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TECHNOLOGY TRANSFER IN THE UNITED STATES 91 study of U.S. industrial innovation by the NSF and the U.S. Bureau of the Census found that the three most important sources of information leading to the devel- opment and commercial introduction of new products (according to the "innovat- ing firms"3i that responded to the survey) were internal sources, clients and cus- tomers, and suppliers of materials and components (National Science Board, 1996~. This study found that the least important sources of such information were government laboratories, technical institutes, and consulting firms. The NSF/Census study also revealed that the channels used most frequently by innovating firms to access new technology were hiring skilled employees, purchasing equipment, and using consultants. Likewise, the channels used most often by innovating firms to transfer new technologies to other organizations included communication with other companies, mobility of skilled employees, and R&D performed for others (National Science Board, 1996~. The following sections explore in greater detail the organization and dy- namic of technology transfer to U.S. industry within the three major sectors of the nation's nonindustrial R&D enterprise: research universities and colleges, fed- eral government laboratories, and the diverse population of privately held, non- academic, mostly nonprofit organizations (e.g., independent and affiliated R&D institutes, consortia, incubators and research parks, and technical and professional associations). TECHNOLOGY TRANSFER FROM HIGHER EDUCATION TO INDUSTRY There are over 3,600 publicly and privately funded colleges and universities as well as 6,900 vocational and technical institutions offering post-secondary edu- cation in the United States. Only about 875 public and private universities and colleges conduct science and/or engineering research, and of these, the 100 larg- est account for 80 percent of all academic R&D (National Science Board, 1996~. It is this latter, highly diverse subset of 100 public and private institutions that constitute the heart of the U.S. basic research enterprise and the main object of analysis in this chapter. To understand the structure and dynamic of technology transfer from these institutions of higher education to industry, it is useful to review briefly several major distinguishing characteristics of the U.S. academic research enterprise as well as an overview and the history of university-industry technology transfer in the United States. Distinguishing Characteristics of the Enterprise SCALE One major distinguishing feature of the U.S. academic research enterprise is its size. In 1995, U.S. universities and colleges performed $21.6 billion worth of

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92 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY research and development,32 or 12.6 percent of all R&D conducted in the United States that year. This expenditure was roughly the same as that by all federal laboratories and FFRDCs ($25 billion in 1995) and was nearly half of total Ger- man R&D spending in 1994. Academic institutions performed 49 percent of all basic research, 14 percent of all applied research, and less than 2 percent of all development work performed in the United States in 1995. In 1993, U.S. univer- sities and colleges employed over 149,800 doctoral scientists and engineers (S&E), 10,500 individuals with professional degrees, and 5,500 S&Es with S&E degrees at the masters and bachelors levels in R&D activities. In addition, nearly 90,000 full-time graduate students (27 percent of total full-time enrollment) re- lied on research assistantships as their primary source of support (National Sci- ence Board, 1996~. U.S. universities and colleges graduate roughly 24,000 Ph.D. scientists and engineers each year. In 1993, these institutions received nearly 6,600 invention disclosures and applied for over 3,000 patents (including roughly 2,000 new pat- ents). In 1993, U.S. academic researchers authored nearly 100,000 articles in professional journals, representing 25 percent of the world's scientific and tech- nical literature.33 DIVERSITY A second distinguishing feature of U.S. research colleges and universities is their diversity. There is no U.S. university "system" in the formal sense of the term. Rather, the academic research enterprise is a heterogeneous, highly au- tonomous population of research colleges and universities, each of which was established and has evolved in response to a unique combination of local, re- gional (state), and national needs. Some are public, state-owned institutions; others are privately owned. Although all institutions that receive federal funding must comply with common federal rules and regulations, each institution, or state- run system of institutions, has a distinct governing body, administration, account- ing practices, and mission statement. U.S. academic research institutions differ greatly in size and research focus. Some institutions perform significant amounts of industry-sponsored research, while others do very little (Table 2.8~. The distribution of R&D spending by science and engineering field of the top 20 research universities illustrates how diverse their research portfolios are (Table 2.9~. (These 20 institutions conducted roughly a third of all U.S. academic research in 1993.) Some universities main- tain research portfolios that are more national or international in scope and repu- tation. Others conduct research that is more heavily weighted to the needs of local industries or their region's or state's economy. Some remain focused al- most exclusively on their traditional missions of education and research, while others have become deeply involved in a broad spectrum of technology transfer and outreach activities.

