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Notes PART I: OVERVIEW AND COMPARISON 1. Technological innovation has been defined as "the processes by which firms master and get into practice product [or process] designs that are new to them, whether or not they are new to the universe, or even to the nation" (Nelson and Rosenberg, 1993). These processes integrate multiple functions, including organized R&D, design, production engineering, manufacturing, marketing, and other value-adding activities in a complex web containing multiple feedback loops (Kline, 1990; Kline and Rosenberg, 1986). 2. In the case of publications and workshops, it is very difficult to determine whether and to what extent information transferred is used for specific purposes. 3. For further discussion of the many factors that have shaped the development of the German and American innovation systems, see Ergas (1987), Keck (1993), and Mowery and Rosenberg (1993). 4. In 1994, Germany had a population of roughly 81.4 million and a workforce of 39.6 million, compared with a U.S. population of approximately 260.7 million and a U.S. workforce of 132.5 million. In 1995, the German gross national product was $2,420.5 billion, and that of the United States was $6,981.7 billion (Organization for Economic Cooperation and Development, 1996b). 5. In this context, synergy is the mutual stimulation of researchers, working in different related areas. 6. Three clusters of service industries (R&D and testing services; communications services; and computer programming, data processing, and other computer-related engineering services) accounted for the vast majority of nonmanufacturing R&D in 1992. Much of the increase in nonmanufacturing R&D in the United States is accounted for by changes in the National Science Foundation's survey of industrial R&D in 1991, which resulted in an upward estimate of such R&D, and a reclassification of R&D activities from several it&D-intensive manufacturing industries to the service sector. Neverthe- less, the structural change in the U.S. industrial R&D base during the past 20 years has been signifi- cant. (National Science Foundation, 1992, 1995c) 7. Because of its sheer volume, U.S. defense R&D and procurement pushed and pulled technol- ogy development in these fields during their early stages much more extensively than in any other 363

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364 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY industrialized country. The importance of defense R&D and procurement for the technological devel- opment of most of these industries, with the exception of aerospace, has declined dramatically in recent decades. For further discussion, see Alic et al. (1992). 8. This problem is explained in more detail in Part III, Universities, Statistics on General Re- search Structures. However, according to BMBF data, about 24 percent of the university funds are related to health and about 20 percent to engineering. This leads to estimates of about 13 percent for the German health sector (instead of 3.3 percent according to the official statistics) as a whole, and about 15 to 20 percent for industrial development (instead of 12.7 percent). There are no data that reveal how well engineering science relates to other objectives, such as energy or environmental technology. These adjustments to the official data have been introduced in the table; consequently, the category "general university funds" has a share of 22 to 27 percent (instead of 38.8 percent). 9. The financial contribution of state and local governments to U.S. academic research is under- stated by the data in Table 1.5. If the share of general-purpose funds provided by state and local governments and used by universities for separately budgeted research or to cover unreimbursed overhead costs associated with research were added to the states' targeted support of academic re- search, the percent share attributed to state and local governments would increase, perhaps by as much as 5 to 10 percentage points. 10. For more details, see Part IIL Universities, Statistics on General Research Structures. 11. U.S. academic researchers compete for a larger share of their total direct research funding in a centralized "national" peer review system than do their German counterparts. Moreover, receipt of the vast majority of U.S. academic research overhead funds is wholly dependent on the aggregate success of individual principal investigators competing for funds at the federal level, whereas over- head funds are in effect guaranteed independently of competitive performance in the German system. 12. For more details, see Part III, Universities, Technology Transfer in the Four Focal Areas. 13. For an evaluation of the Engineering Research Centers program, see National Academy of Engineering (1989); for an evaluation of the Science and Technology Center programs, see Commit- tee on Science, Engineering, and Public Policy (1996); and for assessments of the Industry-University Cooperative Research Centers program, see Gray et al. (1986, 1988) and Hetzner et al. (1989). Indus- try-University Cooperative Research Centers receive start-up funding from NSF that tapers down over 5 years. For years 6 and beyond, NSF funding continues at only a token level ($25,000 to $50,000 per year). 14. The 15-percent figure includes an unidentified number of An-Institutes in the social sciences and humanities. 15. For more details, see Part III, Universities, An-Institutes and Other External Institutes. 16. For an overview of institutional forms of industry collaboration at universities, see Table 3.6 in Part III. 17. The Bayh-Dole Act of 1980 gave nonprofit organizations such as universities and small busi- nesses the right to patent inventions they developed with federal support; granted government-owned and operated laboratories the authority to grant exclusive licenses to inventions which they patented; and prevented public disclosure of information about inventions to allow for patent applications to be filed. Although Bayh-Dole did not originally apply to any of the DOE laboratory management and operations contractors, the law was subsequently amended to include them. 18. With external funds from the BMBF and other sources accounting for a growing share of total academic research funding, the exploitation privilege of German academic researchers is increasingly circumscribed by the intellectual property claims of external funders. See also the section Selected Technology Transfer Issues in a Comparative Context, below. 19. Reviewing existing research on the topic, Stankiewicz (1994) notes that what high-tech start- ups usually spin off from universities are "not technologies-as-products but rather R&D and problem- solving capabilities." For further discussion, see Technology Transfer from Higher Education to Industry in Part II.

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NOTES 365 20. The German figure includes laboratories at Helmholtz Centers, departmental research insti- tutes, and Blue List institutes. 21. The Blue List institutes are independent research institutes with supraregional importance; heterogeneous structure, legal status, and technical importance; and are supported almost entirely by public funding, half from the federal government and half from state governments. For further dis- cussion of these institutes and the departmental research institutes, see the section Technology Trans- fer from Public Intermediate Institutions in Part III. 22. U.S. panel member Albert Narath notes that DOE's success with CRADAs has fostered a growing volume of industry-funded "work-for-other" business (i.e., industry-sponsored contract re- search) in some federal laboratories. 23. The Stevenson-Wydler Technology Innovation Act mandated that federal laboratories actively seek cooperative research with state and local governments, academia, nonprofit organizations, and private industry and disseminate information about their activities and research. It established the Center for the Utilization of Federal Technology (CUFT) at the National Technical Information Ser- vice and required the establishment of an Office of Research and Technology Applications (ORTA) at each federal laboratory, setting aside 0.5 percent of each laboratory's budget to fund laboratory technology transfer activities. The act also established the National Medal of Technology. The Federal Technology Transfer Act of 1986 (P.L. 99-502) amended Stevenson-Wydler to accelerate technology transfer by requiring that personnel evaluations of federal laboratory scientists and engineers include information about their support of technology transfer activities and that gov- ernment-owned, government-operated (GOGO) laboratories pay inventors a minimum 15-percent share of any royalties generated by the licensing of their inventions. It gave directors of GOGO laboratories authority to enter into CRADAs, to license inventions that might result from such CRADAs, to exchange laboratory personnel, services, and equipment with research partners, and to waive rights to lab inventions and intellectual property under CRADAs. The act allows for federal employees to participate in commercial development with private firms if there is no conflict of interest, and created a charter for and funded the Federal Laboratory Consortium. The National Competitiveness Technology Transfer Act of 1989 (P.L. 101-189) further amended the Stevenson-Wydler Act to allow for the protection, in CRADA arrangements, of informa- tion, inventions, and innovations, against disclosure under the Freedom of Information Act for a period of 5 years. It also established a technology transfer mission for the nuclear weapons laborato- ries and clarified that government-owned contractor-operated laboratories could execute CRADAs and enter into other technology transfer activities. U.S. panel member Albert Narath estimates that Sandia National Laboratories receives over $1 million in royalties on patents each year. Based on trends over the past 5 years, Narath estimates that royalty revenues will represent a significant fraction of some federal laboratories' budgets 10 years from now. 24. For further details, see the discussion of technology transfer by Helmholtz Centers in the section Technology Transfer from Public Intermediate Institutions in Part III. 25. Max Planck institutes and individual departments within them are generally established around the work of an outstanding scientist. This personality-centered form of organization (i.e., the Harnack principle), first used by the institutes of the Max Planck Society's predecessor organization, the Kai- ser Wilhelm Society, can explain the finite lifetime of MPIs or departments within them. If a depart- ing head scientist is not replaced by an equivalent successor, the research focus of the institute or department may be changed (depending on the new leader) or even dissolved. For further discussion of the Max Planck Society, see the section Technology Transferfrom Public Intermediate R&D Insti- tutions in Part III. 26. For further discussion of issues relevant to the future of U.S. federal laboratories, see the section U.S. Federal Laboratories and Technology Transfer to Industry in Part II. 27. For example, German Helmholtz Centers had close ties to the nuclear energy industry but have relatively few industrial contacts in their new areas of activity.

