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272 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY a marked increase in the production of European suppliers of computer memories like SGS-Thompson, which became the leading supplier world- wide for EPRON in 1993. the specification for the 0.35-micron CMOS logic process. For this project, industry, institutes, and universities were joint partners. In the field of equipment and materials, one can see the benefits even for smaller equipment manufacturers. Various companies have strengthened their global competitive position through international cooperation with users, co- producers, and research institutes and through new innovative technologies. They include the following: . ASTI, which introduced its all-plastic ultraclean chemical pump with a favorable global market response; AST, which is now accepted as one of the leading suppliers of rapid ther- mal processing equipment; Plasmos, whose share of the worldwide ellipsometer market has increased to about 32 percent; and Successful sales of GEMATEC's ELYMAT machine, which is used for . . . mapping on silicon. JESSI cooperation with SEMATECH in the field of minienvironment and mask technology resulted in internationally accepted standards, an increased un- derstanding of U.S. market requirements, and increased European access to U.S. markets. Even though JESSI's funding ended in 1996, the program has accepted a variety of new projects and decided to continue others. These focus on important application-oriented topics like digital audio broadcasting and also on new devel- opments in integrated circuit technology and equipment for integrated circuit manufacturing. The main achievement of JESSI is that the major suppliers in microelectron- ics and information and communications technologies have been brought together, forming a critical mass for large-sized research projects. TECHNOLOGY TRANSFER FROM UNIVERSITIES Universities HISTORY OF TECHNOLOGY TRANSFER The development of German universities in the nineteenth century was influ- enced by the idealist philosophers as well as the growing industrial sector's need for well-trained personnel. Philosophers like von Humboldt, Fichte, and Schleiermacher influenced

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TECHNOLOGY TRANSFER IN GERMANY 273 decisively the organization and orientation of the German university system. The idealists, who were involved in the founding of the Berlin University (1809- 1810), viewed research at universities as an important element of teaching. At the outset, however, German academic research was focused primarily on areas such as philosophy, mathematics, and humanities; empirical research had to fight for recognition. Nevertheless, by the end of the nineteenth century, German university research had achieved world leadership in several major fields of sci- ence, including medicine, chemistry, and physics. Due to rapid increases in stu- dent enrollments, particularly since 1870, many universities created separate de- partments and institutes with laboratories for natural sciences. Through the mid-1800s, the idealist orientation of German professors and administrators led them to elevate the natural sciences and neglect the "less-dig- nified" engineering sciences. Ultimately, it was the demand of German industry for skilled engineers that led the German states to establish special polytechnical schools outside universities. In the 1870s, the polytechnical schools were el- evated to higher status, becoming technical higher education schools (Technische Hochschulen). Initially, the efforts of these new institutions to achieve academic recognition led them to overemphasize theory and neglect research targeting in- dustrial needs. At the end of the nineteenth century, however, the establishment of engineering schools in the United States induced German technical higher edu- cation schools to begin introducing research laboratories. The main benefit to industry of universities and technical higher education schools was the provision of trained personnel. Even at this early stage of the development of the German academic research system, professors had consultancy arrangements with indus- try. In other words, the first forms of technology transfer appeared. Universities and technical higher education institutes focused on education, whereas the central government and the states established a variety of research institutes in applied areas. A prominent example of the latter is the Imperial Insti- tute for Physics and Technology (Physikalisch-Technische Reichsanstalt), which served as a model for the National Bureau of Standards in the United States. In addition, some smaller research institutes were financed jointly by government and industry. Finally in 1911, the Kaiser Wilhelm Society, the predecessor of the Max Planck Society, was founded, at that time with a strong focus on applied science and nearly totally financed by industry. The increasing engagement of industry in government or industry institutes outside universities was stopped by the economic problems caused by the two world wars. Following World War II, the government and the states assumed important roles in the national innovation system through such institutions as the Max Planck Society, the Fraunhofer Society, and the National Research Centers, today called Helmholtz Centers, which are described in more detail in the follow- ing sections. Increased public investment in R&D, beginning in the 1970s, was motivated by a perception that Germany was lagging technologically compared with the United States.

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274 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY In the educational sector, the main development after World War II was the official recognition of technical higher education schools as equivalent to univer- sities. By integration of other nontechnical disciplines some of them officially became "Technical Universities" or even normal universities. In the 1970s, German universities began to consider seriously their role in technology transfer, and university-industry relationships grew. Between 1970 and 1980, industry support of universities increased by 25 percent, and between 1980 and 1990, such support grew by 44 percent. In addition, universities' needs for external funds increased with student enrollments and, in recent years, be- cause of a scarcity of public funds. Both factors have created pressure on aca- demic research. Beginning in the 1980s, initiatives on a number of fronts document Ger- many's increasing interest in technology transfer. Early in the decade, German universities established a special working group of university chancellors to look into the topic (Selmayr, 1987), and the former Ministry of Education and Science (BMBW) initiated a research project called Projakt Wissenschaft (PROWIS) that had a strong technology transfer focus (see the publication list in Allesch et al., 1988~. In the mid-1980s, the German Science Council issued a statement on technology transfer (Wissenschaftsrat, 1986~. These efforts led to the easing of very strict regulations concerning the budget and personnel structures of univer- sities, recommendations on how to handle technology transfer instruments (e. g., the establishment of external institutes), the establishment of technology transfer units at universities, and a generally more open-minded attitude in universities toward technology transfer. STATISTICS ON GENERAL RESEARCH STRUCTURES This section presents information about the development of research funding at universities and the distribution of money among research fields. It also ana- lyzes the sources of external funds, which are good indicators of the major chan- nels of technology transfer. Data are not available, however, on the four focal areas of this study. A main characteristic of the German research system is the public funding of most universities; students do not have to pay tuition fees. It is the states, not the national government, that are responsible for education and hence for the support of universities. According to the principle of equality of research and teaching, the states assign general budgets to each university without dictating how the money should be used. Since universities are not required to report how much of their general budget they allocate to research and its associated overhead, there are no precise statistical data, only general estimates, on this base of institutional research funding. The latter are based on the assumption that a certain share of the total general budgets is used for research, with the share differing from disci- pline to discipline (Wissenschaftsrat, 1993a). In addition, research funds from

