even when research laboratories and product or process development groups are in close proximity within a company, transferring technology

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The Government Role in Civilian Technology: Building a New Alliance between these two groups involves significant effort. A number of formal mechanisms to facilitate technology transfer and diffusion were mentioned at the workshop. Among the most important were: Consultation: Scientists often spend a considerable amount of time with product development personnel to help solve product-specific problems. This joint activity provides researchers with a view of product and process engineering that can improve their work once they return to their laboratories. Transferring expertise: One of the most effective ways to transfer technology is to move the individuals who have specialized knowledge to divisions within a firm. Many corporations use short-and long-term "internships" to transfer research personnel to areas of the company involved in product development, and vice versa. Joint assignments and projects: Removing the formal barriers between research and development can enhance technology transfer. Toward this end, some companies assign staff to both product development and research activities. Others bring full-time researchers and development engineers together on the same project. Other important, but less effective, ways of fostering technology transfer include distributing research reports and technical memos to development staff and conducting research seminars and product strategy reviews. Workshop participants stressed that no single mechanism or approach to technology transfer is adequate alone to meet corporate technology development needs. Technology transfer is a complex, chaotic, and dynamic process that requires constant revision and change as the realities of the marketplace change.2 Following the one-dimensional, "pipeline" view of technology transfer is no longer a viable strategy.3 Several participants stressed that it was management's responsibility to encourage communication between groups within a firm. Management should also attempt to foster an atmosphere in which high-risk, innovative work is encouraged. Similarly, researchers should be shielded, to the extent practical, from short-term demands of the market. Employees who fear failure or delay will not take risks that may be critical to successful R&D projects. An official at one company noted, however, that technology transfer does not happen just because management demands it or company policy calls for it. Individuals involved in research and product development must be motivated to undertake the steps necessary for successful technology transfer. This official also noted that simply because technology transfer is often a chaotic process, firms should not be discouraged from constructing a plan for achieving it. There must be clear objectives in any transfer strategy, with timetables and frequent revisions of original plans. One method of stimulating technology transfer discussed at the work

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The Government Role in Civilian Technology: Building a New Alliance shop involves moving development engineers to research units prior to the period in which technology transfer is expected to occur. Over time, the number of manufacturing engineers assigned to projects increases, whereas the number of development engineers decreases. One large U.S.-based chemical company uses "business teams," comprised of individuals from marketing, manufacturing, research, accounting, and personnel planning, to increase information and technology flow within the company. It also has a central research department that, in addition to supporting applied R&D, enhances the company's innovative capacity while at the same time strengthening its ability to negotiate with other firms for important research-related information. The firm's operating departments each have their own research divisions, but the central facility maintains a long-term perspective on R&D challenges facing the company. The system is referred to as "managed collaboration," in which technical staff and management officers with operating experience are integrated into a single corporate research division. Operating department R&D directors are rotated through the organization as directors of corporate research. This process brings business and management experience to the leadership of the corporate laboratory and increases understanding of corporate research goals in the departmental laboratories. Another company integrates its corporate and operating department research personnel and management in project-focused centers. Technology committees, staffed by R&D directors, ensure that institutional knowledge about specific business areas, such as polymers, energy, and health sciences, is shared by all operating departments. In all in-house mechanisms to enhance technology transfer, company relationships with customers, vendors, and suppliers remain the key link to successful technology development. It was noted that many firms view these relationships as business partnerships and that companies must often work closely with suppliers, sharing data and personnel, to maximize chances for successful product and process technology development. TECHNOLOGY TRANSFER BEYOND INDUSTRIAL LABORATORIES In-house efforts to transfer technology from the laboratory bench into marketable products are vital to most firms that conduct research and development, and are part of a larger process that involves many individuals and organizations outside the company as well. From a corporate perspective, to varying degrees, technology transfer relationships with other firms, universities, and federal laboratories are also desirable. Although this interaction has usually been one-way—into the corporation, not out—many firms are discovering that sharing technologies with other organizations can con-

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The Government Role in Civilian Technology: Building a New Alliance tribute to technology development goals. New relationships are being formed between and among corporations and their suppliers, through joint R&D ventures, cooperative agreements with federal laboratories, and university-industry partnerships. These new relationships reflect the importance of balancing cooperative and competitive interests in today's global economy. From the university's perspective, technology transfer—both into and out of the university—can be productive, reflecting, in part, the academic tradition of free flow of information and expertise. Even in universities, however, the desire for professional prestige, the competition for scarce research funds, and the trend toward more extensive relationships with the private sector can reduce the flow of new ideas and technologies. As academic institutions seek to capitalize on the economic benefits from their research activities, these impediments to successful technology transfer may continue to increase in number and complexity. To state and federal governments, technology is viewed as a valuable resource that contributes to economic vitality and public welfare. Enhancing the diffusion and use of new technologies—especially those developed with the assistance of public funds—is a primary goal. Government agencies such as the National Institutes of Health (NIH), the National Science Foundation (NSF), and the Departments of Commerce, Defense, and Energy (DOC, DOD, and DOE, respectively) have also moved to stimulate technology transfer from federal facilities. Mechanisms for "Cross-Boundary" Technology Transfer Workshop participants spent a considerable amount of time discussing technology transfer involving "cross-boundaries." A number of the specific mechanisms used to encourage this activity are outlined below. Industry-university cooperative arrangements; Using this approach, corporations can gain valuable access to the university research community, and students and researchers can gain insight into commercial technology development. Several different types of programs exist, including joint research-industrial parks and the NSF's Engineering Research Centers. These relationships often involve funds from state, federal, and private sources. Company-supplier relationships: A number of steps can be taken to increase the likelihood of technology transfer between firms and their suppliers. Corporate engineers and engineers working for suppliers can spend time in each other's laboratories, for example. Joint R&D projects, between a firm and its supplier, have the potential for enhancing the success of product and process technology development. Finally, quality improvement programs, undertaken jointly by corporations and suppliers, can lead to more effective technology transfer.