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366 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY 28 Fraunhofer institute directors are generally part-time employees of the Fraunhofer Society and part-time civil servants of their institute's host state. In addition, there is a cooperation contract between the university and the Fraunhofer institute to avoid conflicts of interest. 29. The seven largest engineering-oriented institutes are Battelle Memorial, IIT Research, Mid- west Research, Research Triangle, Southern Research, Southwest Research, and SRI International. Their research ranges from basic research to development and is largely comparable to that of the Fraunhofer institutes. These U.S. engineering institutes have built up highly competitive competen- cies in a variety of specific technical areas and serve national and international markets. Most of them, however, with the exception of Southwest Research Institute and SRI International, perform 70 percent or more of their research for government clients a larger share than is true for the Fraunhofer institutes. Unlike the Fraunhofer Society, the independent R&D institutes receive no public base- institutional funding and so must rely exclusively on contract research. Therefore, for example, the Southwest Research Institute can use only about 1.5 percent of its revenues for self-initiated research. Due to the lack of public base funding, the engineering-oriented institutes have to generate a signifi- cant portion of their budgets by selling testing and technical services to industrial clients. 30. For the U.S. situation, see Carr and Hill (1995). No data are available regarding the total volume of cooperative industrial R&D in the Germany. The fact that more than 10 percent of the industrial R&D budget in Germany is spent externally indicates that the total volume of industrial cooperative research is significantly greater than the 1 percent of industrial research associations within the AiF. 31. The National Cooperative R&D Act of 1984 (NCRA; P.L. 98-462) provides exemption from treble damages in antitrust lawsuits to companies that register their joint R&D ventures with the U.S. Department of Justice. In so doing, the act offers a clear signal from the federal government in support of industrial cooperative research. Vonortas (1996) notes that fragmentary early evidence regarding strategic alliances in R&D, including consortia, shows that cooperative R&D activity began increasing prior to passage of the NCRA. In 1993, the NCRA was amended by the National Coopera- tive Research and Production Act (NCRPA; P.L. 103-42), which extended exemption from treble damages to registered joint production ventures involving firms also engaged in joint R&D activity. For further discussion, see the section Technology Transfer by Privately Held, Nonacademic Organi- zations, in Part II, and Hagedoorn (1995). 32. During the early l990s, the Department of Energy embraced a relatively expansive view of its laboratories' role in supporting the it&D/technology needs of civilian industry. However, subsequent review and action by the federal government, as exemplified by the so-called Galvin Report (Secre- tary of Energy Advisory Board, 1995) has tended to moderate the proliferation of federal laboratory- industry partnerships. For further discussion, see Part II, U.S. Federal Laboratories and Technology Transfer to Industry. 33. For further discussion, see Part II, Technology Transfer by Privately Held, Nonacademic Or- ganizations. 34. For further discussion of the many factors that have contributed to the special role of high-tech start-up companies in the United States, see Mowery and Rosenberg (1993) and National Academy of Engineering (1995c). 35. However, the coming opening of a European stock exchange, EASDAQ, modeled on the American NASDAQ, might improve the situation. 36. As discussed in this section (Technology Transfer from Higher Education Institutions), Ger- man universities have little incentive to devote resources to patent licensing and marketing activities, since under German law the right to exploit inventions resulting from university-based research sup- ported by base-institutional funds resides exclusively with the individual researchers involved. 37. Technologically mature industries are defined by the binational panel as industries in which technological advance is predominantly incremental and moderately paced. By contrast, technologi- cally dynamic, or revolutionary, industries are characterized by very rapid and frequently radical or "breakthrough" technological change.

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NOTES 367 38. For an overview of the industry-government-university consortium, the American Textile Partnership (AMTEX), and its many research and outreach activities, see the AMTEX home page at . 39. See, for example, recent publications and current research initiatives of the Massachusetts Institute of Technology (MIT) International Motor Vehicle Program on the program's home page, http://web.mit.edu/org/c/ctpid/www/imvp/index.html. For a recent assessment of the government- industry Partnership for New Generation Vehicles, see National Research Council (1997). 40. For further discussion of these and other industry-led initiatives aimed at the manufacturing technology needs of small- and medium-sized firms in more technologically mature U.S. industries, see Part II, Technology Transfer by Privately Held, Nonacademic Organizations. 41. See, for example, the discussion of NIST's Manufacturing Extension Partnerships, or of state technology extension deployment programs such as the Thomas Edison Institute in Ohio or the Ben Franklin Partnership in Pennsylvania, in Part II, Technology Transfer in the United States, as well as Coburn (1995). 42. However, exceptions to this general rule are possible. 43. For more details, see the section, Technology Transfer from Public Intermediate R&D Institu- tions in Part III. 44. According to the German/European ruling, every publication of an invention prior to the filing of a patent application including publications of the inventor is considered a prejudicial disclosure opposed to its novelty. 45. For further discussion of the importance of day-to-day personal contact for technology trans- fer as demonstrated empirically by the revived importance of regional agglomerations of industrial skills and comparative advantage, see Brooks (1996), David et al. (1992), Pavitt (1991), and Reger (1997). 46. See, for example, Secretary of Energy Advisory Board (1995); Executive Office of the Presi- dent, Office of Science and Technology Policy (1995); and National Academy of Sciences, et. al. (1995); and, for Germany, Weule et al. (1994). 47. For data regarding the movement of U.S. scientists and engineers between government, indus- try, and academia, see National Science Foundation (1994b) and Part II, Technology Transfer from Higher Education to Industry. Unfortunately, no comparable data exist with which to assess quanti- tatively the relative job mobility of scientists and engineers in Germany and the United States. 48. The U.S. delegation's definition of "infrastructural" and "pathbreaking" R&D draws on the taxonomy of technologies developed by Alic et al. (1992). Infrastructural R&D is directed at the discovery and development of infrastructural technologies technologies generally low in technical risk and difficult to appropriate privately, but which enhance the performance of a broad spectrum of firms and industries. Pathbreaking R&D is directed at the discovery and development of pathbreaking technologies technologies high in technical risk that create new industries or transform existing industries. 49. The 1997 tax law introduces an amendment consistent with the delegation's recommendation. Nevertheless, the decision of the Federal Financial Court makes clear that the tax status of research performed by public and semipublic institutions in Germany is still disputed. 50. Since 1989, the U.S. Department of the Air Force had been preparing detailed technology road maps for defense contractors for all areas of science and technology related to the department's mis- sion as part of its Technology Area Plans. 51. See, also, the recently released technology road map for the U.S. chemical industry, Technol- ogy Vision 2020, authored by the American Chemical Society, Chemical Manufacturers Association, American Institute of Chemical Engineers, Council for Chemical Research, and the Synthetic Or- ganic Chemical Manufacturers Association (American Chemical Society et al., 1996). This road map effort was launched, in part, by a request from the White House Office of Science and Technology Policy. 52. The Government-University-Industry Research Roundtable, in collaboration with the private