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TECHNOLOGY TRANSFER IN THE UNITED STATES TABLE 2.8 Industry-Sponsored Research as a Share of Total Academic Research Expenditures at the Top 20 Research Universities, Fiscal Year 1994 93 Industry Industry Sponsored as Total Research Sponsored Percentage of Expenditures Research Total Research Institution and Ranking (thousands of $) (thousands of $) Expenditures Johns Hopkins University 784,043 10,418 1.33 University of Michigan 430,778 26,732 6.21 University of Wisconsin-Madison 392,718 13,729 3.50 Massachusetts Institute of Technology 363,918 55,500 15.25 Texas A&M University 355,750 28,576 8.03 University of Washington 343,910 33,199 9.65 University of California-San Diego 331,901 9,764 2.94 Stanford University 318,561 14,714 4.62 University of Minnesota 317,865 23,726 7.46 Cornell University 312,683 17,199 5.50 University of California-San Francisco 312,393 10,977 3.51 Pennsylvania State University 302,997 45,408 14.99 University of California-Berkeley 289,632 12,547 4.33 University of California-Los Angeles 279,869 13,394 4.79 Harvard University 289,459a 10,228 3.53 University of Arizona 269,939 15,053 5.58 University of Texas-Austin 260,602 4,268 1.64 University of Pennsylvania 251,461 12,107 4.81 University of Illinois-Urbana 245,407 13,527 5.51 Columbia University 236,417 1,632 0.69 TOTAL 6,679,303 372,698 5.58 NOTE: Because of rounding, figures may not add to the totals shown. aEstimated SOURCE: National Science Foundation (1996a). SPONSORED RESEARCH A third distinguishing feature of U.S. academic research is the way in which it is funded. The vast majority of U.S. academic research in science and engi- neering is sponsored directly via grants or contracts from federal mission agen- cies. In other words, it is not supported by public "general university" or "base institutional" funds as is the case in Germany, Japan, and other advanced indus- trialized countries. In 1995, federal government agencies funded 60.2 percent of

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94 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY TABLE 2.9 R&D Expenditures at Universities and Colleges, by Science and Engineering Field, Fiscal Year 1994 (dollars in thousands) PhysicalEnvironmentalMath & Cor Institution and Ranking TotalEngineering SciencesSciencesputer Scienc Johns Hopkins University 784,043210,522 117,18840,593119,297 University of Michigan 430,77888,837 22,97220,82319,186 University of Wisconsin-Madison 392,71855,021 39,83821,89810,031 Massachusetts Institute of Technology 363,918153,530 95,15416,09418,514 Texas A&M University 355,75082,565 21,89080,8786,963 University of Washington 343,91020,332 19,37557,9126,516 University of California-San Diego 331,90115,806 35,450102,26613,542 Stanford University 318,56192,946 44,0306,19214,513 University of Minnesota 317,86530,625 15,80211,560218 Cornell University 312,68341,416 45,2114,38923,614 University of California-San Francisco 312,3930 000 Pennsylvania State University 302,997129,313 22,48621,3603,518 University of California-Berkeley 289,63261,654 59,9964,4664,836 University of California-Los Angeles 279,86929,544 24,06914,1308,291 Harvard University 278,459a6,027a 31,718a9,714a4,169a University of Arizona 269,93920,659 91,76520,8617,296 University of Texas-Austin 260,602106,743 64,10825,82615,897 University of Pennsylvania 251,46111,918 23,2458018,408 University of Illinois-Urbana 245,40751,634 38,50027,05215,395 Columbia University 236,41714,407 21,43339,7864,637 TOTAL 6,679,3031,223,499 834,230526,601326,438 NOTE: Because of rounding, figures may not add to the totals shown. aEstimated SOURCE: National Science Foundation (1996a). U.S. academic R&D, state and local governments 7.4 percent, industry 6.9 per- cent, individuals and nonprofit institutions 7.4 percent, with the remaining 18.1 percent coming directly from academic institutions themselves.34 Most federal funds for academic research are awarded on a competitive basis to individual investigators or to research teams. Researchers submit project proposals that are then peer reviewed according to "best-science" principles. This approach de- mands that principal investigators invest a great deal of time in grant manage- ment (i.e., non-research-related) activities, both as grant applicants and "volun- teer" reviewers of the grant proposals of other researchers. However, it also fosters intensive and valuable competition among ideas and rapid exploitation of new research directions and concepts within the academic research community.