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TECHNOLOGY TRANSFER IN GERMANY 10 ~ 9: 8t 7 1 Total - - - Basic funds --- External funds 2t 1 oL 275 / . . . . . . . . . . . . . . ~. . ~. . . . . ~. 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 year FIGURE 3.14 Research funds of German universities in constant 1980 DM. SOURCES: Bundesministerium fur Bildung, Wissenschaft, Forschung und Technologie (1996~; Bundesministerium fur Forschung und Technologie (1993a); Wissenschaftsrat (1993b); calculations of the Fraunhofer Institute for Systems and Innovation Research. third parties (Drittmittel), called external funds (contracts and grants), have to be taken into account. Between 1980 and 1990, the overall research budget of universities increased nominally by 59 percent; in constant 1980 DM, the increase was 21 percent (Fig- ure 3.14 and Table 3.2~. The sharp growth that followed in 1991 and 1992 was mainly due to the inclusion of the new states in the former East Germany. At about 12 percent, however, the share of research conducted by former East Ger- man universities is quite small. In 1990,49 percent of the total research budget of German universities was related to natural sciences and engineering (Figure 3.15~. This has to be taken into account when a direct comparison between the total R&D budgets of industry and universities is made, because industrial research focuses primarily on these two areas. If only the natural sciences and engineering are considered, the relative share of universities in the German R&D system is much lower than suggested in the general comparison presented in the "General Structures" section, above. (See in particular Figure 3.2.) In real terms, university institutional research budgets grew by 15 percent and the external funds by 42 percent between 1980 and 1990. Hence, the share of

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276 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY TABLE 3.2 Research Funds of German Universities in billions of DM Nominal values Real values (1980) Indexes (real, 1980) Year Basic External Total Basic External Total Basic External Total 1980 4.82 1.36 6.18 4.82 1.36 6.18 100 100 100 1981 4.92 1.47 6.39 4.69 1.40 6.09 97 103 99 1982 5.08 1.51 6.59 4.68 1.39 6.07 97 102 98 1983 5.26 1.54 6.79 4.71 1.38 6.09 98 101 99 1984 5.31 1.73 7.04 4.69 1.52 6.21 97 112 100 1985 5.51 1.78 7.29 4.75 1.54 6.29 99 113 102 1986 5.86 1.95 7.81 4.95 1.65 6.60 103 121 107 1987 6.19 2.15 8.34 5.11 1.78 6.89 106 131 112 1988 6.53 2.26 8.78 5.31 1.84 7.15 110 135 116 1989 6.83 2.40 9.23 5.38 1.89 7.27 112 139 118 1990 7.29 2.56 9.85 5.53 1.94 7.47 115 142 121 1991 8.64 3.53 12.17 6.27 2.56 8.83 130 188 143 1992 9.33 3.83 12.16 6.50 2.67 9.17 135 196 148 1993 9.59 4.25 13.84 6.41 2.84 9.26 133 208 150 1994 10.06 4.48 14.53 6.53 2.91 9.44 136 213 153 1995 10.31 4.56 14.90 6.56 2.93 9.49 136 215 154 SOURCES: Bundesm~nisterium fur Bildung, Wissenschaft, Forschung und Technologie (1996); Bundesm~nisterium fur Forschung und Technologie (1993a); Wissenschaftsrat (1993b); calculations of the Fraunhofer Institute for Systems and Innovation Research. external funds within the total budget became more important, increasing from 22 percent of the total in 1980 to 26 percent in 1990. These figures have to be interpreted with care, however, because the apparent growth in external funds is partly due to more complete publication of financial sources (Wissenschaftsrat, 1993b). Furthermore, the method of calculation used by different statistical sources varies, leading to different results (Selmayr,1989~. The following analy- sis of external funds is based primarily on data compiled by the German Science Council (Wissenschaftsrat,1993b), which seems to be the most consistent source. The external funds come chiefly from semipublic agencies, federal minis- tries, foundations, and industry (Figure 3.16~. The major semipublic agency (Forderinstitutionen mit uberwiegend stuatlicher Finanzierung) is the DFG, which provides about 90 percent of the funds in this category. The DFG is the ~ _ _ most important central orgamzatlon tor science promotion and IS, to a certain extent, comparable to the National Science Foundation in the United States. The largest part of its budget comes from the central government and the states, each of which usually makes an equal contribution for the support of individual projects (see Meyer-Krahmer, 1990; Wissenschaftsrat, 1993b). The DFG supports all areas of science, including the humanities and social sciences, and is generally, but not exclusively, oriented toward basic research. The coordination of univer- sity research at the federal level is one of its major statutory tasks. In this context,