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The Government Role in Civilian Technology: Building a New Alliance Cooperative R&D ventures between competitors: The benefits of cooperative arrangements include shared capital costs, economies of scale, and reduced risk, and can involve a considerable amount of technology transfer. U.S. corporations are increasingly working within such relationships. Whether they involve private firms only or combine the efforts of public and private entities, cooperative ventures can facilitate technology transfer and can result in technological breakthroughs. Moreover, federal and state governments can leverage investment in research and allow market forces to direct research agendas by requiring matching funds from private participants. Cooperative Research and Development Agreements (CRADAs): Cooperative Research and Development Agreements were authorized by the Technology Transfer Act of 1986. Under a CRADA, a federal laboratory provides scientists and equipment for a particular industry-based research project; the company provides funding and its own scientists and equipment. CRADAs mentioned at the workshop that appear promising include those between NIH and small biotechnology firms. Many observers believe, however, that these agreements have yet to achieve their full potential to stimulate technology transfer and development. Participants identified a number of problems with CRADAs: they require a high level of technical sophistication on the part of industrial partners, which narrows the field of potential participants; ''cultural" differences (with regard to incentives, recognition, and rewards) between private industry and federal laboratories can reduce the potential effectiveness of CRADAs; and a considerable amount of administrative oversight is associated with their operation. These difficulties contribute to an environment that inhibits technology transfer. TECHNOLOGY TRANSFER IN AN EMERGING INDUSTRY: BIOTECHNOLOGY The biotechnology industry is relatively young, having experienced rapid growth in the late 1970s and early 1980s. The founders of this industry, most of whom began their careers in university research laboratories, have been essential to technology transfer. The industry's rapid commercialization of discoveries is due in large measure to its continuing ties to academic research institutions and its openness in sharing the results of basic research. Another factor contributing to the development of the biotechnology industry centers on the availability of venture capital.4 As the industry matures, however, some of these advantages may no longer apply.5 Workshop participants noted, for example, that as the founders of biotechnology companies retire, the industry's openness to academic laboratories is likely to diminish. In addition, some scientists who, in the past, had affiliations with both academia and industry are now less mobile be-

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The Government Role in Civilian Technology: Building a New Alliance tween these sectors. Another potential problem, according to workshop participants, is conflict of interest. Policies intended to address real or perceived conflicts of interest, whether at the federal or the university level, may make it more difficult for industry and academia to maintain close ties in the future. Participants pointed out that as investors increasingly focus on anticipated returns to investment in biotechnology, the flow of venture capital to the industry is slowing. Although this may simply reflect the maturity of the biotechnology industry, it may force some firms to reduce their levels of basic research funding and, as a result impair long-term competitive advantages. Participants noted that firms with access to capital markets and government research support, or those that operate under reduced regulatory scrutiny and transparent conflict of interest guidelines, would benefit. Industry Strategies for Biotechnology Transfer Representatives from the biotechnology industry discussed a number of strategies to encourage technology transfer. For example, many firms have established scientific advisory boards, whose members are drawn at least in part from academia. Not only do these advisors provide scientific expertise, they also are a link between the firms and university research laboratories. Other steps taken by the biotechnology industry that directly or indirectly result in technology transfer include the following: Using CRADAs: Involvement with federal laboratories is one method of leveraging R&D funds. In some instances, firms have calculated that problems associated with CRADA are less important than access to research conducted in federal laboratories, one participant at the workshop explained. Several commercially successful products are the result of CRADAs, including the AIDS drugs AZT (azidothymidine) and DDI, and the human immunodeficiency virus (HIV)-antibody tests. Other benefits of collaborating with federal laboratories include access to expensive state-of-the-art equipment and machinery, as well as technical assistance from federal researchers. Licensing: Several participants at the workshop expressed the view that product licensing should occur at or as close as possible to the time of a breakthrough. Waiting for patents, for the determination of all possible uses or even for the complete understanding of a new technology, can result in loss of potential returns. Biotechnology firms must be conscious of the needs and interests of academic collaborators when developing licensing strategies. Royalty reimbursement and technology-sharing arrangements can speed up the process of bringing an advanced technology to market by as much as five years, according to one participant.

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The Government Role in Civilian Technology: Building a New Alliance Foreign patents: Filing foreign patents, particularly for chemical reagents, is an important but often overlooked component of technology transfer. At least one company representative expressed the view that universities have not been sufficiently diligent in prompt filing of foreign patents. Interaction with NIH and NIH-funded investigators: NIH funds a significant amount of biomedical research, much of it on the cutting edge of science. Contact with investigators at NIH, and with researchers funded by the agency working in other organizations, has been an important factor in the success of the biotechnology industry. In-house, state-of-the-art research capabilities: One workshop participant noted that discoveries made by a firm's own researchers can complement advances made by scientists outside the company, and vice versa. It is not possible, the participant noted, to concentrate on external sources of technology and information and to neglect in-house R&D capabilities. The University Perspective Universities are facing many new opportunities as a function of increasing ties to industry. At the same time, these relationships challenge the historic mission of university education and research. University-based biotechnology research has been characterized by its close ties to industry and the potential for commercial market applications. New sources of funding, educational opportunities, enhanced possibilities for contributing to the public good, and profit are among the many benefits to universities from their industrial affiliations. There are potential problems, as well, such as conflicts of interest, the loss of top faculty to the private sector, maintaining a proper balance between research and teaching, and new sources of liability. The passage of the Government Patent Policy Act of 1980 (Public Law 96-517) gave universities new patent rights for inventions developed with federal funds. Prior to this act, only about 4 percent of the more than 30,000 patents held by the federal government were ever licensed. According to one participant at the workshop, patents for inventions developed at universities with federal funding are now licensed approximately 50 percent of the time—an example of how market-based incentives can enhance technology transfer. Workshop participants discussed a number of other factors that can influence the success of university-industry partnerships in biotechnology, including the following: Speed of licensing: In biotechnology markets, licenses are often issued before a patent. The director of one university technology licensing office noted that, to issue licenses quickly, the institution involves lawyers only in the latter stages of the licensing process. In general, patents are not