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TECHNOLOGY TRANSFER IN THE UNITED STATES nce and 95 EnvironmentalMath & Com-Life SocialOther Sciencesputer SciencesSciencesPsychologySciencesSciences 40,593119,297270,3141,0219,78415,324 20,82319,186212,1989,09851,0946,570 21,89810,031222,48211,54031,028880 16,09418,51437,6908,5038,17926,254 80,8786,963141,1301,57017,5473,207 57,9126,516218,9987,32110,6752,781 102,26613,542156,7243,9984,1150 6,19214,513152,1043,7105,0660 11,560218219,2416,97011,8520 4,38923,614184,4253,6709,9580 00312,393000 21,3603,51896,5206,39310,40912,998 4,4664,836122,1826,61724,8305,051 14,1308,291178,0147,51418,3070 9,714a4,169a168,143a3,117a46,480a9,091a 20,8617,296116,2022,5468,6661,944 25,82615,89723,5843,96116,1834,300 8018,408183,5022,29621,2910 27,05215,39555,5196,30514,09636,906 39,7864,637148,1002,3865,6680 526,601326,4383,219,46598,536325,228125,306 Most research performed by U.S. universities and colleges is basic or long- term applied in nature. Basic research accounted for 67 percent of total academic R&D in 1995, applied research 25 percent, and development only 8 percent. Nevertheless, because of the way it is funded, U.S. academic research (even so- called basic research) in many fields is shaped largely by the applied needs of federal agency missions. The distribution of U.S. academic research expenditures by field shows a heavy emphasis on the life sciences, particularly the medical sciences (Table 2.10~. In 1993, the medical and biological sciences consumed 45 percent of all academic research dollars. All engineering disciplines together accounted for less than 16 percent of the total. Despite the fact that U.S. funding of academic research has not kept pace with the financial demands of a growing population of academic researchers, U.S. academic research expenditures grew faster than those of any other major

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96 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY TABLE 2.10 R&D Expenditures at Universities and Colleges, Percent Share by Major Science and Engineering Field, Fiscal Year 1994 Source arid Field 1994 Engineenng, total Aeronautical and Astronautical Chemical Civil Electncal Mechanical Metallurgical and materials Other, n.e.c. All sciences, total Physical sciences Environmental sciences Mathematical sciences Computer sciences Life sciences Psychology Social sciences Other sciences, n.e.c. 15.77 1.03 1.31 1.86 3.44 2.34 1.51 4.27 84.23 10.30 6.76 1.32 3.13 54.65 1.70 4.51 1.86 NOTE: Because of rounding, figures may not add to the totals shown. n.e.c. = not elsewhere classified. SOURCE: National Science Foundation (1996a). R&D performing sector during the 1984-1994 period. During this period, aca- demic research grew at an average annual rate of 5.8 percent, compared with 2.8 percent for FFRDCs and other nonprofit laboratories, 1.4 percent for industrial laboratories, and 0.7 percent for all federal laboratories (National Science Board, 1996). History of University-Industry Relations The history of U.S. university-industry interaction with respect to research and development and technology transfer can be divided roughly into three peri- ods: from the mid- 1800s to the eve of World War II; from the early 1940s through the mid-1970s; and from the late-1970s to the present. During the first of these periods, the development of U.S. higher education and research was influenced heavily by the more immediate, practice-oriented training and technical problem-solving needs of U.S. agriculture and industry. Although this era witnessed the emergence of a small number of elite research universities whose faculties engaged in basic research, it was during this period