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368 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY sector Industrial Research Institute and the Council on Competitiveness, is currently hosting a series of regional workshops on industry-university research collaboration. 53. See the German-American collaborative study, Conflict and Cooperation in National Compe- tition for High-Technology Industry (Hamburg Institute for Economic Research, Kiel Institute for World Economics, and National Research Council, 1996) for an extensive treatment of these and related issues. The report is a constructive first step toward articulating principles for international cooperation in science and technology. PART II: DEFINING THE U.S. TECHNOLOGY TRANSFER ENTERPRISE 1. Technology transfer is a person-to-person activity, or a body-contact sport. Inventions and new technologies spring from and reside in the human mind. Written descriptions, samples, or even working prototypes rarely convey all that is to be known about a new technology. The developer's knowledge and intuition about further potential must be transferred via personal contact between individuals. While the transfer of intellectual property is often thought of as the essence of technology transfer, such a view is misleading. Signing of license agreements, payments of royalties, and trans- fers of intellectual property are among the few elements of technology transfer that lend themselves to quantification, and thus they form the majority of available metrics of technology transfer. But unpat- ented know-how, ideas, and suggestions often constitute information of considerable value, however difficult to measure and evaluate. Among companies, mergers and acquisitions often have important technology components, but the value of technology is rarely visible in the public data on such events. Furthermore, other less formal mechanisms such as conferences, meetings, and even personal rela- tionships among technologists make an important but largely unmeasured contribution. In addition, a semantic problem has arisen in recent years. The very term "technology trans fer" has fallen out of favor among many who view the term as outmoded, too narrow in scope, and too closely linked with the "linear" model of innovation. Others prefer technology collaboration, tech- nology deployment, technology utilization, or other terms. The term is sufficiently imprecise that a general definition of technology transfer brief enough to be useful is impossible to develop. Opera- tional definitions of technology transfer are easier to devise in a specific context and are best con- structed in terms of specific mechanisms of transfer. The authors of the U.S. report define the term technology transfer broadly, incorporating the following mechanisms: Formation of new technology-based companies from R&D organizations (spin-offs and others) Licensing of patents, software and technical know-how, prototypes, biological materials Performing contract R&D for clients and transferring the results Sharing information in interactive events (conferences, workshops, briefings, and visits) Performing cooperative R&D Forming R&D or technology transfer consortia Providing technical assistance Employing unique R&D facilities and capabilities Activities that catalyze or facilitate any of the above 2. Federally funded research and development centers (FFRDCs) are defined as contractor-oper- ated and mostly contractor-owned research facilities established at the request of federal agencies with congressional authorization. FFRDCs draw over 70 percent of their funding from the federal government. 3. The National Science Foundation (NSF) classifies research and development into three cat- egories: basic research, applied research, and development. Basic research seeks to advance scien- tific or technical knowledge or understanding of a particular phenomenon or subject without specific applications in mind. Applied research recognizes a specific need and seeks new knowledge or understanding in order to meet that need. Development is "the systematic use of the knowledge or

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NOTES 369 understanding gained from research directed toward the production of useful materials, devices, sys- tems, or methods, including design and development of prototypes and processes" (National Science Board, 1993). 4. In addition to the $20.3 billion of industrial R&D funded directly by federal agencies through contracts, several federal agencies (most prominently the Department of Defense) reimbursed U.S. companies for roughly $3 billion of the $4.4 billion spent by private-sector contractors on indepen- dent research and development (IR&D) and the preparation of bids and proposals (B&P) during fiscal 1995, an activity that frequently involves technical work. JR&D and B&P expenses are treated by federal procurement regulations as indirect or overhead costs (i.e., expenses that increase a firm's total costs, but cannot be attributed to specific contracts). All intellectual property resulting from JR&D belongs to the performing firm. The $4.4 billion of industry JR&D and B&P expenditures are included in the $101.7 billion of R&D funding attributed to industry in 1995 in federal R&D data (Defense Contract Audit Agency, 1997; National Science Board, 1996). Prior to the early 1990s, all reimbursable JR&D projects were to have "potential military relevance." The NationalDefense Authorization Act for FiscalYears 1992and 1993 (P.L. 102-190) provided for the gradual removal of limitations on the amount DOD reimburses contractors for JR&D expenditures and partially eliminated the need for advance agreements and technical review of JR&D programs. Reimbursement is now allowable for a broader range of JR&D projects of interest to DOD including those designed to develop dual-use technologies, enhance industrial competitiveness or to develop technologies for environmental concerns. For further information regarding JR&D and B&P, see Alic et al. (1992) and National Science Board (1993). 5. The current administration's explicit intention is to reduce the share of public spending for defense R&D to equal that devoted to federal nondefense missions. 6. Until recently, most federally funded R&D performed by U.S. companies was concentrated in a few "dual-use" industries such as electronics and aerospace. As late as 1988, 61 percent of all federal R&D support of industry went to aerospace and 14 percent went to the electronics and com- munications sector. This federal contribution represented 76 percent and 38 percent, respectively, of total R&D spending in these sectors (National Academy of Engineering, 1993; National Science Foundation, 1996b). 7. It is worth noting the large contrast in the distribution of effort between publicly funded de- fense and nondefense research and development. Ninety percent of public funding for defense-re- lated R&D is for development, testing, and evaluation, with applied research, basic research, and R&D plant accounting for the remaining 10 percent. In contrast, public nondefense R&D spending is divided more evenly among the 3 major categories, with 30 percent for development, 30 percent for applied research, and 30 percent basic research, with the remaining 10 percent for R&D plant (Na- tional Science Board, 1996). 8. Alic et al. (1992) note that most of the university-based engineering research sponsored by DOD, DOE, the Atomic Energy Commission, and the National Aeronautics and Space Administra- tion "was 'engineering science' i.e., investigations of natural phenomena underlying engineering practice rather that engineering design, manufacturing operations, or the construction and testing of prototype equipment." 9. If Department of Energy (DOE) laboratories that focus primarily on nuclear weapons research are added to those of DOD, the national security mission laboratories account for roughly 55 percent of total federal laboratory expenditures and 60 to 70 percent of the total number of laboratory re- searchers. At present, slightly less than half of all DOE laboratory resources are dedicated to weapons research (Committee on Science, Engineering, and Public Policy, 1992). 10. This sharp division has frequently been stricter in theory and rhetoric than in practice since World War II. See Brooks (1986), Cohen and Noll (1991), Kash (1989), Mowery and Rosenberg (1989), National Academy of Engineering (1993), and Nelson (1989). 11. For further discussion of the Bayh-Dole Act and its implications for university-industry tech- nology transfer, see pp. 98-99, 102-108.