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The Government Role in Civilian Technology: Building a New Alliance as important in biotechnology as in other sectors since products are often made by biological organisms, which are difficult to reproduce. Role of university scientists in the licensing process: University researchers who direct scientific projects often have insights about the selection of companies for licensing agreements. Participants noted that these researchers should be consulted early in the licensing process. Product liability insurance: The high cost of liability insurance makes it difficult for universities to license innovations to small companies, particularly in biotechnology. According to several participants at the workshop, some universities support remedial product liability legislation to reduce potential damages in these situations. Biological materials: Restricting the transfer of biological materials to other scientists was described as counterproductive to the goal of technology transfer. The Role of NIH in the Transfer of Biotechnology NIH has played an important role in the development and transfer of biotechnology products and manufacturing processes. The agency invests about $3.5 billion on biotechnology-related R&D, approximately 80 percent of the total spent by the federal government in this area. Approximately one-third of the $3.5 billion is spent on biotechnology-specific research; the remainder supports basic scientific research with wide biomedical applications. NIH has several in-house units dedicated specifically to technology transfer. One is the Patent Policy Board, which has a number of working subcommittees, including one that reviews CRADA proposals and a second that focuses on royalty distribution. In addition, each of the agency's institutes has a technology development coordinator responsible for monitoring CRADA documentation and acting as a liaison with private firms on technology transfer activities. NIH representatives at the workshop expressed the view that CRADAs are a productive method for small biotechnology firms to leverage internal R&D resources. The agency has approximately 130 CRADAs in place, of which approximately one-third are with small businesses. NIH also facilitates technology transfer by licensing patented materials and by training postdoctoral students and research fellows. NIH researchers are responsible for the publication of approximately 7,000 technical journal articles each year, as well as presentations at scientific workshops. Both of these activities involve technology transfer objectives. It was reported that NIH also operates an electronic bulletin board containing lists of technologies available for licensing (identified and sorted by key words and names of researchers interested in collaborating) and that it

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The Government Role in Civilian Technology: Building a New Alliance will allow texts of patent applications, copies of policy guidelines, and model agreements for cooperative research to be down-loaded to personal computers. TECHNOLOGY TRANSFER IN A ''MATURE" INDUSTRY: AUTOMOTIVE ELECTRONICS Universities have played a much smaller role in the technology transfer process in automobile electronics than in biotechnology, according to the director of an academic electronics laboratory. Instead, the automotive industry has relied on in-house R&D capacities and, more recently, worked with the aerospace, computer, semiconductor, and electronics industries. The director of electrical engineering at one U.S. automobile manufacturer told the workshop that most development work in automotive electronics is performed either in-house or through private sector collaborative R&D projects. There is much less interaction with U.S. universities, he reported. With the exception of a project involving the Department of Energy to develop an electronic car, one participant noted that there has been limited interaction with federal facilities. Participants also noted that in automotive electronics, the federal government has promoted technology transfer primarily through federal regulatory control. The Clean Air Act of 1970 and the establishment of the Environmental Protection Agency provided the incentives for the automotive industry to use electronics to control tailpipe emissions. Other incentives for developing new technology came with the establishment of corporate average-fuel-economy requirements. In the 1980s, market incentives led to electronic advances in antilock and antiskid braking, digital instrumentation, and intra-and extravehicular communications. Although advances in aircraft design can in some cases be applied to automotive transportation, a number of barriers exist to this form of technology transfer. For example, under DOD sponsorship, aerospace electronics are developed and manufactured without cost considerations, a critical factor in private sector technology strategies. Similarly, performance requirements for the technologies differ. Differences in design methodology and management style between the two industries have also served to hinder technology transfer. For instance, only recently did the automobile industry start using a true systems engineering approach (standard practice in the defense industry) to develop new vehicles. Rapid technology transfer is also inhibited due to the fact that upstream electronics developers, particularly those developing defense-related technologies, have different cost and performance requirements. Frequently, auto companies must redesign electronics to meet these requirements. Technology transfer in this sector has also been characterized by in-