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TECHNOLOGY TRANSFER IN THE UNITED STATES 97 that U.S. colleges and universities made their greatest strides in the applied sci- ences and engineering disciplines, largely in response to the demands of local or regional industries. Government at both the state and federal levels had a strong hand in shaping the practical, regional economic orientation of higher education and research dur- ing the period. Indeed, many public universities were founded by state govern- ments with an explicit mandate to support the technical needs of the regional economy. In 1936, state governments funded 14 percent of all U.S. academic research. Throughout this time, federal government support of academic research, education, and extension activities was concentrated in areas critical to the tech- nological development of large sectors of the U.S. economy that lacked a pri- vately funded R&D base, in particular agriculture, forestry, and mining.35 Uni- versity-based agricultural research and extension activity alone claimed about 40 percent of federal research funds during the mid-1930s (Matkin, 1990; Mowery and Rosenberg, 1993~. By the eve of World War II, the federal government accounted for no more than one-quarter of total academic research funding. Private foundations funded the majority of academic R&D during this second period. The it&D-intensive industries of the day, such as electrical manufacturing and chemicals, helped to develop the research and training capabilities of select U.S. universities, but mainly as a complement to the extensive in-house R&D efforts of the companies themselves (Matkin, 1990~. World War II represented a watershed in the relationship between U.S. re- search universities and the federal government. Academic research was enlisted very effectively in service of the war effort and was instrumental in the develop- ment of new technologies such as atomic energy and radar, and new fields like aeronautics. This greatly enhanced the public reputation of academic research institutions and engendered a new appreciation for the importance of basic and long-term applied research for U.S. military security and economic prosperity, as well as other national interests. Accordingly, academic research assumed a cen- tral role in the new federal science policy articulated during the mid-1940s a policy based on a new "social contract" that explicitly harnessed the academic science community in service of national objectives through greatly increased federal support for academic research and its associated infrastructure (Bush, 1945~. By the early 1950s, agencies of the federal government, led by the Depart- ment of Defense, had become the principal patrons of U.S. academic research, sponsoring 60 percent of all academic R&D in 1955. In the decades to follow, the academic research community would be enlisted in support of a broad range of federal agency missions, including national defense, energy independence, the cure of disease, space exploration, as well as the broader goal of achieving U.S. preeminence in virtually all fields of science and engineering. With the shift in the funding base of U.S. academic research came a corre

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98 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY spending shift in the orientation of much academic research and graduate educa- tion in science and engineering. Rather than focusing on the more immediate practical and applied R&D needs of private industry, academic research became more concerned with the basic and long-term applied research agendas of the federal agencies.36 A majority of academic research funds were now allocated by federal agencies through a system of peer-review evaluation, which was guided by "best-science" principles. This new funding environment fostered a more pronounced division of labor between universities and industry with re- gard to basic and applied research, and reinforced differences between the two sectors' research cultures.37 Academia rewarded research faculty primarily for the originality of their research; the quality, number, and timeliness of their re- search publications; and their success in competing for research funding from government agencies and nonprofit foundations. Accordingly, the academic re- search community placed a premium on the openness, free exchange, and rapid dissemination of new knowledge and ideas. By contrast, industry-based re- searchers continued to be rewarded according to the standards of the market- place (e.g., the number and value of patents received, the successful commer- cialization of technologies). In short, private industry concerned itself with capturing and protecting the economic value embodied in new ideas through intellectual property and trade secrets. Throughout this second period, the transfer of technology from academic research institutions to industry was treated generally as an ancillary activity by most major research universities. These institutions considered their primary contributions to the technological capabilities of American industry to be well- trained graduates, published research results, and faculty consultants. The third and current phase of university-industry interaction dates from the late 1970s and is characterized by a renewed interest in collaborative research and technology transfer between the two sectors. This changing dynamic is the result of several factors. First, the 1970s heralded the commercial take-off of industries with strong technological roots in academic research, including micro- electronics, software, and biotechnology. These successes generated a new wave of industrial interest in particular areas of academic research and expertise. Sec- ond, the emergence of major new challenges to the competitiveness of many U.S. technology-intensive industries during the 1970s prompted federal and state ef- forts to harness the capabilities and outputs of the U.S. academic research enter- prise to serve the R&D and technology needs of American industry more effec- tively. Finally, although federal funding of academic research has grown rapidly in absolute terms throughout the period, the increased cost of research and an expanding population of academic researchers have made competition for federal support tighter than ever. These trends have encouraged university-based re- searchers to look increasingly to the private sector for sources of research support. At the federal level, two changes in policy fostered the shift to a more col- laborative era in U.S. university-industry relations. First, in 1980, Congress