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370 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY 12. For further discussion of CRADAs and other federal laboratory technology transfer efforts, see pp. 135-151. 13. For further discussion of NCRA and the growth of industrial R&D consortia, see pp. 156-162. 14. For further discussion of NSF university-industry research centers, see pp. 111-118. 15. See discussion of SEMATECH, pp. 157-159. For information on the TRP, see also Annex II, p. 208. 16. The phase-out of Department of Defense funding of SEMATECH was negotiated voluntarily, not mandated. 17. By 1994, 40 states had technology extension programs (Coburn, 1995) in addition to other types of programs that also assist manufacturers. Approximately half of the state programs were operated by educational institutions, with the balance managed by nonprofit organizations or state agencies. These programs offer different types of services, including supply of technical information, seminars and workshops, demonstrations, referral of consultants and other experts, and in-plant con- sultation. However, intensive field assistance (generally agreed to be the most effective technique) was provided by only a few programs (Shapira et al., 1995). 18. Although not captured in national industrial R&D statistics, many small and medium-sized companies perform product and process design that would likely be reported as R&D in the more organized setting of a large firm. 19. The National Science Board (1996) notes that a large share of the R&D spending in computer software and communication services was spent by companies formerly classified as manufacturing industries. This is not surprising given the growing importance of software and other information technologies relative to "hardware" in most industries. 20. Between 1991 and 1995, industry's share of total basic research performed in the United States declined from 29.5 percent to 24.2 percent (National Science Board, 1996). 21. In 1992, researchers at the Georgia Institute of Technology surveyed members of the Indus- trial Research Institute (generally large, research-intensive firms), and asked respondents to indicate their most significant sources of external technology. The results indicated that other companies (U.S. and foreign) were the most significant external technology source, with universities second, private databases third, and federal laboratories fourth. 22. See pp. 90-124 for further discussion of these trends. 23. See pp. 135-139 for further discussion of these trends. 24. A U.S. affiliate of a foreign-owned firm is a company located in the United States in which a foreign person or business has a "controlling" stake (i.e., 10 percent or more of the company's voting equity). 25. See Annex II, Case Studies in Technology Transfer: Software, for discussion of factors that have facilitated the rapid proliferation of software start-up companies in recent decades. 26. For further discussion of the role high-tech start-ups have played in the development of the software and biotechnology industries, see Annex II. 27. Technological uncertainty and therefore technological risk shapes the opportunity for start- ups and smaller, technologically oriented companies. This observation is crucial to understanding why start-ups and entrepreneurs dominate technology-intensive sectors of the economy. Typical early barriers (barriers to entry or "start-up") derive less from the need to command massive resources than from the ability to bear risk, be creative technologically, and make forward-looking decisions. This also explains why larger competitors are usually not first to exploit these opportunities (National Academy of Engineering, 1995c). 28. For further discussion of the many factors that have contributed to the special role of high-tech start-up companies in the United States, see Mowery and Rosenberg (1993) and National Academy of Engineering (1995c). 29. This perception is reinforced by a recent report by the Office of Science and Technology Policy (1995) that identifies 27 technologies in 7 major areas seen as crucial to "develop and further

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NOTES 371 long-term national security or economic prosperity in the United States." The report finds that the United States leads or has parity with Japan and Europe in each of the 27 technologies. 30. For a comparison of U.S. and German patent specialization using European Patent Office statistics see Part III, Figures 3.3 and 3.4. 31. Approximately 1,000 companies were surveyed. The survey response rate was 57 percent, and approximately one-third of firms responding indicated that they had introduced a new product or process during the 1990-1992 period or were planning to introduce a new product between 1993 and 1995 (National Science Board, 1996). 32. This does not include R&D performed by university-administered FFRDCs, which performed over $5 billion of R&D in 1995. For further discussion of the role of FFRDCs in U.S. technology transfer, see pp. 125-126. 33. National shares of world scientific and technical literature were determined by a review of some 3,500 major U.S. and international technical journals. U.S. academic and nonacademic research- ers collectively accounted for nearly 34 percent of scientific and technical articles published in all U.S. and international journals, and more than 33 percent in all major fields with the exception of chemistry (23 percent) and physics (27 percent). U.S. academic researchers accounted for more than 70 percent of all articles published in U.S. science and engineering journals. By way of comparison, German researchers accounted for nearly 7 percent of articles in the world's science and engineering journals, with the largest shares in two fields, chemistry (9 percent) and physics (8 percent) (National Science Board, 1996). 34. Federal funds include grants and contracts for academic R&D (including direct and reim- bursed indirect costs) by agencies of the federal government. State/local funds include funds for academic R&D from state, county, municipal, or other local governments and their agencies, includ- ing funds for R&D at agricultural and other experiment stations. Industry funds include all grants and contracts for academic R&D from profit-making organizations, whether engaged in production, dis- tribution, research, service, or other activities. Academic institutional funds include institutional funds for separately budgeted research and development, cost-sharing, and under-recovery of indirect costs; they are derived from (1) general-purpose state or local government appropriations; (2) general- purpose grants from industry, foundations, and other outside sources; (3) tuition and fees, and (4) endowment income. Other nonprofit sources include grants for academic R&D from foundations and voluntary health agencies, as well as restricted individual gifts (National Science Board, 1996). 35. In 1862, Congress passed the Morrill Act. This act provided resources for the establishment of state universities (land grant colleges) to pursue research and education in the "agricultural and mechanical arts." Subsequent acts of Congress, including the Hatch Act of 1887 and the Adams Act of 1906, expanded federal support for agricultural research and a national system of agricultural extension centers. See Mowery and Rosenberg (1993). 36. Despite this general shift in orientation, many institutions retained a commitment to industrial extension service and regional economic development even as they took on support of federal agency missions. Among these are many of the original land grant colleges (see note 35, above), as well as other institutions such as Georgia Institute of Technology, Rensselaer Polytechnic Institute, Pennsyl- vania State University, and University of Minnesota Mines Experimental Station. 37. Matkin (1990) points out that this divergence in research cultures began in the United States prior to the turn of the century. For further discussion of academic and industrial research cultures and their interaction, see Dasgupta and David (1994). 38. For an informative discussion of the origins and consequences of Bayh-Dole, see Wisconsin BioIssues (1994). 39. For further information regarding these centers, see National Science Foundation website URLs http://www.eng.nsf.gov/eec/i-ucrc.htm; http://www.cise.nsf.gov/asc/STC.htm; http://www.eng.nsf.gov/eec/erc.htm; and http://www.nsf.gov/mps/dmr/mrsec.htm. See also note 53, below.