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TECHNOLOGY TRANSFER IN GERMANY 30 25 20 15 10 5 A 277 natural engineering medical agricultural humanities sciences sciences sciences and social sciences FIGURE 3.15 Distribution of research funds at universities, according to major areas, 1993. SOURCE: Bundesministerium fur Bildung, Wissenschaft, Forschung und Tech- nologie, 1996. an effective instrument is the special research areas (Sonderforschungsbereiche), representing about 25 percent to 30 percent of DFG's budget (Bundesministerium fur Forschung und Technologie, 1993a). The special research areas are tempo- rary institutions at selected universities, established for a period of 12 to 15 years, where scientists from different disciplines cooperate in joint research programs (Deutsche Forschungsgemeinschaft, 1993~. Focal programs (Schwerpunkt- verfahren) are another instrument for supporting the supraregional cooperation of scientists of different universities. In the case of external funds from federal ministries, the former Ministry for Research and Technology (Ministerium fur Forschung und Technologie [BMFTi), now the BMBF, contributed the largest share, about 86 percent. The BMFT support of university research increased by about 110 percent between 1980 and 1990. In other words, the general increase in external university funds is due largely to the increase in BMFT support. A major reason for this growth was the introduction of collaborative research projects in 1984, whereby several industrial partners as well as university institutes work together (Bundesmin- isterium fur Forschung und Technologie, 1993a; Lutz, 1993~. The projects of BMFT/BMBF are generally quite application oriented, but they also support many basic research projects, for example in the area of marine science. BMFT fund- ing of university research in 1990 equaled about 67 percent of what the DFG invested in this area. Thus, BMFT/BMBF became a second major force in the external funding of university research.

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278 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY 1 l ~ ~ 1980 1985 1990 Year () th e r International organizations Ind u stry ~ Foundations C1 Federal m inistries Semi-public agencies FIGURE 3.16 External research funds of universities, according to major sources, 1980, 1985, 1990. SOURCE: Wissenschaftsrat (1993b). The Ministry of Defense invests relatively little in university R&D. In 1990, the ministry's contribution represented just 10 percent of all federal funds sup- porting university research. The Volkswagen Foundation (VW-Stiftung) accounts for 70 percent of all foundation financing of research at universities. Although it was founded by a private company, the foundation generally supports basic research projects. According to data of the German Science Council, in 1990, industry contrib- uted 15 percent of all external university R&D funds, an 80-percent increase (in real values) from 1980 and a 115-percent increase from 1970 (Wissenschaftsrat, 1993b). This means that funding from industry has become both absolutely and relatively more prominent, particularly since 1980. Compared with the total re- search budget of universities including institutional funds industry support represents a mere 4.4-percent share. The industrial funds can be divided into donations, money for collaborative research, and money for contract research. Most industry support (81 percent in 1990) went to contract research. In addi- tion, 11 percent of industrial funding went for "cooperative research" linked to projects of the AiF (see "Federation of Industrial Research Associations," be- low). Donations from industry or industrial associations accounted for a modest share, 8 percent, of all industrial funds for universities in 1990.~2 Recent data of the BMBF based on a more complete survey than that of the German Science Council provide different figures for the industrial contribution

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TECHNOLOGY TRANSFER IN GERMANY 279 to the university R&D funds.~3 According to the BMBF, in 1990, industry sup- port represented 7.7 percent of the total research budget of universities or 25 percent of the universities' external R&D sources. In 1995, these figures increased to 8.7 percent of the total funds or 28 percent of the external sources (Bundes- ministerium fur Bildung, Wissenschaft, Forschung und Technologie,1996~. With- out including the contribution of industry-financed foundations, in 1995, the in- dustry support represents about 7.5 percent of the total funds. To sum up, the BMBF data indicate that in recent years, industrial funding of universities has reached a significant level. Among the international organizations that contribute to university research, the EU is the most important (about 85 percent of total international funding). According to the Science Council, EU funding for universities amounted to DM 23 million in 1990, or 0.8 percent of all external university funds. In contrast to that figure, Reger and Kuhlmann (1995) estimated, using data from the European Commission, that EU funding of German universities came to DM 170 million in 1991. Compared to the average situation, this value may be artificially high, since in 1991 the Second and Third Framework Programs of the EU overlapped. But even if EU contributions came to roughly DM 100 million, this is still a relatively small amount compared with total external funding for German univer- sities (see "Impact of European Research," above). According to recent BMBF data, the EU funding amounted to about DM 130 million in 1995, or 2.7 percent of all external university funds. This means that the contribution of the EU to university funding has increased considerably in recent years (Bundesministerium fur Bildung, Wissenschaft, Forschung und Technologie, 1996~. The only other significant external source of academic research funding is project-related funding from the states, which represented about 4 percent of the total external funding in 1990. Finally, it should be noted that not all external funds are linked to research activities: Only 86 percent of those funds were so linked in 1990. This reduced share has already been considered in Figure 3.14 and Table 3.2. For the analysis of technology transfer, it is important to note that the exter- nal funds are not equally distributed across disciplines. For example, in the hu- manities and social sciences, the absolute and relative volume of external funds is rather low; in law, the external funds are about 4 percent of the institutional re- search funds; and in economics, they are about 9 percent (Wissenschaftsrat, 1993a). As Figure 3.17 shows for selected areas, the level of external funding in the natural sciences and engineering is much higher. The greatest amount of external funding, DM 266 million, or 41 percent of the total research funds, is apparent in mechanical engineering. This high proportion of external funds can be taken as a strong indication of considerable industrial funding of technical disciplines; the proportion is much higher than the overall 4.4 percent share of university research funding contributed by industry. In physics and electrical engineering, external funding represents about 29 percent of university research