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TECHNOLOGY TRANSFER IN THE UNITED STATES 99 passed the Bayh-Dole Act, which made it possible for universities, other nonprofit organizations, and small businesses to retain rights to most of their federally funded inventions. Under the terms of the act, academic research institutions are granted considerable autonomy in licensing or otherwise com- mercializing intellectual property they develop with public funds, as long as they (a) give preference to businesses located in the United States, particularly small companies, when licensing such intellectual property; and (b) grant exclu- sive rights or sell this intellectual property to companies willing and able to manufacture substantially in the United States products embodying the inven- tion or produced through application of the invention (U.S. General Accounting Office, 1992~.38 The federal government has also sought to promote greater university-indus- try collaboration by funding university-based research centers that engage aca- demic and industrial researchers in collaborative, often multidisciplinary, re- search. Most prominent among these are the National Science Foundation's Industry-University Cooperative Research Centers (begun in 1973), Science and Technology Centers (1987), Engineering Research Centers (1985), and Materials Research Science and Engineering Centers (1993~.39 Recent federal industrial technology initiatives such as the Advanced Technology Program of the National Institute of Standards and Technology or the multiagency Technology Reinvest- ment Project have also included provisions supportive of university-industry col- laborative research.40 State governments, too, have tried to promote closer ties between public uni- versities and their host region's economies and industrial base. The 1980s wit- nessed a shift to increasingly science-and-technology-driven economic develop- ment strategies among most of the 50 states. Public universities stand at the center of many of these new initiatives, as state governments seek to recreate the success of Route 128, the high-tech corridor around Boston said to have been spawned and nurtured by the technical capabilities of MIT (Etzkowitz, 1988; Feller, 1990~. Technology Transfer by Research Universities and Colleges Recent surveys of it&D-performing companies attest to the fact that the most valued output of U.S. research universities from the perspective of corporate America is the human capital they generate in the form of well-trained scientists and engineers.4i For the most part, the value of science and engineering gradu- ates to a firm (or the economy at large) is defined by the research and learning skills these individuals have acquired through their academic training, rather than by the volume of specific (and often rapidly outdated) knowledge they have amassed during their course of studies. Researchers based at universities and colleges account for over 70 percent of all U.S. scientific and technical articles (see Figure 2.10~. In certain fields the

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- ;; FIGURE 2.10 Distribution of U.S. scientific and technical articles, by sector, 1993. FFRDC = federally funded research and development center. SOURCE: National Science Board (1996~. research literature represents an important source of highly specialized knowl- edge of direct relevance and value to the technology strategies of companies in some industries. In recent years, citations of research literature on the first page of U.S. patent applications (an indication of the potential contribution of pub- lished research to patentable inventions) have risen rapidly. About half of all publications cited were papers from academic institutions (National Science Board, 1996~. In most industry sectors, the most valuable contribution of funda- mental academic research is its role in helping companies understand existing technologies better and in exposing promising paths for and enhancing the pro- ductivity of industrial applied research and development (David et al., 1992; Pavitt, 1991~. Indeed, university research is usually more useful for improving on inventions already made than for making them (i.e., one has to thoroughly understand how and why an invention works before one can have a strategy, other than pure trial and error, for improving on it). The U.S. panel accepts that the production of graduates and new knowledge remain the primary contribution of American higher education to the technical needs of U.S. industry. It also acknowledges the important role academic re- search publications play in the transfer of highly specialized knowledge in a num- ber of industries. However, in this report, the panel focuses primarily on those

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TECHNOLOGY TRANSFER IN THE UNITED STATES 101 activities that, though related to the missions of education and research, involve the intentional or "directed" transfer of intellectual property or specific knowl- edge (i.e., "proto-technology") from universities and colleges to industry. Even within this narrower definition, university technology transfer encom- passes a wide range of transfer mechanisms. Some can be defined and measured relatively easily (e.g., the transfer of codified technology or proto-technology via patents, copyrights, and research publications). Others are little more than prox- ies for actual technology transfer and are very difficult, if not impossible, to quan- tify. These mechanisms include faculty consulting; the movement of graduates and faculty from academia to industry; university investments in the transfer and commercialization of technology; industry-sponsored or collaborative academic- industrial R&D; and a range of other market-making activities by industry and academia directed at the commercially valuable outputs of academic research. TECHNOLOGY TRANSFER MECHANISMS There are three types of mechanisms for technology transfer from academia to industry in the United States.42 The first includes such things as faculty con- sulting and the transfer of university intellectual property and proto-technology embodied in graduates and faculty who are hired by private companies. These mechanisms, closely related to the education and research missions of universi- ties and colleges, were the predominant modes of technology transfer prior to the mid-to-late 1970s. The second type, also linked to the traditional missions of universities, has only seen extensive use or significant growth in use since the late 1970s (the third phase of university-industry relations). These mechanisms in- clude patent licensing, university acquisition of private-sector licensees, and vari- ous approaches for enhancing industry access to and sponsorship of university- based research. The third type includes activities, such as technical assistance programs and technology business incubators, associated with commercializing research or improving university-industry relations more generally. These mecha- nisms, which have also seen significant growth since the late 1970s, are more ancillary to the traditional missions of the research university. The following sections review each of these mechanisms separately. It is well to remember, however, that universities and individual academic researchers employ many of these mechanisms in concert in order to take advantage of the synergies and complementarities among them. Faculty Consulting No aggregate data exist on the number of U.S. academic research faculty involved in consulting with private industry or the number of scientist or engineer man-hours academic researchers devote to consulting with industry each year. Nevertheless, panel members estimate that more than half of the academic engi- neering faculty at the top 20 U.S. research universities spend 10 to 15 percent of