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372 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY 40. See New Federal Industrial R&D Initiatives, Part II, and Annex II, p. 208, for further informa- tion regarding these two initiatives. 41. See, for example, the report of the Government-University-Industry Research Roundtable (1992). 42. The following discussion of university technology transfer mechanisms draws upon the gen- eral taxonomy used by Matkin (1990). 43. Surveys by Morgan et al. (1994a,b) indicate that 87 percent of U.S. university engineering faculty have been consultants to industry or government (National Science Board, 1996). 44. The involvement of graduates and research staff in the spin-off of new technology-based firms has been studied at individual institutions, however. See, for example, the studies by BankBoston (1997) and Roberts (1991). 45. Roughly 16,660 high-tech companies were established in the United States between 1980 and 1994 546 in the field of biotechnology, 5,196 in software, 1,907 in computer hardware, 1,293 in electronic components, 1,933 in telecommunications, 1,917 in automation, 487 in advanced materi- als, 507 in photonics and optics, and 4,874 in other high-tech fields (National Science Board, 1996). 46. The Association of University Technology Managers survey covers data on sponsored re- search, licensing, start-ups, gross royalties, invention disclosures, patents applied for and issued, legal fees, and staffing. The survey population for fiscal year 1995 consisted of 279 institutions, including 196 U.S. universities, 53 hospitals and research institutes, 25 Canadian institutions, and 5 third-party patent management firms. 62 percent of these institutions responded to the survey, including 127 U.S. universities (roughly 65 percent of U.S. universities contacted). The response rate for the top 100 U.S. research universities (ranked by volume of federal research monies received) was 87 per cent. 47. H. Wiesendanger, Office of Technology Licensing, Stanford University, personal communi- cation to Simon Glynn, research associate, National Academy of Engineering, August 10, 1993. 48. The patents on recombinant DNA techniques by Boyer and Cohen is an example: Income from the Cohen-Boyer patents for 1991 amounted to $14.6 million, or 58 percent of total income from all patents held by Stanford (H. Wiesendanger, Office of Technology Licensing, Stanford University, personal communication to Simon Glynn, National Academy of Engineering, August 10, 1993). 49. For discussion of the growing involvement of universities in venture finance, see Feller (1994) and Matkin (1990). 50. For further discussion of the role of venture capital firms in technology transfer, see pp. 172- 173. 51. This section draws heavily on data reported in Cohen et al. (1994). 52. See, for example, National Academy of Engineering (1989) on Engineering Research Centers; National Research Council (1996a) on Science and Technology centers; and Gray et al. (1986; 1988) and Hetzner et al. (1989) on Industry/University Cooperative Research Centers. 53. The Material Processing Center Industry Colloquium at MIT was established subsequent to the launch of the Institute's Materials Processing Center in order to organize the center's relations with industry (Matkin, 1990). 54. For further discussion of the role of business incubators in technology transfer, see pp. 167- 169. 55. See, for example, Cohen et al. (1994, 1995); Dasgupta and David (1994); Feller (1994); Gov- ernment-University-Industry Research Roundtable (1991); Henderson et al. (1995); Mansfield (1996); and Rees (1991). 56. By way of comparison, U.S. universities and colleges employed roughly 150,000 Ph.D. scien- tists and engineers and another 16,000 individuals with professional, masters, or bachelors degrees in R&D activities in 1993. In addition, it is estimated that some 90,000 full-time graduate students were involved in university-based research that year. See Part II, Technology Transfer from Higher Educa- tion to Industry.

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NOTES 373 57. Multiprogram laboratories are large labs with diverse core competencies and resources that permit scientific and engineering work across a wide spectrum of technologies. 58. FFRDCs are defined in regulation. Most of the well-known FFRDCs do research for the Defense Department. Some confusion exists about the distinction between GOCO federal laborato- ries and FFRDCs. FFRDCs are rigorously defined in criteria published by the Office of Federal Procurement Policy and an official list of FFRDCs, based on those criteria, is maintained by the NSF. Most are single-office facilities employing a small number of researchers; a small percentage are large organizations that employ thousands of scientists and engineers. FFRDCs do not have a specific prescribed management structure, but they must engage in research based on a specific or general request from the federal government, must receive more than 70 percent of their financial support from the government, and must have been brought into existence at the request of the government with congressional authorization. 59. CRADAs have tended to supplant other types of R&D agreements in the Department of En- ergy (DOE), the Department of Defense, and some other agencies because they offer intellectual property protection lacking in earlier agreements. DOE made a decision in the early 1990s that all new cooperative R&D agreements would be CRADAs. Hence, CRADAs are both supplanting other forms of cooperative agreements and generating new cooperative R&D activity as agencies and labo- ratories promote CRADAs more actively. Estimating the total number of CRADAs at any point in time is made difficult by differences among agencies with respect to how CRADAs are defined and counted. For example, NASA Space Act agreements are frequently counted as CRADAs, but not always. The Department of Agriculture has a number of cooperative R&D agreement types estab- lished in legislation that are similar to CRADAs, but not always counted as such. NIH uses material transfer agreements, which they counted as CRADAs at one time (Personal communication, Robert K. Carr to Proctor Reid, July 4, 1997). 60. According to the U.S. Department of Energy (1994) these percentages are based on the num- ber of CRADAs, not CRADA dollars or duration of CRADA agreements. Therefore, these data are of little informational value. 61. In 1993, the Department of Energy took steps to streamline the CRADA negotiation process in response to criticisms that its procedures were too bureaucratic and time consuming. For further discussion, see U.S. Department of Energy (1993). 62. Mowery and Ziedonis (1997) estimate that 160 new technology-based firms were spun-off from Lawrence Livermore National Laboratory between 1985 and 1995. They defined a spin-off as a firm "founded by anyone with a prior or current employment relationship with the Laboratory." Using a somewhat less restrictive definition of spin-offs (including enterprises "founded by labora- tory consultants or nonemployees that seek to commercialize innovations drawing on laboratory tech- nologies"), Markusen and Oden (1996) estimated that less than 100 firms were spun-off from DOE's Los Alamos and Sandia National Laboratories and the U.S. Airforce Phillips Laboratory, all located in New Mexico, between 1980 and 1994. 63. Mowery and Ziedonis (1997) found that 40 percent of the 160 Lawrence Livermore National Laboratory (LLNL) spin-offs identified listed their primary activity as consulting. Seventy-five per- cent of all spin-offs were owned by current LLNL employees (as of 1995). Of the 37 firms respond- ing to the Mowery and Ziedonis survey, two-thirds stated that LLNL technologies were of "little or no" importance to their establishment and operation. Only 8 of 37 respondents stated that their companies were commercializing LLNL technologies. At the same time, Mowery and Ziedonis observe that "virtually all of these firms' founders noted the importance of the Laboratory as a source of generic expertise and skilled employees." 64. For further discussion of NASA's recent entry into the technology incubator business, see pp. 149, 168-189. 65. Personal correspondence from panel member Albert Narath, Lockheed Martin Corp., to Proc- tor Reid, July 16, 1997.