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280 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY budgets. In absolute terms, external support for physics R&D is second only to that for mechanical engineering. This outcome is quite remarkable because of the generally basic orientation of physics research; unfortunately, more detailed sta- tistics on the industrial funds in physics are not available. External funds amount to about 25 percent of the total research budget in computer science, chemistry, and biology. Thus, all focal areas of this report have above-average levels of external funding and probably relatively high contributions from industrial sources. These budget statistics, however, can lead to an underestimate of research activities supported by external funds. In the German system, external sponsors pay only direct personnel costs and, to a limited extent, costs for facilities. They generally do not pay any overhead costs (e.g., for buildings, administration, cen- tral services). This is true for public and semipublic as well as private sponsors. Therefore, research with external funding has to be cofinanced, or matched, by infrastructure funds of about the same amount. Universities must take these in- frastructure funds from their base-institutional support. These infrastructure funds can be considered cross-subsidies to external funds. To sum up, the share of research supported by external funds is about twice as high in terms of time and personnel than it is in terms of budget. This relationship is indicated in Figure 3.17. For example, in terms of time and personnel, the real share of research supported by external sponsors is equivalent to 82 percent of university research funds in mechanical engineering, 58 percent in physics and electrical engineer- ing, and 50 percent in computer science, chemistry, and biology.~4 The German delegation is of the opinion that the shares of external support in those areas have increased since 1990 and in many technical institutes have reached 100 percent. Many of these institutes often have the opportunity to acquire additional external funds but cannot take advantage of them because of insufficient infrastructure funds; this insufficiency generally is manifested by a lack of space (see also Hochschulrektorenkonferenz, 1996~. Against this background, the overall figure of 4.4 percent of industrial funds within the research budget of universities, according to the data of the German Science Council, has to be adjusted to at least 8 percent in terms of research personnel and time. In other words, the industrial share can be considered equiva- lent to the U.S. share of 6.9 percent, because in the United States, industrial sup- port generally covers the full cost of research, including overhead. If the more realistic share of 7.5 percent of industrial funds, according to the BMBF data, are taken, the German level including related infrastructure funds is even substan- tially above 10 percent. On the basis of available statistics, it is quite difficult to assess the growth rates of external funding for specific disciplines because the disaggregated fig- ures for 1980 and even 1985 are quite incomplete. According to a survey of the Science Council (Wissenschaftsrat, 1993a) and the German delegation's own es- timates, computer science shows the highest increase in external funding, and the

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TECHNOLOGY TRANSFER IN GERMANY Mechanical engineering Electrical engineering Physics Computer science Chemistry Biology _ ................................................................................................... ................................................................................................... 0 100 200 300 400 500 600 700 Million DM 281 External funds Infrastructure funds Institutional funds FIGURE 3.17 Relation of external, related infrastructure, and institutional base R&D funds of universities in selected areas in 1990 in current DM. SOURCE: Wissenschaftsrat (1993a). increase in electrical engineering seems to be considerable, too. It is, however, not possible to say to what extent the increase in electrical engineering is related to (traditional) energy technology or (modern) electronics. The external funding in mechanical engineering shows only a moderate growth rate, probably because the rates at the beginning of the 1980s were already quite high. In order to provide at least a rough estimate of industrial funding in different disciplines, the data for the University of Karlsruhe, one of the largest technical schools in Germany, are presented in Figure 3.18. The school of mechanical engineering receives the largest volume of industrial funds, but the growth rate in the 1980s was quite modest. These findings support the general results for exter- nal university funds. Electrical engineering, computer science, chemistry, and biological sciences (including geography occupy the next positions, whereas physics is quite low on the scale. This can be taken as an indication that the high general level of external funds in physics does not necessarily reflect a high share of industrial funds. The high absolute level of industrial funding for computer science is due to specialization in this area at the University of Karlsruhe. The highest growth rates can be observed for computer science, electrical engineer- ing, and biological sciences (including geography), which confirms the upward trend found in the general data for computer science and electrical engineering for the total amount of external funding.

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282 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY 8 7 6 o 5 o 4 - ._ O ~10 ~10 I ~ Mech.Eng. Elect Eng. Physics Cater Cbendstry Biology/ CivilEng. Science Geography FIGURE 3.18 External funds from industry at the University of Karlsruhe, for selected areas, 1980 and 1990. SOURCE: Universitat Karlsruhe (1995~. A special finding at the University of Karlsruhe is the extremely high level of industrial funds in the school of civil engineering. (The level is twice as high as that in mechanical engineering.) However, the majority of these funds are raised as a consequence of the activities of two departments, which act as official certi- fying institutions in the field of building materials. Also, according to the chan- cellor of the university, many construction companies expect universities to con- duct the bulk of needed civil engineering research. The general statistics of the Science Council for "other engineering," however, indicate that the dominance of civil engineering as a recipient of industrial funds cannot be generalized to Ger- many as a whole. To sum up, the major external sources of funds linked to technology transfer between universities and industry are collaborative research funded by BMBF and, at a much lower level, contract research paid for by industry. These activi- ties are concentrated in the natural sciences and engineering, especially the latter, leading to distinctly higher rates of industry funding than the average rates sug- gest. The funds for collaborative research as well as for research contracts in- creased considerably during the 1980s; the greatest growth was in the areas of electrical engineering and computer science. ADMINISTRATIVE STRUCTURES The different means of technology transfer at German universities are largely determined by the public status of these institutions. This obliges the universities