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Forty percent of the research conducted by UIRCsis basic research, 40 per- cent is applied research, and 20 percent is development work. In other words, UIRCs perform a significantly higher proportion of applied research and devel- opment than do universities. On average, UIRCs devoted two-thirds of their effort to R&D and one-fifth to education and training. As a group, UIRCs receive 46 percent of their funding from public sources (34 percent from federal government and 12 percent from state governments), 31

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114 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY TABLE 2.11 UIRC Research by Discipline, 1990 Discipline Number of UIRCs Percent of UIRCs Basic science: Chemistry 192 38.6 Biology 169 34.0 Physics 120 24.1 Geology and earth sciences98 19.7 Mathematics54 10.7 Engineering: Materials171 34.4 Electrical159 32.0 Mechanical155 31.2 Chemical137 27.6 Civil103 20.7 Industrial87 17.5 Aeronautical and astronautical58 11.7 Applied science: Materials145 29.2 Computer science130 26.2 Agricultural106 21.3 Medical sciences93 18.7 Applied math and operations research57 11.5 Atmospheric45 9.1 Oceanography27 5.4 Astronomy6 1.2 NOTE: Total number of UIRCs reporting was 497. Many of the centers had more than one disciplin- ary focus. SOURCE: Cohen et al. (1994). percent from private industry, and 18 percent from universities themselves. Some 70 percent of all industry support for academic R&D was channeled through UIRCs in 1990. The vast majority of public and private support for research at UIRCs comes in the form of grants. Most industrial support of UIRCs appears to be directed at more basic and long-term applied research. In addition to direct funding, industry contributions to individual centers also include equipment, in- strumentation, and internship opportunities for students. The goals and missions of individual centers vary considerably, as do their disciplines (Table 2.11), technology (Table 2.12), and industry orientation, and their organizational form. Collectively, these centers engage a broad range of traditional and high-technology industries in their research (Table 2.13~. Some centers are more focused on industry's immediate needs, for example product and process improvements. Other centers are focused on more traditional aca- demic objectives, such as education and the advancement of knowledge (Table 2.14).

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TECHNOLOGY TRANSFER IN THE UNITED STATES TABLE 2.12 UIRC Research by Technology Area, 1990 115 Technology Area Number of UIRCs Percent of UIRCs Environmental technology and waste management Advanced materials Computer software Biotechnology Biomedical Energy Manufacturing (industrial, automotive, and robotics) Agnculture and food Chemicals Scientific instruments Semiconductor electronics Aerospace Pharmaceuticals Computer hardware Telecommunications Transportation 147 135 129 109 108 100 98 89 77 67 64 61 61 50 48 37 29.8 27.3 26.1 22.0 21.9 20.2 19.8 18.0 15.6 13.6 13.0 12.3 12.3 10.1 9.7 7.5 NOTE: Total number of UIRCs reporting was 494. Many of the centers had more than one technol- ogy focus. SOURCE: Cohen et al. (1994). The primary impetus for establishing nearly three-quarters of all UIRCs in existence in 1990 came from university-based researchers themselves. Govern- ment and industry each took the initiative in 11 percent of all centers established. The most aggressive federal sponsor of UIRCs during the 1980s was the NSF, which helped establish a raft of university-based centers, including Engineering Research Centers, Science and Technology Centers, Industry-University Coop- erative Research Centers, Materials Research Centers, and Supercomputer Cen- ters. NSF provided seed money for these centers with the expectation that the host institutions would raise matching funds from industry, state and local gov- ernments, and internally. While the objectives of these centers' programs vary in many respects (research focus, relative emphasis on research, education, and tech- nology transfer, etc.), all share a commitment to facilitate industry access to uni- versity research results, engage industry in the definition of a research portfolio, and otherwise promote technology transfer to participating firms. Recent assessments of the NSF centers indicate that, on the whole, they are effective mechanisms for forging university-industry research partnerships.52 In aggregate, UIRCs graduated an average of four to five Ph.D.'s and seven to eight master's recipients per year (Table 2.15~. On average, roughly 6 students from each UIRC found permanent employment with a participating company during the 2-year period 1989-1990. UIRCs accounted for 211, or about 20 percent, of