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374 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY 66. After remarks by Albert Narath, Lockheed Martin Corp., at the May 7-8, 1996, meeting of the U.S. delegation to the binational panel in Washington, D.C. 67. For further discussion of the economic performance and reciprocity requirements embodied in recent U.S. technology transfer legislation, see National Academy of Engineering (1996b). 68. Knowledge is the coin of technology transfer. Knowledge may be embedded in formal intel- lectual property documents, such as licenses; may reside in scientists and engineers from the public and private sectors who interact; may be created by cooperative R&D programs; may be embedded in transferred materials, processes, and prototypes; and may move in many other ways. Because the medium of technology transfer is some form of knowledge, to measure the economic value of tech- nology transfer is to measure the economic value of knowledge. This is an old conundrum. Econo- mists and others have struggled with the problems of defining and measuring the economic value of knowledge for many years, without particularly satisfying results. Economic analyses which require dollar valuations of knowledge are often forced to employ surrogates, sometimes crude surrogates, to produce that value. The use of such surrogates reduces the outcome to a (sometimes misleading) approximation. (See U.S. Congress, Office of Technology Assessment, 1986, regarding the measure- ment of the results of research.) 69. These data are the basis of Figure 2.15 and Table 2.16. However, some of the OMB data are generally considered problematic, since agencies have interpreted the reporting requirements in dif- ferent ways, particularly the requirements for budgetary information on cooperative R&D. 70. While the 104th Congress was generally favorably inclined toward federal laboratory technol- ogy transfer activities (including CRADAs) that were funded out of the regular program activities of federal agencies, the Department of Energy's Technology Transfer Initiative funding for CRADAs, which was a separate line item in DOE's budget, was attacked by Congressional leaders hostile to- ward specially funded programs that might enter into the "industrial policy" arena. 71. See DOE's home page on the World Wide Web . 72. On the other hand, the Galvin Report strongly encourages industrial partnerships as a deriva- tive mission (i.e., partnerships that contribute to DOE' s historic mission responsibilities). This "dual- benefit" requirement is not a serious constraint in most cases. 73. This is to be accomplished through enhanced monitoring of contractor-developed technolo- gies, as well as commercialization requirements. 74. Recent efforts along these lines include the so-called Galvin Report (Secretary of Energy Advisory Board, 1995) and the report of the Committee on Criteria for Federal Support of Research and Development (1995). 75. See, for example, the chairman's summary report on the National Academy of Engineering workshop on Defense Software Research, Development and Demonstration: Capitalizing on Private Sector Capabilities (National Academy of Engineering, 1996a). 76. The "fourth category" of institutions excludes (a) Private firms transferring technology internally and among themselves (except in a few specifically defined cases); (b) Federal agencies and laboratories (including FFRDCs) transferring technology to the pri- vate sector or elsewhere, and state and local technology organizations transferring technol- ogy to and working with the private sector; and (c) Universities transferring technology to the private sector (including from university-based technology centers and university-owned technology transfer organizations). Some types of institutions whose primary activities lie outside the panel's operational defini- tion of technology transfer were also excluded. These include organizations that primarily deliver or produce education and training; after-sale technical services; testing and quality control; published materials and other one-way (i.e., noninteractive) communications; and training in support of hard- ware production. Institutions engaging primarily in international technology transfer activities are also excluded, because while international technology transfer is important to U.S. industry, it is too

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NOTES 375 diverse and distinct from the principal focus of this survey. Furthermore, the traditional dissemina- tion of research results through publication in professional journals and discussion in open confer- ences is not generally considered to be part of the technology transfer universe and is not included. In addition, the emphasis in this section is placed on technology transfer to the private sector as opposed to the development of products and systems for transfer to the government via procure- ment or other acquisition mechanisms. Finally, funding sources were not used as a criterion for inclusion or exclusion, as government funding for R&D activities is so pervasive that almost all independent R&D and technology transfer institutions are direct or indirect beneficiaries. Ownership and control were more important in defining "independent." 77. Most affiliated R&D institutes are "affiliated" with research universities, research hospitals, and other medical research institutes. Affiliated R&D institutes are very similar to the independent group except for their formal ties to a parent institution and lack of independent legal status (i.e., independent institutes are independent corporate entities with their own governing boards affiliated institutes are not). Hence, even though most of the department heads at Massachusetts General Hos- pital and Brigham and Women's Hospital are professors at Harvard Medical School, these hospitals are classified as "independent" teaching hospitals. 78. The National Science Board (1996) estimates that nonprofit institutions, which account for one-half to three-quarters of all R&D performed by fourth-sector organizations, conducted about $5.1 billion worth of R&D in 1995. A lack of consistent estimates of R&D performed by consortia and the fact that R&D performed by affiliated institutes cannot be separated from that of their parent organi- zations make it difficult to estimate total R&D investment by these organizations. For these reasons, quantitative comparison of the fourth sector's R&D performance with that of the three other principal segments of the U.S. R&D and technology transfer enterprise are also deficient. 79. This does not include $800 million in government-funded R&D performed by federally funded research and development centers administered by nonprofit institutions. 80. The Universities Research Association, Inc., is a consortium of research universities and pri- vate nonprofit corporations. However, it serves primarily as a contractor to the federal government for the operation of major scientific facilities, including the Fermi National Accelerator Laboratory (FermiLab), a GOCO and a leader in superconductivity research. 81. Despite the fact that SRI researchers work for multiple clients simultaneously, the institute has never had complaints regarding conflicts of interest or breaches of confidentiality (remarks by H. N. Abramson at meeting of the Binational Panel on Technology Transfer Systems in the United States and Germany, November 7, 1995, Freising, Germany). 82. Industrial consortia first appeared in the United Kingdom early in this century. The concept was transplanted to post-war Japan and to the United States in the 1980s, although there were earlier examples of joint research in the context of specific industries. In the early 1900s, various industry groups such as the American Iron & Steel Institute, the Portland Cement Association, and the Ameri- can Petroleum Institute established research programs focused on their industry's problems. In the 1970s, prompted by the energy crisis, the Electric Power Research Institute and the Gas Research Institute were formed. Finally, in the 1980s, Japan's rapid development in high-tech industries (par- ticularly electronics and semiconductors) as well as other competitive concerns led to the creation of the Semiconductor Research Corporation, the Microelectronics and Computer Technology Corpora- tion, the National Center for Manufacturing Sciences, SEMATECH, and many other consortia. (Carr and Hill, 1995) 83. Each SEMATECH member calculates its own "return on investment" (ROI) by estimating returns in the form of improvements in manufacturing processes, savings on in-house R&D, etc. and dividing them by the costs they incur through participation in the consortium, i.e., dues paid and other administrative costs associated with participation in SEMATECH programs. 84. These two programs provide funding for industry-related R&D, and since 1994 both have been threatened repeatedly with elimination by the Republican-controlled Congress.