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The Government Role in Civilian Technology: Building a New Alliance creased collaborative R&D partnerships with suppliers. In the future, some workshop participants predicted, there will be increased emphasis on joint ventures, especially with foreign partners. Collaborative agreements with specific, applied technology goals may become more common. In addition, suppliers will be increasingly responsible for the development of new technologies, and acquisitions as a form of technology transfer may increase in frequency, according to participants. One official of a U.S. electronics company indicated that a number of other factors have contributed to successful technology transfer in automotive electronics. Many of these center on market incentives. For instance, many electronics firms have been willing to transfer technology to the automotive industry to help create new markets for their products. Automobile manufacturers view these developments as opportunities to enhance the customer appeal of their products through increased use of electronic components in autos. One example of government support for automotive-related technology transfer discussed at the workshop is the Combustion Research Facility funded by DOE. The facility has a staff of approximately 80 government scientists and engineers, and an equal number of visiting staff from academia, industry, and other laboratories. Each year the facility hosts approximately 800 visitors, which facilitates the diffusion of technology. Automotive industry representatives help set the facility's research agenda through involvement in project R&D working groups. FEDERAL EFFORTS IN TECHNOLOGY TRANSFER Federal efforts to enhance technology transfer have increased over the past decade.6 Formal links between government facilities and the private sector remain limited, however, in contrast to intrafirm collaborative arrangements.7 One federal initiative discussed at the workshop, the National Center for Manufacturing Sciences (NCMS), involves R&D in support of the machine tool industry. NCMS, a consortium of 120 member companies established under the National Cooperative Research Act of 1984, provides technology outreach to small firms that make up the industry. Technology transfer can also occur when an organization has specific product development requirements. In cases such as this, it may contract with a federal laboratory to carry out the necessary research. The Department of Energy is also moving to enhance its technology transfer activities, an agency official told the workshop.8 Among the mechanisms DOE is using to transfer technology to the private sector are Superconductivity Pilot Centers that have industry-driven research agendas and require cost sharing. Similar efforts are the Clean Coals Technologies Program, DOE involvement in the Small Business Innovation Research Program, the Energy Conservation Utilization Technology Program, the Advanced Manufac-

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The Government Role in Civilian Technology: Building a New Alliance turing Initiative, and the Specialty Metals Processing Consortia. In the future, one official reported, DOE will increasingly interact with R&D consortia, state organizations, and other federal agencies in technology transfer activities. DOE is also developing model agreements for technology transfer, as well as systems for conflict management, so that technical problems do not inhibit technology flow. A DOE official noted that much of the agency's future efforts in technology transfer will be framed by the National Energy Strategy, which among other objectives is targeted at expanding investment in basic research and increasing the number of scientists and engineers engaged in energy research. The 1988 Omnibus Trade and Competitiveness Act established programs targeted at technology transfer, including the Manufacturing Technology Centers (MTCs) managed under the sponsorship of the National Institute of Standards and Technology (NIST).9 MTCs are designed to assist in modernization of the approximately 100,000 small (50 employees or less) parts manufacturers in the United States. MTCs are located in nonprofit and academic institutions to leverage existing state and local information networks. As of April 1990, three MTCs had been established. Another NIST initiative is the Advanced Technology Program (ATP), which in 1989–1990 had funding of $10 million; this program of financial awards to industry and industrial consortia aims to speed the commercialization of emerging technologies.10 Workshop participants noted that, although the federal government can play an important role in technology transfer through these and other programs, the government should not determine what specific technologies industry should develop. Similarly, government should not have final authority over how industry and government collaborative ventures operate. These choices need to be made in partnership. REGIONAL AND STATE TECHNOLOGY TRANSFER There are important regional economic issues that affect the technology transfer process. One workshop participant argued that the U.S. economy should be viewed as a series of highly concentrated industrial regions. In certain areas of the United States, there is a critical mass of qualified personnel, public R&D support, investment capital, and a technology and manufacturing base to sustain competitive firms. These regions often include distinguished universities and a core of industrial firms that perform advanced R&D.11 Highly skilled scientists and engineers, for example, are often concentrated in these areas. The challenge for these regions, one participant noted, is to maintain and improve the R&D infrastructure to stimulate industrial development. Some areas in the United States are succeeding at this; a strong measure of success is the level of private industrial

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The Government Role in Civilian Technology: Building a New Alliance from partnerships with U.S. academic institutions. One research director for a major U.S. multinational firm maintained that American companies typically do not bring the same level of dedication, diligence, and interest to university-industry collaborations as do their foreign counterparts. An executive from a foreign-based multinational firm maintained that foreign firms do not enjoy preferential access to U.S. university-based research. Rather, he reported, European and Japanese firms more fully recognize that they have an obligation when they enter into relationships with universities. That is, the foreign firms realize that they must bring innovative ideas to the collaboration and that it is their responsibility to take and use discoveries or inventions that result from it. One speaker suggested that U.S. firms may be more diligent partners in the growing number of relationships they are forming with research institutions in other countries. This may result, in part, from the greater effort required by U.S. companies to cultivate ties with unfamiliar overseas partners. Conflict of Interest and Public Perceptions Real and perceived conflicts of interest can present obstacles to collaborative relationships between universities and industry.25 Potential conflicts are common, according to one university representative, and the challenge for both parties is to manage them appropriately. One set of concerns involves the level of financial compensation for products resulting from research conducted at universities. Some participants argued that research supported by the government should mean that the results of such research are publicly available. Conflict may also arise when university faculty serve as consultants to industry, an activity viewed by some as in conflict with education goals. Moreover, the question of whether foreign firms should have access to the results of research conducted at U.S. universities continues to be debated. This concern reflects the larger issue of foreign participation in U.S.-based collaborative ventures and, conversely, the participation of U.S. firms in foreign R&D ventures. GOVERNMENT-INDUSTRY COLLABORATION The government accounts for nearly half of the total R&D spending in this country. It is the nation's largest single employer of scientists and research engineers and provides funding for most basic research conducted by universities. In addition, the more than 700 federal laboratories employ nearly one-sixth of the scientists in the United States. Defense R&D constitutes a large percentage of the total federal R&D budget, accounting for more than 60 percent of such expenditures during the last decade.