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116 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY TABLE 2.13 UIRC Research by Industry, 1990 Number of Percent Industry UIRCs of UIRCs Chemical/Pharmaceutical 213 41.7 Computer 179 35.0 Electronic equipment 148 29.0 Petroleum and coal 144 28.2 Software and computer services 133 26.0 Food products 110 21.5 Fabricated metals 107 20.9 Agriculture 102 20.0 Utilities 100 19.6 Rubber and plastics 88 17.2 Transportation 86 16.8 Transportation equipment 79 15.5 Mining 78 15.3 Communications 78 15.3 Industrial/Commercial machinery 78 15.3 Lumber and wood 77 15.0 Primary metals 76 14.9 Paper and allied products 75 14.7 NOTE: Total number of UIRCs reporting was 511. Many of the centers engaged more than one industry in cooperative research. SOURCE: Cohen et al. (1994). the 1,174 patents granted to universities in 1990. The nature and level of UIRC performance varies by technical field and funding source and is heavily influ- enced by the mission orientation of the particular center. Moreover, the scope and type of UIRC outputs is influenced heavily by the area of technology special- ization (Cohen et al., 1995~. For example, UIRCs focused in the fields of bio- technology and advanced materials lead in the production of patents. UIRCs emphasizing biotechnology develop the most new products, whereas those spe- cializing in software lead in the development of new processes. Nevertheless, some observers have expressed concern that the benefits resulting from deepening academic ties with industry through UIRCs and other mecha- nisms may come at a cost to core comparative strengths of the U.S. academic research enterprise in particular, its capacity for basic research and its relative openness that is unacceptable (Dasgupta and David, 1994; Rosenberg and Nelson, 1994) In fact, recent empirical studies indicate that university faculty receiving support from industry tend to conduct research that is more applied on average and to accept restrictions on the dissemination of their research findings (Blumenthal et al., 1986a,b; Cohen et al., 1994; Morgan et al., 1994a,b). While these documented changes appear to offer benefits to firms directly involved in UIRC

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TECHNOLOGY TRANSFER IN THE UNITED STATES g a' C) a' a' VO o a' C) go _. _. o o .= .= Cal Em . . ca o .e o C) V, ca o 4= sit _4 C) o C) V, ~F go V, ~ go Z ~ o ~Do .... ~CMCM .... CM ~ o ~ ~ ~ ~ ~ ~ Do ~ o~ ~ 00 ~00 ~) ~ m) CM CMC') C')~t ' ' ~t -I~1- ' ' ~_I ' ' _I ' '_I ' ' ' ' ~Do ~._4 oo ~ ~o CM ~ ~ ~ ~ ~ ~ 00 ~00 ~00 ~ 11 4= ~0 0 0 ~ O ~ ~i oo ~ ~ ~ ~ c ~ O ~ CM ~ ~ CM CM CM ~ CM ~ ~ ~ ~_4 11 _4 0 oo ~oo 00 ~ ~ ~ ~ ~0 ~ ~0 ~ c~) ~ -I ' ' c~) ~O ca 11 4= ~o 6~ ~ ~ ~ ~ 1~1 '( ~ ~ ~ ~ ~ _ 117