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TECHNOLOGY TRANSFER IN GERMANY 29 TABLE 3.4 Percent Share of University External Funds in Four Focal Areas, 1995 Share of External Funds Within Share of Industrial Funds Within Share of Secondary Activities Within Area Total Budget Total Budget Industry Contracts Production technology 68 25 11 Microelectronics 63 18 10 Software 43 13 16 Biotechnology 69 12 25 Total 62 17 15 Two reasons may help explain these differences: . laud to the increasing number of students, the relative share of research funds from institutional sources has diminished since 1990, and the uni- versities have become more active in the acquisition of external funds. Since the questionnaire was clearly oriented toward technology transfer, primarily institutions with a high level of external funds answered (re- spondent bias). However, the main reason for the disparity is probably different. Expert interviews revealed that many professors are not aware of the real cost structures and do not sufficiently take into account the contribution of institutional funds to universities' overhead costs (see the related discussion in "Statistics on General Research Structures". Only some respondents answered in terms of money. In consequence, the results presented in Table 3.4 are a little bit lower than the real values in terms of personnel and time. Among the focus areas, the high share of external funds in production tech- nology is closely related to a high share of industrial income. It seems to be easier in biotechnology research than other technology areas to acquire external funding through BMBF, KU, DFG, and other sources. The average level of industry-related research within the total research ac- tivities is (as explained above) probably a little higher than 17 percent.2i In any case, it is far above the average level of about 8 percent for universities alto- gether. The industrial budget does not include collaborative projects with indus- trial partners funded by public sources (e.g., BMBF, KU), so the actual rate of industry-related activities is even higher. Production technology, microelectronics, software, and biotechnology are ranked first through fourth, respectively, in terms of the percentage of industrial funds that make up their total budgets. This ranking results because the focal areas are at different stages of their technology cycles, reflected by different de- grees of concentration on basic research. For example, in production technology,

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292 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY TABLE 3.5 Orientation of University R&D Activities, by Percent, 1995 Area Basic Research Applied Research Experimental Development Production technology 29 53 18 Microelectronics 41 47 12 Software 50 38 12 Biotechnology 66 27 7 Total 47 41 12 29 percent of R&D activities can be labeled as basic research; the amount of basic research is much higher in biotechnology (66 percent; Table 3.5~.22 Thus, biotechnology is still at an early stage of development, whereas production tech- nology has already matured. It is interesting to note that in all areas, the univer- sities do not restrict their activities to basic and applied research but devote some effort to experimental development work. A rather interesting result shown in Table 3.4 is the relatively low level of secondary activities within industrial contracts (average 15 percent) compared with the results of Allesch et al. (1988), who found an average share of 40 per- cent. A partial explanation is that the relative share of regular activities has in- creased since 1984, when Allesch et al. conducted their survey. The greater flex- ibility of university administration has made the integration of industrial contracts into regular work easier (Wissenschaftsrat, 1993a). Second, Allesch et al. fo- cused on individual professors, whereas the present questionnaire included whole research teams. Thus, with respect to professors, the level of secondary activities is more important than Table 3.4 suggests. Secondary activities are still a rel- evant incentive for technology transfer. Survey respondents also were asked to assess the importance of different channels of technology transfer. As it is not possible to measure and compare the various channels using common quantitative units, the respondents could choose from among the statements "very important," "important," "somewhat impor- tant," and "not important." These assessments were meant to reflect the specific importance of the industrial contacts for the institution, not general opinions. For the analysis of the results, the statements were arranged in an ordinal scale from 1 (not important) to 4 (very important). In Table 3.6, the assessments of the differ- ent channels and the overall mean scores are recorded. The respondents regarded collaborative research as the most important trans- fer channel, with a mean score of 3.2. Despite the various points of criticism raised in accompanying interviews, this type of technology transfer, which is primarily supported by BMBF programs, seems to be very effective. Informal channels (e. g., telephone conversations or informal meetings; see also Rappa and Debackere, 1992) are second in importance, with a score of 3.0. Thus, the

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TECHNOLOGY TRANSFER IN GERMANY TABLE 3.6 Channels of University Technology Transfer by Percent and Mean Score 293 Very Somewhat Not Mean Important Important Important Important Score Cooperative research 53 25 12 10 3.2 Contract research 35 25 18 22 2.7 Consultancy 21 31 36 12 2.6 Informal contacts 34 39 20 7 3.0 Industry-related committees 10 23 32 35 2.1 Workshops, conferences 24 35 28 13 2.7 Organization of seminars 14 30 32 25 2.3 Exchange of scientists 16 25 30 29 2.3 Provision of personnel for industry 27 31 24 17 2.7 Exchange of pubications 10 25 36 28 2.2 Industrial participation in master's and doctoral theses 29 33 20 17 2.7 establishment of appropriate conditions for the arrangement of informal meetings is important (e.g., the availability of travel funds and meeting rooms). With scores of 2.7, 2.6, 2.7, 2.7, and 2.7, respectively, contract research, consultancy, work- shops and conferences, provision of personnel for industry, and industrial partici- pation in master's theses and doctoral dissertations are quite important, too. In contrast, participation in industry-related committees and the organization of seminars for people in industry generally are viewed as only somewhat impor- tant. The same applies to the exchange of publications, which is a major instru- ment for information exchange in academia but obviously is less important for industry contacts. The exchange of scientists was given a low score, a result that confirms the outcome of other studies. This low score means that the temporary exchange of scientists is rarely used. But according to the interviews with profes- sors, when used, the exchange of scientists has been very effective. The results, disaggregated according to the four focal areas, are similar to those for the total sample, but not completely uniform. For instance, contract research has a high score in the application-oriented area of production technol- ogy, and a low score in biotechnology with its distinct focus on basic reasearch. A detailed discussion of these differences, however, lies beyond the scope of this study. Not suprisingly, university researchers saw the availability of additional funds as the most important advantage of industry contacts (Table 3.7~. How- ever, the opportunity to confer with industry had almost the same impact. Thus, technology transfer does not only flow from universities to industry, but aca