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The Government Role in Civilian Technology: Building a New Alliance Some policy analysts and business leaders have suggested that U.S.-economic interests would be better served if the government assumed a broader and more active role in civil technology development. One industry executive at the workshop noted that many of the ''critical technologies'' identified by various groups will probably not contribute to the nation's defense. Yet progress in many of these key areas, he argued, is crucial to the performance of many U.S. industries, to national economic performance, and to improvement in the U.S. standard of living. Since the late 1970s, the federal government has provided incentives to encourage the transfer technology from federal laboratories to the private sector; it established SEMATECH, created NSF Engineering Research Centers, and established the Advanced Technology Program at the National Institute of Standards and Technology. The ATP is centered on the development of pre-competitive, generic technology with significant commercial promise.26 In fiscal year 1991, ATP awarded some $9 million to support 11 industry-led R&D projects in such areas as x-ray lithography for semiconductor manufacturing, high-temperature superconductivity, flat-panel display manufacturing, and optical recording.27 Federal Laboratory-Industry Collaboration There is considerable debate about the utility of federal initiatives, the most productive modes of collaboration, and the need for a national policy for technology transfer.28 Participants at the workshop discussed the fact that technology transfer requires sustained, market-driven technology programs. As one laboratory director explained, early technology transfer efforts were guided by the mistaken assumption that federal scientists and engineers had created a vast wealth of technology with commercial applications. Measures to improve private sector access to the laboratories, it was believed, would yield a stream of off-the-shelf technologies that could easily be converted to commercial applications. That has not been the case, several participants noted. Most of the technology at the federal laboratories, according to one participant, was developed to support the missions of federal agencies rather than to address commercial needs. In recent years, Congress has passed measures to create incentives for laboratory-industry collaboration and technology transfer. For example, federal scientists and engineers can now collect royalties on patented inventions they create.29 Procedures for licensing federal technology have been simplified, and industry sponsors of collaborative research conducted at national laboratories can own or secure exclusive licensing rights to inventions arising from these joint efforts. Nonetheless, the missions of many of the federal laboratories do not reflect the commercial technology needs of industry. One

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The Government Role in Civilian Technology: Building a New Alliance participant noted that the NIST is the only federal facility with the explicit mission of assisting U.S. industry. Some federal agencies that conduct research are taking steps to foster collaborative relationships with industry. The Department of Energy, for example, has explicitly included technology transfer in the mission statement of each of its laboratories.30 DOE laboratories are now evaluated on the basis of how successfully they work with industry. In addition, the department's decisions on investments in capital and equipment are guided by its desire to make the laboratories better partners with industry. Another participant noted, however, that mission statements can be changed easily. Other, more difficult changes—in facilities, staff, and location—will be needed if federal laboratories are to fulfill a role in technology development and transfer, they noted. SEMATECH SEMATECH's goal is to develop a domestic capacity for world-class levels of semiconductor manufacturing by 1993. The federal government supplies half of the consortium's $200 million annual budget; SEMATECH's 14 member companies provide the remaining funds. The five-year experiment conducts in-house research and funds outside R&D projects. In recent years, SEMATECH has spent a growing portion of its budget on R&D projects conducted by a group of 140 equipment and materials manufacturers that make up the consortium's fifteenth member, SEMI/SEMATECH. These outside R&D projects now comprise half of SEMATECH's research budget. SEMATECH provides about 10 percent of the funding for equipment improvement projects and about 30 percent of the support for joint development projects focusing on new equipment. Collaborating companies provide the rest. The consortium also funds research at its 11 university-based centers of excellence and at several national laboratories. In-house research is carried out by the consortium's 700-person staff, one-third of whom are on loan from corporate members. In addition to its research program, SEMATECH is working to improve relationships between semiconductor manufacturers and domestic suppliers. For example, SEMATECH's corporate members conduct qualification tests of new equipment at a single site. Representatives from other firms come to the test site, where they evaluate equipment performance and provide feedback to the supplier.31 Anticipated Returns Workshop participants noted that the consortium appears to be achieving its technical goals on schedule. By mid-1993, the end of its original

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The Government Role in Civilian Technology: Building a New Alliance five-year charter, SEMATECH is expected to reach its goal of producing memory chips with 0.35-micron circuitry at its pilot fabrication plant in Austin, Texas, using equipment from domestic U.S. suppliers. One speaker predicted that with SEMATECH's contributions, U.S. semiconductor manufacturers and their suppliers will reach parity with the Japanese in equipment and some processes by 1993. Some participants argued that the United States should have firms capable of producing world-class quality equipment for each stage in the semiconductor manufacturing process: lithography, furnaces and implantation, etching, planarization, and deposition. Some participants at the workshop reported that semiconductor manufacturers are benefiting from the consortium's programs. For example, two firms have used technical information from SEMATECH's pilot fabrication facility to guide planning of new manufacturing plants. Other participants have used SEMATECH's technical expertise to guide the purchase of new equipment. Workshop participants discussed plans for SEMATECH after 1993, when its initial five-year authorization ends. Some suggested that current SEMATECH programs could be extended to new areas of manufacturing. One such possibility, a participant noted, is "clean sheet" designs for factories built to manufacture the next generation of high-density memory and logic chips. SEMATECH might also be used to compare the advantages of costly, large-scale production facilities with the benefits that might be achieved from small fabrication plants. Government-Sponsored R&D Collaboration in Other Countries Government-led collaborative R&D efforts in other nations have received significant attention.32 Collaborative programs in Europe were discussed at the workshop. The changing nature of Japan's collaborative R&D programs was also discussed, as programs that initially focused on applied R&D projects increasingly emphasize basic science and engineering.33 The European Community The long-term research programs jointly sponsored by the governments and businesses of the European Community (EC) are an expression of Europe's emphasis on new technology.34 According to one participant, these R&D projects also reflect the recognition that technology development requires substantial economic support, that the scale of the required efforts often outstrips the capacities of individual companies and nations, and that the globalization of technology shortens technical advantages. Many European firms view collaborative R&D as a way to achieve a competitive edge. This widely held perception distinguishes European companies from their American counterparts, which are more likely to pursue individual R&D initiatives exclusively with internal resources.