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376 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY 85. Vonortas (1996) notes that other forms of interfirm alliances predominate in these fields, including technology swaps, licensing, mergers and acquisitions, and marketing agreements. 86. A survey of consortia taken for the NSF in 1974 estimated that year's budget for collaborative R&D was $125 million. Using the NSF figures for total U.S. spending on R&D in 1974 ($32,863 million), the $125 million represented only a 0.4-percent share. In that year, consortia conducting energy-related R&D accounted for nearly half of collaborative R&D (Wolek, 1977). A more recent estimate of collaborative R&D investment was provided by Albert Link in 1989. On the basis of survey data, he found that among manufacturing industries (which do the lion's share of U.S. industrial R&D) the mean expenditure on collaborative research was 7.3 percent of industry-financed R&D. Using NSF's 1989 figures ($72.1 billion for industrially financed R&D) this estimate produced a figure of $5.3 billion spent in collaborative R&D activities in that year. Gibson and Rogers (1994) estimated that in 1994 1 percent of U.S. research spending went for collaborative R&D. Using the NSF figure for total R&D in 1994 ($172,550 million), this means collaborative R&D consumed an estimated $1,726 million that year. In the private sector, levels of R&D expenditure, particularly at a project level, are often treated as proprietary information. This is less true with nonprofit and government members of consortia, but data are nonetheless difficult to come by. Definitional problems also complicate the calculation of a national total for collaborative R&D. For example, by many definitions, Bellcore, the research arm of the regional Bell operating companies, is the country's largest research consortium. Its annual budget is close to $1.5 billion. Gibson and Rogers do not include Bellcore in their list of large U.S. consortia. If they did, the estimated percentage of U.S. investment in collaborative R&D would double. 87. For a useful discussion of organizational factors that have been shown to be important in transferring knowledge between members of R&D consortia, see Smilor and Gibson (1991). 88. Although publishers are generally excluded from this survey since their activities are largely noninteractive, it is worth noting that there are a number of publications that track developing tech- nologies in specific fields. These highly focused publications (both traditional and electronic) use a number of public sources (such as papers in technical journals, patents, technical meetings, and press releases) to locate new technologies. Such publications can serve as a very valuable source of infor- mation, especially in the private sector. 89. As one might imagine, data on the technology-related activities of law firms are not readily available, in part due to privacy concerns surrounding the attorney-client privilege. However, a search through the Martindale-Hubble database on the Lexis/Nexis service revealed that 484 U.S. law firms include the word technology to describe their practice. A more specific search for two or more technology-transfer-related key words resulted in only 144 "hits." Some firms may not yet include technology terms in their Martindale-Hubble listing. (Indeed, some states do not allow such specific- ity.) Thus, it is difficult to be certain that one has identified all the technology-oriented law firms. Whatever the actual number of technology-oriented law firms, it is still a small subset of the over 800,000 firms listed by Martindale-Hubble. 90. For further discussion of university-affiliated incubators, see p. 121. 91. The role of federal-laboratory-affiliated incubators is also addressed on p. 149. 92. For selected findings from NBIA's 10th Anniversary Survey of Business Incubators, includ- ing data on incubator types, clientele by industry type, types of services offered, as well as estimates of the average number of firms served, firms "graduated," and the average number or FTE jobs created per incubator, see the NBIA website, . 93. One study of the risk and reward of venture financing determined that of the 1,004 invest- ments made by 40 venture partnerships between 1985 and 1992, 17 percent were total write-offs, 29 percent yielded returns that were below or at cost, 38 percent yielded returns at 1 to 5 times cost, 8 percent at 5 to 10 times cost, and another 8 percent yielded returns that were over 10 times cost (Horsley, 1997). For further discussion of recent trends in U.S. venture and equity capital markets, see National Research Council and Committee on Science, Engineering, and Public Policy (1997).

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NOTES 377 94. See pp. 76-80, 88-90, and Annex II, pp. 201-204, for further discussion. 95. For an overview of the industry-government-university consortium, the American Textile Partnership (AMTEX), and its many research and outreach activities, see the AMTEX home page at . 96. See, for example, recent publications and current research initiatives of the Massachusetts Institute of Technology (MIT) International Motor Vehicle Program on the program's home page . For a recent assessment of the government- industry Partnership for New Generation Vehicles, see National Research Council (1997). 97. For further discussion of these and other industry-led initiatives aimed at the manufacturing technology needs of small and medium-sized firms in more technologically mature U.S. industries, see Part II, Technology Transfer by Privately Held, Nonacademic Organizations. 98. The chemical industry road map, Technology Vision 2020, was authored by the American Chemical Society, Chemical Manufacturers Association, American Institute of Chemical Engineers, Council for Chemical Research, and the Synthetic Organic Chemical Manufacturers Association (American Chemical Society et al., 1996). 99. See, for example, the discussion of NIST' s Manufacturing Extension Partnerships, or of state technology extension deployment programs such as the Thomas Edison Institute in Ohio or the Ben Franklin Partnership in Pennsylvania, pp. 77-79, and Annex II, pp. 204-207, as well as Coburn (1995). Annex II: Case Studies in Technology Transfer 1. In semiconductors and flat panel displays, for example, U.S. companies face severe competi- tion from Japanese companies that focused their efforts on commercialization of technology that originated in the United States. 2. The six interagency initiatives were biotechnology research, funded at $4.3 billion; advanced materials and processing, at $2.1 billion; global environmental change research, at $1.5 billion; ad- vanced manufacturing technology, at $1.4 billion; high-performance computing and communications, at $1.0 billion; and science, mathematics, engineering, and technology education, at $2.3 billion (Na- tional Science Board, 1993). 3. The effect of these incentives are qualified. First, the royalty system does elicit technology disclosures, but it does not elicit the breakthrough observation. Second, views are divided on the income-generating aspects of technology transfer. In a GAO survey of the top 35 universities, aver- age income for licenses was $1.6 million; 9 universities reported income in excess of $1.0 million and only six reported income in excess of $2.0 million. The GAO concluded that "there is a reasonably high probability that many universities that 'invest' in expanded technology licensing operations to produce income [will fail]" (U.S. General Accounting Office, 1992). This is consistent with the view expressed by an observer at Stanford that "a technology licensing office requires a minimum critical mass of at least $40-50 million to be justified on eco- nomic grounds" (Neils Reimers, personal communication, 1993). 4. See . 5. "Herb Boyer who was then an assistant professor at UCSF . . . presented his work with . . . a restriction enzyme, and I found that interesting. That night, we took a long walk and ended up near a kosher delicatessen near Waikiki Beach. During that particular discussion, eating overstuffed corned beef sandwiches, I proposed a collaboration with Herb that led to the discovery of recombinant DNA" (Stanley Cohen, remarks, Committee on Technological Innovation in Medicine: The University In- dustry Interface and Medical Innovation, Stanford University, February 21, 1993). 6. This section is derived from pp. 55-95 in Borrus (1988). 7. It is interesting to observe that, although Japan does not currently challenge U.S. dominance in software or hardware, Japan has nonetheless established a dominant position in the area of embedded