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294 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY TABLE 3.7 Benefits to University Researchers from Contacts with Industry, by Percent and Mean Score (percent total sample), 1995 Very Somewhat Not Mean Important Important Important Important Score Additional R&D funds 66 22 8 5 3.5 Flexibility of industrial funds 51 25 14 10 3.2 Additional facilities 31 30 26 13 2.8 Opportunity to confer with industry 54 33 11 3 3.4 References for acquisition of public funds 22 33 27 18 2.6 demic researchers receive new intellectual input from industry as well. This find- ing was confirmed by interviews, in which university scientists emphasized the relevance of information from industry for their research and for improved, prac- tice-oriented teaching. As already explained in the context of administrative struc- tures, the flexibility of industrial funds compared with public funds is a major incentive for German universities to undertake contract research for industry. As to the barriers to industry contacts (Table 3.8), university researchers regard only the short-term orientation of their industrial partners as relevant (mean score of 2.9~. All of the other reasons were "somewhat important" or even "not important" (scores between 1.8 and 2.3~. The low score for administrative barri- ers confirms interview results indicating that today's university administrations cope better with the problems of industrial contracts than in the 1980s (Selmayr, 1986~. University researchers' assessment of a limited indigenous industrial base as a barrier (mean score of 2.3) showed interesting differences in the four focal areas. (This internal differentiation is not indicated in the tables.) In biotechnol- ogy, the mean score was 2.6 (still an "important" barrier); in microelectronics, the TABLE 3.8 Barriers to Industry Contacts, by Percent and Mean Score, 1995 Very Somewhat Not Mean Important Important Important Important Score Less interesting topics 8 23 34 35 2.0 Industry's short-termorientation 35 32 21 12 2.9 Restrictions of publications 10 26 39 25 2.2 Administrative problems 7 17 38 38 1.9 Unfair contracts 4 14 38 44 1.8 Limited industrial base in Germany 20 28 17 35 2.3

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TECHNOLOGY TRANSFER IN GERMANY 295 TABLE 3.9 Reasons for Industry Interest in University Research, by Percent and Mean Score, 1995 Very Important Important Somewhat Not Mean Important Important Score Observation of scientific development 40 42 16 3 3.2 Solution of technical problems 39 36 20 6 3.1 Personnel recruitment 26 43 25 5 2.9 mean score was 2.5; in software, it was 2.4; and in production technology, it was 1.9 ("somewhat importantly. These results reflect the strong focus of German industry on all areas of mechanical engineering and a lower level of specializa- tion in information technology, microelectronics, and biotechnology. The university researchers were asked to describe what they believe to be the reason for industry's interest in their research (Table 3.9~. It is interesting that they ranked "observation of scientific development" even higher than "solutions to technical problems." This ranking confirms once again researchers' belief in a scientific dialogue between universities and industry on mid- and long-term ques- tions and an acknowledgment that industry needs solutions for its immediate tech- nical problems. In addition, the provision of qualified personnel a basic func- tion of universities plays an important role. As mentioned above, the relative importance to universities of different trans- fer channels, industry contacts, and barriers to working with industry are gener- ally the same in all selected areas. Nevertheless, differences in the absolute val- ues of the scores can be observed (Table 3.10~. To demonstrate this effect, the mean scores of all responses to a group of questions were combined and then averaged. In the case of transfer channels, those working in production technol- ogy generally saw the different channels more positively than did those in bio- technology. The similarity of this result to the differences in industrial funding in these four areas is obvious. The same phenomenon emerges with respect to the TABLE 3.10 Average Mean Scores in Major Question Groups Area Channels Benefits Barriers Production technology 2.8 3.3 2.1 Microelectronics 2.8 3.2 2.2 Software 2.6 3.0 2.3 Biotechnology 2.3 2.9 2.2 Total 2.6 3.1 2.2

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296 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY benefits of industrial contacts, but to a lesser extent. In the group of questions dealing with barriers to industrial contacts, the differences between the areas are negligible although the scores are generally low. All in all, the contacts between universities and industry in the selected areas are above average, and universities are more engaged in technology transfer to industry than generally assumed. Of course, the differences between the ana- lyzed institutions are large, and technology transfer could be improved in many cases. Nevertheless, the potential for a further increase in technology transfer seems to be limited at least in the selected focal areas. It is important to take the different stages in the technology life cycle into account. In biotechnology, for instance, a great increase in applied research and a corresponding reduction in basic research would be detrimental to the quality of research given the present stage of the area's technology life cycle. Comparison with the American Situation The results presented above give interesting insights into how technology transfer occurs at German universities. It is informative to compare this with the situation at American universities. A direct comparison is not possible, because an equivalent U.S. survey does not exist. But Cohen et al. (1994) conducted a survey of the University-Industry Research Centers (UIRCs), which are in many respects comparable to German university institutes. For the purpose of the present study, Cohen et al. (1995) prepared a special analysis for the four focal areas. UIRCs are research centers at U.S. universities that get base funds from the federal government, mostly the National Science Foundation, on the precondition that they also raise money from industry. In most cases, the industrial funds are base funds, too, and are not linked to contracts with clearly determined deliver- ables. The funding companies, however, are involved in the general planning of research activities and have early access to research results. With respect to the four focal areas, Cohen and his colleagues received input from 411 UIRCs (Table 3.11), a magnitude of response comparable to the Ger TABLE 3.11 Responses to the Survey of UIRCs, 1990 Area Number of UIRCs Production technology Microelectronics Software Biotechnology Total 109 64 129 109 411 SOURCE: Cohen et al. (1995, Table 3.1).