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The Government Role in Civilian Technology: Building a New Alliance Many of the barriers to collaborative R&D that European nations are working to overcome, such as cultural and language differences and competing national interests, do not inhibit U.S. collaborative ventures. While acknowledging that transnational collaborations can lead to administrative confusion and the waste of resources, several participants asserted that European countries have built a viable framework for collaborative R&D. EC nations have forged a consensus on the technological areas most vital to future industrial competitiveness and are allocating their R&D support accordingly. Japan Government-led cooperative R&D in Japan has evolved through three stages since 1950. During the 1950s and 1960s, the country's efforts focused on creating the science and engineering foundation for economic development. Initially, government support for R&D was directed to individual firms, which contributed between 50 and 70 percent of project funds. To stimulate research efforts, some participants noted, the government created a network of trade organizations, the Engineering Research Associations. With government support and guidance, the associations organized collaborations among small and midsize companies to address common technical barriers. Industrial trade associations remain an important feature of collaborative R&D in Japan. During the 1970s, the focus of government-led collaborations changed. Efforts were directed at elevating the performance of Japanese companies in technology generation. Collaborative projects were designed to refine advanced technologies. The specific goals of each collaborative venture were developed by the government in close consultation with the trade associations. The third stage of Japan's government-led collaborative R&D efforts came as Japanese companies began to dominate world markets for many high-technology consumer products. This current phase of Japanese government-industry research focuses on the development of next-generation technologies. One recent initiative is the government-funded Key Technology Center (KTC) program, which has provided support for more than 60 projects since 1985. The Key Technology Center (KTC) Program In contrast to earlier initiatives focused on next-generation technology, the KTC program involves high-risk R&D. The program functions as a venture capital fund, providing seed money in the form of government-owned equity shares to support industrial collaborations, which typically involving 10 or fewer companies. (Participation of foreign-owned subsidiaries in KTC programs is not prohibited.) Participants are expected to

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The Government Role in Civilian Technology: Building a New Alliance produce commercially useful technology and to operate profitably over a seven-to ten-year period. The Optoelectronic Technology Research Corporation (OTRC) is an example of this new approach to cooperative R&D. Founded in 1986, the center has 13 member companies and an annual budget of about $7.5 million, 70 percent of which is supplied by the Japanese government. OTRC's research agenda is the product of a planning process involving member companies, government, and universities. The goal of the center's research program is to develop the knowledge and tools to design and manufacture integrated circuits that combine electronic and photonic technologies.35 Optoelectronic integrated circuits are expected to be important components of future communications and computing equipment. R&D work at OTRC is divided between the center's laboratory in Tsukuba Science City, outside Tokyo, where 20 scientists focus on process-related issues, and the in-house laboratories of member firms, where collectively some 30 researchers work on various devices and applications. Technology transfer between member firms is promoted by the dissemination of reprints of articles and other presentations by center scientists, an annual workshop for company representatives, and semiannual panel discussions in which government and university scientists also participate. To date, the center's R&D work has not produced any inventions that have resulted in patents. Should patented technologies result from the research, decisions on licensing the inventions to nonmember firms will be made on a "case-by-case basis." Rights to patented inventions, however, are assigned to the member firms, not the government. Issues for Consideration Several workshop participants suggested criteria for evaluating the merits of proposed collaborative ventures and defining the roles of prospective partners. Two criteria that might be used to select areas of collaboration are (1) high levels of technical and financial risk and (2) a chance of high returns for successful ventures. Without the incentive of profit, individual businesses will not undertake R&D on potentially risky projects. There are other mechanisms by which technologies developed through government-supported collaborations can lead to product refinement and commercialization. A clear lesson of the past, participants noted, is the need to pull technology from R&D ventures. Historically, an industry representative noted, government-funded projects have been operated under the assumption that technology will flow to industry, which will then commercialize the product or process application. As was noted often throughout the workshop, however, this expectation leads to less than successful technology transfer outcomes.

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The Government Role in Civilian Technology: Building a New Alliance One participant noted that the government will need a way to assess the "value added" by each prospective partner in a collaboration. The personnel and technical contributions of collaborating firms must enhance prospects for achieving project goals and, ultimately, the technological advantage that motivated the cooperative effort. Moreover, steps must be taken to ensure the participation of small companies, an important source of new ideas and innovations. Government loans or loan guarantees might be used to encourage innovative small companies to participate in cooperative projects. In addition, it was suggested, carefully crafted tax incentives might encourage large U.S. companies to assist smaller businesses as they work to develop new technologies and products. Finally, many participants recommended that collaborative projects should be required to meet a series of technical milestones and should be monitored periodically for progress. Participation of Foreign Companies As participants noted, it is increasingly difficult to distinguish between U.S. and foreign companies. Just as U.S.-based firms have subsidiaries overseas, foreign corporations have operations in the United States that employ U.S. workers and provide federal and state tax revenue. Some public and private sector representatives at the workshop suggested that if a foreign-owned U.S. subsidiary pays taxes in the United States, it should be eligible to participate in government-supported R&D collaborations. It was also noted that foreign participation in collaborative research can benefit U.S. companies. In many key areas, workshop participants said, foreign firms are at the forefront of technological know-how. To be competitive, U.S. companies must draw on these repositories of expertise. NOTES 1.   For an overview of methods to promote development in small firms, see P. Shapira, "Helping Small Manufacturers Modernize," Issues in Science and Technology 7(Spring 1990): 49-54. 2.   See Stephen J. Kline and Nathan Rosenberg, "An Overview of Innovation," in The Positive Sum Strategy, eds. Ralph Landau and Nathan Rosenberg (Washington, D.C.: National Academy Press, 1986) and David C. Mowery, "The Diffusion of New Manufacturing Technologies," in The Impact of New Technologies on Employment and Economic Growth, eds. Richard M. Cyert and David C. Mowery (Cambridge, Mass.: Ballinger, 1987). 3.   For an overview of the innovation process, see Stephen J. Kline, Models of Innovation and Their Policy Consequences, Report INN-4B (Stanford University, Stanford, California, 1990). 4.   See Wendy Schacht, Commercialization of Technology and Issues in the Competitiveness of Selected U. S. Industries: Semiconductors, Biotechnology, and Superconductors (Paper prepared for the Congressional Research Service, Washington, D.C., 1988). 5.   For an overview of some of these difficulties see The President's Council on Competitiveness, Report on National Biotechnology Policy (Washington, D.C., 1991).