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378 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY software, especially so-called fuzzy systems. Japanese applications of fuzzy logic currently extend to more than 100 product areas, from video cameras to elevators and subway trains. In 1990, revenues from Japanese consumer goods incorporating fuzzy logic microcontrollers exceeded $1.5 billion (U.S. Department of Commerce, 1994). 8. Estimates of annual revenues were calculated by multiplying 6-month data by a factor of 2.2; these data are not comparable to IDC data cited earlier. PART III: TECHNOLOGY TRANSFER IN GERMANY 1. To understand R&D structures, it is interesting to look at relative indicators, especially the national expenditure on R&D in relation to the gross domestic product. In Germany, this so-called GERD factor started at the beginning of the 1980s at a level of 2.45 percent and reached nearly 2.9 percent in 1989. Between 1990 and 1994, this factor declined to 2.3 percent, which can be ex- plained by the unification of West and East Germany and the resulting economic problems. 2. The BMBF was established at the end of 1994 by merging the former Ministry of Education and Science and the Ministry for Education, Science, Research and Technology. This merger docu- ments the growing interest of the federal government in a closer linkage of science and technology. 3. For the universities, only research activities are covered; education activities are excluded. 4. For country comparisons, the analysis of patent applications at the European Patent Office leads to meaningful results, because European applications represent a selection of inventions charac- terized by their high quality; domestic distortions, which can be observed at national patent offices, play a negligible role (Grupp et al., 1996; Organization for Economic Cooperation and Development, 1994c; Schmoch and Kirsch, 1994). 5. In order to achieve a more differentiated picture, all European patents were classified accord- ing to a scheme of 30 technology fields. This classification has been elaborated by the Fraunhofer Institute for Systems and Innovation (FhG-ISI) in cooperation with the French Observatoire des Sci- ences et des Techniques and the French Patent Office. Because of the different patent volumes in different fields of technology, analysis based on absolute numbers of patents can be misleading. Therefore, a specialization indicator, called revealed patent advantage (RPA), was calculated. The RPA indicates a country's share of patents in a particular field compared with the average of the rest of the world. Positive RPA values indicate above-average activities, and negative ones indicate be- low-average activities. 6. In Figure 3.3, the criterion for assigning a patent to Germany is the address of the inventor (i.e., the location of the laboratory, not the address of the applicant). Therefore, the U.S.-based activities of German companies are not included. For further details, see Part III, Technology Trans- fer in Biotechnology. 7. The statement of high costs seems not to be true for universities, since they generally do not calculate overhead costs (see Part III, Statistics on General Research Structures). Therefore, this impediment is primarily an indication of the limited financial resources of SMEs. 8. For further details, see Part III, Federation of Industrial Research Associations. 9. The exact number of science associations is very difficult to determine. Schimank (1988b) identified 374, based on Vademecum (1985). A manual for 1995 (Hoppenstedt Verlag, 1995) records a list of about 400 technical or scientific associations, also including small industry-oriented associa- tions. The major methodological problem with clearly determining an exact count relates to the heterogeneity of organization and targets of the different associations. 10. The impact on research and technology development in Greece, for example, is further dem- onstrated in a study by Kuhlmann (1992). 11. The following description is based largely on the very comprehensive description of Keck (1993).

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NOTES 379 12. This figure does not include donations through industry-related foundations (e.g., the Volkswagen Foundation). 13. The data of the German Science Council are based on a survey of a sample of R&D-perform ing firms. The BMBF data are based on a full survey of German universities. Therefore, the BMBF figures seem to be more realistic. Nevertheless, the data of the German Science Council are docu- mented as they provide a consistent data series of the situation before 1990. In contrast, the BMBF data reflect the development in recent years. 14. These percentages are confirmed by a detailed analysis of the school of mechanical engineer- ing at the University of Karlsruhe. 15. The available data unfortunately put biological sciences and geography into one category. 16. They are located in Cologne, Heidelberg, Munich, Stuttgart, Hamburg (two), Berlin, and Dusseldorf. 17. These figures include an unidentified number of An-Institutes in the social sciences and hu- manities. Since the An-Institutes are legally independent bodies, their expenditures are not included in the universities' budgets. 18. In Karlsruhe, the latter probably come from the national research center Forschungszentrum Karlsruhe [FZK]. 19. The FhG-ISI and the National Academy of Engineering (NAB) reached a preliminary agree- ment on the focal areas in spring 1995. The binational panel agreed to this suggestion in June 1995, but chose the broader area of information technology instead of software. At that time, the survey was already nearly finished. 20. The persons questioned were asked to limit their answers to research activities in the focal areas. 21. That is, in terms of personnel, not money. 22. A clear delimitation between the different types of research is often not possible, and the respondents may have different perspectives. Nevertheless, the different compositions of the areas are obvious. 23. The nearly 1,000 UIRCs in the United States account for almost 70 percent of industry's support for academic R&D (Cohen et al., 1995). 24. This assumption is confirmed by a manual assignment of professor-related patents of 1985 and 1993, published in Becher et al. (1996). According to this analysis, about 80 percent of patent applications with professors as applicants or inventors actually trace back to universites. 25. In 1994, 26 of the 59 members (44 percent) of the Senate (without guests) were Max Planck scientists; 5 members (8 percent) came from other scientific institutions (Max-Planck-Gesellschaft, 1994a). 26. In 1995, as in previous years, outstanding MPG scientists were honored with Nobel prizes in medicine and chemistry. 27. This figure is based on the publication list of each institute, which might contain fewer than the actual number of recipients of doctoral degrees. In any case, the actual number of doctoral stu- dents working at MPG institutes is much higher. 28. To become a full-time professor, it is necessary to write a habilitation thesis, which is a kind of second doctoral thesis. The time needed to research and write this required paper varies. At universities, about 5 years is estimated to be appropriate. 29. In particular, the German Science Council has made various suggestions for improved meth- ods of technology foresight (Wissenschaftsrat, 1994). 30. For more details, see Bundesministerium fur Forschung und Technologie (1993a), Fraunhofer- Gesellschaft (1985, 1993), Frisch et al. (1982), Hohn (1989), Imbusch and Butler (1990), Krupp and Walter (1990), and Syrbe (1989). 31. According to the new Frascati definitions, this type is called basic research (Organization for Economic Cooperation and Development, 1994a).

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360 ~ ~ ~y ~ - j~ ~ ~ ~ - j^ ~ 4 ~ ~ ~y 32. ~ recent yeas, bout 230 spinach of Unbar 1nsOtutes, employing ~ tote of Taut 1,000 _, ~ _ em 33. accesses exclusively based on e-1dc~ Repledge such as In beer baaing He not included.