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TECHNOLOGY TRANSFER IN GERMANY TABLE 3.12 Industrial Contributions to UIRCs, Percent Share by Area, 1990 Area Share Production technology Microelectronics Software Biotechnology Total 41 30 33 21 31 SOURCE: Cohen et al. (1995, Table 2). 297 man survey (Table 3.3~. Only in software was the German absolute response rate distinctly lower, but the remaining sample is still sufficiently large. A revealing outcome of the U.S. survey is the share of the industrial contri- bution to the funds of the UIRCs (Table 3.12~. Like in Germany, U.S. centers devoted to production technology receive the highest share, those for biotechnol- ogy the lowest, and the area of microelectronics falls in the middle. The share of U.S. industrial funds for software R&D are comparable to, or even a little higher than, that for microelectronics, whereas in Germany funding for microelectronics research is near the level of funding for biotechnology. This difference may be due to closer university-industry relations in U.S. software development. The level of industry contributions to the UIRCsis generally higher than the average level of industry contributions to German universities, because the spe- cial mission of UIRCsis to improve technology transfer.23 In contrast, the Ger- man survey sample covered all types of university institutes and also included institutes with few industrial relationships. The U.S. survey, like the German one, asked respondents about the distribution of their R&D activities in basic research, applied research, and experimental development (Table 3.13~. The dif- ferences between the four focal areas are less distinct in the United States than they are in Germany (Table 3.5), but the level of basic research in production technology is lowest in both Germany and the United States. The distribution of the three types of R&D activity in the United States is comparable to that in Germany for production technology and microelectronics. But the U.S. orientation toward basic research is clearly less pronounced in soft- ware and biotechnology. Of course, such comparisons are of limited usefulness, because the German and American interpretations of the different R&D types might be different. The higher U.S. level of applied R&D in software, however, correlates to the higher share of industrial contributions in this area. In the case of biotechnology, the difference between Germany and the United States is so large that it cannot be explained by a methodological bias. To summarize, the applica- tion orientation in German academic R&D is apparent in production technology

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298 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY TABLE 3.13 Orientation of R&D Activities at UIRCs, Percent Share, 1990 Area Basic Research Applied Research Expenmental Development Production technology 32 46 22 Microelectronics 44 42 14 Software 38 44 18 Biotechnology 44 41 15 Total 18 SOURCE: Cohen et al. (1995, Table 3.3). and microelectronics and just as it is at U.S. UIRCs (Table 3.13~. In contrast, the German university research in software and microelectronics appears to have a distinctly basic orientation. Unfortunately, the available U.S. data do not shed light on the extent to which other academic research outside UIRCs is oriented toward more basic activities. Like the German survey, the UIRC survey asked about the relevance of dif- ferent transfer channels (Table 3.14~. Because of the different structures of Ger- man university institutes and American UIRCs, responses to the UIRC survey do not always have a counterpart in the German survey. Nevertheless, some com- parisons can be made. The U.S. scores, however, seem to be generally higher than the German ones (Table 3.6~. This is due to different ways of analyzing the questionnaires. According to the German approach, all questionnaires are in- cluded as long as the respondents assessed the importance of some channels of technology transfer. The channels not marked by respondents were considered to be "not important." According to the U.S. approach, however, only questions with a definite answer were included. If the German questionnaires are dealt with according to the U.S. method, the scores of German respondents rise and become comparable to the U.S. figures (Table 3.14~. The only distinct difference con- cerns the temporary work of UIRC/university personnel in industry laboratories, where the U.S. score is clearly higher; in other words, the movement of personnel is less often a mode of technology transfer in Germany. The approach of the UIRC survey to assessing the benefits of industry con- tacts was different than that of the German survey, and the U.S. data are com- bined rather than separated out by the four focal areas (Table 3.15~. The U.S. questionnaire asked whether or not the UIRCs see a benefit, without further dif- ferentiation, so that only the percentages of positive answers are available. The outcome, however, indicates that the U.S. and German respondents gave similar rankings to the value of "R&D funds," "opportunity to confer with industry," and "equipment." In other words, the U.S. survey, like the Germany survey, revealed the importance of dialogue with industry for the advancement of academic research. As to the barriers to industry contacts, the U.S. survey asked only about restrictions on publication. Thirty-nine percent of UIRCs reported that partici