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The Government Role in Civilian Technology: Building a New Alliance 6.   See, for example, U.S. Department of Commerce, Federal Government Initiatives with Policy Implications for Science and Technology (Washington, D.C.: U.S. Government Printing Office, 1988). 7.   See U.S. Congress, House Committee on Small Business, Subcommittee on Regulation, Business Opportunities, and Energy, Hearing on Technology Transfer Obstacles in Federal Laboratories: Key Agencies Respond to Subcommittee Survey, 101st Cong., 2nd sess., 1990. 8.   For an overview of DOE technology transfer efforts, see U.S. Congress, House of Representatives, DoE's Enhanced Technology Transfer Program , statement of W. Henson Moore, Deputy Secretary, Department of Energy and testimony of Matthew B. Coffey, president, National Tooling & Machining Association, at a hearing before the Committee on Energy and Commerce, Subcommittee on Oversight and Investigations, 102nd Cong., 1st sess., July 25, 1991. 9.   For an overview of the program see U.S. Department of Commerce, National Institute of Standards and Technology, "Procedures for the Selection and Establishment of NIST Manufacturing Technology Centers," Part 290, Title 15, Federal Register (September 17, 1990):8. 10.   The Omnibus Trade and Competitiveness Act (P.L. 100-418), section 5131 authorized the creation of the Advanced Technology Program. 11.   For a discussion of regional economic development and the role of states in promoting industrial development, see R. Scott Fosler, ed., The New Economic Role of the States: Strategies in a Competitive World Economy (New York: Oxford University Press, 1988). 12.   For an overview of state technology transfer efforts, see M. K. Clarke and E. N. Dobson, Promoting Technology Excellence: The Role of State and Federal Extension Activities (Washington, D.C.: National Governors Association, 1989). 13.   See Ben Franklin Partnership Board, 48-Month Progress Report, March 1, 1983-February 28, 1987 (Philadelphia: Pennsylvania Technology Assistance Program, Ben Franklin Partnership Challenge Grant Program for Technological Innovation, 1987), and other reports of the Ben Franklin Partnership Board. 14.   Center for Social and Economic Issues, Industrial Technology Institute, Solomon Associates, and J. D. Eveland, Literature of Collaborative Research and Development: An Analytic Overview (Report submitted to the Congressional Office of Technology Assessment, U.S. Congress, 1986). 15.   For a brief overview of cooperative R&D efforts in the United States, see H. I. Fusfeld and C. S. Haklish, "Cooperative R&D for Competitors," Harvard Business Review (November-December 1985): 60-76, and John A. Alic, "Cooperation in R&D," Technovation 10, no. 5 (1990): 319-331. 16.   For an overview of forces impacting global technology development and strategic technology alliances, see National Academy of Engineering, National Interests in an Age of Global Technology (Washington, D.C.: National Academy Press, 1991), and John Hagedoorn and Jos Schakenraad, Strategic Partnering and Technological Cooperation (The Netherlands: Maastricht Economic Research Institute on Innovation and Technology, 1989). 17.   Jerry Werner and Jack Bremer, "Hard Lessons in Cooperative Research, Issues in Science and Technology (Spring 1991): 44-49. 18.   See B. Bozeman, A. Link, and A. Zardkoohi, "An Economic Analysis of R&D Joint Ventures," Managerial and Decision Economics 7 (1986): 263-266, as cited in David Mowery, Collaborative Research: An Assessment of Its Potential Role in the Development of High Temperature Superconductivity (Report prepared for the Office of Technology Assessment, U.S. Congress, 1988). 19.   See National Research Council, Office of Japan Affairs, R&D Consortia and U.S.-Japan Collaboration (Washington, D.C., 1991), 16. 20.   U.S. Congress, General Accounting Office, SEMATECH's Efforts to Strengthen the U.S. Semiconductor Industry (Washington, D.C., 1990).

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The Government Role in Civilian Technology: Building a New Alliance 21.   There have been several bills introduced in Congress to remove antitrust restrictions on cooperative manufacturing and production ventures. These include, H.R. 4611 and S. 1006. H.R. 4611, National Cooperative Production Amendments of 1990, sponsored by Congressman Brooks, amends the National Cooperative Research Act of 1984 to reduce the liability for joint ventures entered into for the purpose of producing a product, process, or service. It also excludes from qualification any joint venture over 30 percent foreign investors, and requires that production facilities be located in the United States. S. 1006, National Cooperative Research Act Extension of 1989, sponsored by Senator Leahy, is similar to H.R. 4611, although the bill did not include the foreign exclusion provision or facilities location requirements in H.R. 4611. The administration supported the Senate bill. 22.   For an overview of the U.S. university research enterprise, as well as that in other industrialized nations, see National Academy of Sciences, National Academy of Engineering, and Institute of Medicine, The Academic Research Enterprise within the Industrialized Nations: Report of a Symposium (Washington, D.C.: National Academy Press, 1990). 23.   For an overview of collaborative research in pharmaceutical and biotechnology, see Kathi Hanna, "Collaborative Research in Biomedicine," in Government and Industry Collaboration in Biomedical Research and Education, Report of a Workshop, Institute of Medicine (Washington, D.C.: National Academy Press, 1989). 24.   For an overview of policy issues affecting the information technology sector, including intellectual property rights protection and licensing agreements, see Ken Guy and Erik Arnold, A Review of Policies Affecting the IT [Information Technology] Sectors of the USA, Japan, EEC, France, West Germany, and the UK (Science Policy Research Unit, University of Sussex, United Kingdom, 1987). 25.   For an overview of these issues, see J. A. Nowack, "The University Policy Environment for University-Industry Interactions," in Government and Industry Collaboration in Biomedical Research and Education: Report of A Workshop, Institute of Medicine (Washington, D.C.: National Academy Press, 1989). 26.   For a discussion of the administration's view of the government role in civilian technology, see "Testimony of the Honorable D. Allan Bromley," Director of the Office of Science and Technology Policy, Executive Office of the President, before the U.S. Senate Committee on Commerce, Science, and Transportation, May 23, 1990, and Office of Science and Technology, Technology Policy (Office of the President, Washington, D.C., 1990). 27.   U.S. Department of Commerce, "Mosbacher Announces Eleven Grants to Advance Key Industrial Technologies" (Press release, Washington, D.C., March 5, 1991). 28.   For an overview of issues concerning technology transfer from the federal laboratories to industry, see U.S. Congress, House Committee on Small Business, Subcommittee on Regulation, Business Opportunities, and Energy, 101st Cong., 2nd sess., Technology Transfer Obstacles in Federal Laboratories: Key Agencies Respond to Subcommittee Survey (Washington, D.C.: U.S. Government Printing Office, 1990) and U.S. Congress, House Committee on Science, Space, and Technology, Subcommittee on Science, Research, and Technology, 101st Cong., 2nd sess., Transfer of Technology from the Federal Laboratories (Washington, D.C.: U.S. Government Printing Office, 1990). 29.   The public laws which direct federal technology transfer policy, including incentives to researchers to commercialize federal technology include P.L. 96-480 Stevenson-Wydler Technology Innovation Act of 1980, P.L. 96-517 Government Patent Policy Act of 1980, and P.L. 99-502 Federal Technology Transfer Act of 1986. 30.   J. F. Decker, "The Office of Energy Research's Approach to Improved Technology Transfer" (Paper presented at the Department of Energy Transfer Orientation Seminar, U.S. Department of Energy, Office of Energy Research, Washington, D.C., January 24, 1991). 31.   For an overview of SEMATECH and progress to date, see U.S. Congressional Budget Office, The Benefits and Risks of Federal Funding of SEMATECH (Washington, D.C.: U.S.

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The Government Role in Civilian Technology: Building a New Alliance     Government Printing Office, 1987) and U.S. Congressional Budget Office, Using R&D Consortia for Commercial Innovation: SEMATECH, X-Ray Lithography, and High Resolution Systems (Washington, D.C.: U.S. Government Printing Office, 1990), among other reports. 32.   For an overview of technology policy overseas, and role of collaborative R&D programs, see Henry Ergas, "Does Technology Policy Matter?", in Technology and Global Industry, eds. Bruce R. Guile and Harvey Brooks (Washington, D.C.: National Academy Press, 1987) and Richard R. Nelson, High-Technology Policies: A Five Nation Comparison (Washington, D.C.: American Enterprise Institute, 1984). 33.   Battelle Memorial Institute, Government-Promoted Collective Research and Development in Japan: Analyses of the Organization Through Case Studies (Washington, D.C.: Pacific Northwest Laboratory, 1990). 34.   See Delegation of the Commission of the European Communities, "Important Progress for European Community Research," (Brussels, Commission of the European Communities, 1990). 35.   Optoelectronics Technology Research Laboratory, Technology for the 21st Century (Program Description, Optoelectronics Technology Research Laboratory, Tsukuba Science City, Japan, 1990).

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The Government Role in Civilian Technology: Building a New Alliance APPENDIX B Legislative Request for the Study OMNIBUS TRADE AND COMPETITIVENESS ACT (P.L. 100-418) "(2) The Committee shall render to the Secretary and the Congress such additional reports on specific policy matters as it deems appropriate. "(c) NATIONAL ACADEMIES OF SCIENCES AND ENGINEERING STUDY OF GOVERNMENT-INDUSTRY COOPERATION IN CIVILIAN TECHNOLOGY.— "(1) Within 90 days after the date of enactment of this Act, the Secretary of Commerce shall enter into contracts with the National Academies of Sciences and Engineering for a thorough review of the various types of arrangements under which the private sector in the United States and the Federal Government cooperate in civilian research and technology transfer, including activities to create or apply generic, nonproprietary technologies. The purpose of the review is to provide the Secretary and Congress with objective information regarding the uses, strengths, and limitations of the various types of cooperative technology arrangements that have been used in the United States. The review is to provide both an analysis of the ways in which these arrangements can help improve the technological performance and international competitiveness of the United States industry, and also to provide the Academies' recommendations regarding ways to im-