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TECHNOLOGY TRANSFER IN GERMANY TABLE 3.14 Channels of U.S. UIRC and German University Technology Transfer, Mean Score in the Four Focal Areas 299 U.S. Mean Score (1990) German Mean Score (1996) Collaborative R&D projects 3.4 3.5 Seminars, workshops, symposiums 2.9 3.0 Research papers, technical reports 2.8 2.6 Telephone conversations 2.9 UIRC personnel in industry labs 3.3 2.8 Industry personnel in UIRC 3.5 Informal meetings withindustry people 3.3 3.2 Delivery of prototypes or designs 3.4 NOTE: German mean scores are calculated according to the method used in the U.S. survey. SOURCES: Cohen et al. (1995, Tables 18 to 22); survey by the Fraunhofer Institute for Systems and Innovation Research. patina companies can require information to be deleted from research papers be- fore they are submitted for publication; 58 percent said that companies can delay the publication of research findings, and 34 percent indicated that companies are able to both delay publication and have information deleted. The data do not indicate the actual frequency of these interventions. In Germany, the problem of publication restriction exists, too, but is generally less important (see Table 3.8~. However, the Geramn and U.S. data sets are not really comparable due to the different types of questions asked. TABLE 3.15 Benefits of Industry Contacts at UIRCs, by Percent, and at German Universities, by Mean Score Percent Share of UIRCs German Mean Score R&D funds 91 3.5 Opportunity to confer with industry 70 3.4 Equipment 68 2.8 Information on industry needs 56 Operational funds 49 Access to industrial facilities 45 Practical experience for students 38 Research direction 36 Industry personnel loaned to academic programs 22 Other 6 None of the above 1 SOURCES: Cohen et al. (1994, Table 3.29); survey by the Fraunhofer Institute for Systems and Innovation Research.

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300 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY All in all, the results of the U.S. survey confirm the German outcome. They emphasize the importance of collaborative research and informal contacts for technology transfer and highlight shortcomings of the German system with re- spect to the difficulty of temporarily moving academic researchers into industrial laboratories. The data seem to indicate that German universities have less of an orientation toward applied research in software technology and biotechnology than their U.S. counterparts, a result that might be due to a lack of complete data for all types of research units of U.S. universities (i.e., not only UIRCs). PATENTS AND PATENT STATISTICS Intellectual property rights, especially patents, play an important role in tech- nology transfer. The particular situation at German universities is characterized by the privilege of professors to exploit for their own benefit inventions created during their work on institutional base funds at the university (Verwertungs- privileg). The consequences of this policy for technology transfer are contradic- tory. On the one hand, the private holding of patents can be an incentive, if the invention is generated within the framework of existing ties to industry. In this case, the patent is licensed or transferred directly to the industrial partner, leading to a generally moderate extra income for the professor. On the other hand, if no industrial partner is directly available, the professor has to pay the patent applica- tion fees at his or her own risk. Therefore, many inventions at universities are not patented. Later on, as a result, companies may not be interested in investing in further development because the basic idea has not been protected. If the research is funded by external sources, especially the BMBF, the uni- versity, not the professor, is responsible for patent protection. Due to the increas- ing relevance of external funding, the significance of the exploitation privilege is diminishing. However, the incentives for patenting by the universities themselves are low due to various factors. Among the most important are that most universi- ties have neither funds nor infrastructure to support patenting and licensing ac- tivities; inventions resulting from federally funded academic research generally can only be licensed on a nonexclusive basis to industrial partners; and a portion of any licensing income earned from developments with federal government funds must go back to the funding agency. In recent years, the University of Karlsruhe and the University of Dresden established patent and licensing offices comparable to those at American univer- sities. These offices offer professors advice on patent affairs and, if the invention seems to be marketable, provide financing for the patent application and search for potential licensees. (For more details, see Schmoch et al., 1996a.) Some federal states plan to start similar programs, with the aim of better supporting inventors at universities. The states do not wish to abolish professors' exploita- tion privilege, but rather to offer institutional support. It is not possible to directly track German academic patents. However, the

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TECHNOLOGY TRANSFER IN GERMANY 301 German database PATDPA allows one to search for the title "Professor" among inventors or applicants. Such a search turns up not only university-related pat- ents, but also inventions by former professors now working in industry. Thus, the search sample is somewhat too broad and does not include inventions by scien- tific assistants at universities. Nonetheless, it can be assumed that the largest part of the search sample adequately reflects university patents.24 From 1980 to 1990, the number of patent applications registered for professors jumped by 46 percent (Figure 3.19~. This rate of increase is comparable to that for external university funds (42 percent), lower than that for industrial funding (80 percent), but higher than that for overall university research budgets (21 percent). Obviously, the number of patents is linked primarily to the share of external funds. Remarkably, 54 percent of university patents are applied and owned by companies (Becher et al., 1996~. These patents are obviously sold directly by the professors who have taken advantage of the exploitation pnvilege. It is interesting to note that the number of patent applications by German professors in 1992 was about 1,000, whereas the number of patent applications originating in American universities was about 2,500 (Association of University Technology Managers, 1993; Schmoch et al., 1996a). Despite the absolute dif- ference in patent activity between the two countnes, the relative number in Ger- many in relation to the gross domestic product seems to be quite high. However, it has to be taken into account that U.S. universities reported about 8,000 inven 1400 . . ~ 1200 o c. 1000 cow - ~ 800 _- 0 600 400- Z; 200- ~ ~ ~ Professors (total) Professors (private) ~ O' 1 1 1 1 1 1 1 1 1 1 1 1 1 80 81 82 83 84 85 86 87 88 89 90 91 92 93 Application year FIGURE 3.19 Patent applications to the German Patent Office by German university professors. NOTE: private = application by the professor; total = includes applications by firms or other institutions. SOURCE: Schmoch et al. (1996a).