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118 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY TABLE 2.15 Output per UIRC, 1990 Meana (N=425) Meanb (N) Mediana Medianb Research papers 42.47 43.60 (414) 20 20 Invention disclosures 1.60 2.11 (321) 0 1 Copyrights 1.09 1.73 (268) 0 0 Prototypes 1.00 1.49 (286) 0 1 New products invented 0.69 1.06 (277) 0 0 New processes invented 0.92 1.39 (281) 0 0 Patent applications 1.08 1.39 (330) 0 0 Patents issued 0.50 0.68 (311) 0 0 Licenses 0.38 0.53 (301) 0 0 Ph.D.'s 4.38c 4.60 (410) 2 2 Master's degrees 7.03c 7.53 (402) 3 3 aComputed assuming blank responses signify zero, as long as there is a response to at least one of the category items. bComposed assuming blank responses are missing values. CN = 431 SOURCE: Cohen et al. (1994). collaborative research, they may weaken channels of communication and redirect resources away from areas of basic research that benefit firms more broadly. Industrial Liaison Programs Industrial liaison programs (ILPs) charge membership fees to companies in return for providing them with facilitated access to the results of university re- search, to researchers, and to laboratories in specified fields. ILP members are generally entitled to receive research publications (some prepublications) from university-based researchers; to attend workshops, lectures, and conferences on research topics of interest; and to participate in an annual conference at which faculty and student research is formally presented and summarized. Some ILPs are universitywide in scope (i.e., a corporate member receives facilitated access to a broad range of university research for a fee that is added to the university's unrestricted funds). Most ILPs, however, are focused on a narrowly defined re- search area involving individual academic departments or research clusters, or, in some cases, individual UIRCs.53 These more typical ILPs involve closer interac- tion between academic researchers and technical staff from industry and a higher level of faculty engagement overall in their management. Accordingly, corporate membership fees go to the sponsoring academic department or UIRC. As part of its 1992 survey of 35 leading U.S. research universities, the U.S. General Accounting Office (GAO) (1992) gathered information on the growth of industrial liaison programs. Thirty of these institutions had at least one ILP.

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TECHNOLOGY TRANSFER IN THE UNITED STATES 119 Carnegie Mellon University alone accounted for 59 of 278 such programs that were identified. Eighteen of the universities surveyed provide liaison program members, domestic or foreign, with access to the results of federally funded re- search before those results are made generally available, while the other 12 insti- tutions do not. Research Consortia Research consortia involve a university, academic research department, or UIRC with multiple corporate sponsors, and often state and federal government funding agencies, in the sponsorship of a specific field of academic research. Examples of such consortia include the Biotechnology Process Engineering Cen- ter Consortium at MIT (Box 5) and the Computer Aided Design/Computer Aided Manufacturing Consortium at the University of California at Berkeley. (See Box 3,pp.106-107.) As in the case of formal UIRCs, consortia partners from indus- try and government are involved directly in helping define the research agenda of the academic research performer. Moreover, research consortia, like UIRCs, may also encompass targeted industrial liaison programs. Technical Assistance Programs Technical assistance programs are designed to serve small and medium-sized enterprises (SMEs) within a defined geographic region by providing them with technical advice and problem-solving capabilities usually related to manufactur- ing and production issues. Technical assistance programs may have a permanent staff of assistance providers or merely serve a broker function by putting compa- nies in contact with expert consultants, including university faculty. Most technical assistance programs are associated with universities. As of 1992, all but 8 of 75 members of the National Association of Management and Techni- cal Assistance Centers were associated with college or universities. Included among the population of university-affiliated programs are the several hundred small-business development centers in community colleges established by the U.S. Small Business Association, the various technical and management assis- tance centers in universities funded by the Department of Commerce (such as the Manufacturing Extension Partnership and the Manufacturing Technology Cen- ters), as well as many of the 42 centers funded by the U.S. Department of Trans- portation that provide technical advice to state departments of transportation. As one observer has noted, these technical assistance programs "are public service activities and rarely have strong alliances with teaching or fundamental research. They require heavy subsidies and therefore must be attentive to the purposes and requirements of funding agencies.... [and they I exist on the periph- ery of the university, uncertain of their place and often unsupported by the admin- istration" (Matkin, 1990~. Whether such activities are worth the diversion of effort from the core missions of the university is an open question. Nevertheless, as in the case of equity investments in start-up companies, these activities may

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TECHNOLOGY TRANSFER IN THE UNITED STATES 121 help buy sponsoring universities continued political/financial support within state legislatures. More importantly, as underscored by Armstrong (1997), such pro- grams have the potential for exposing basic researchers in academia to other in- stitutional cultures in the technological innovation system, to the benefit of all parties involved. TECHNOLOGY BUSINESS INCUBATORS The purpose of university-based technology business incubators is the care and feeding of start-up ventures through their early phases of development. Gen- erally, incubators provide laboratory or building space at below-market rental rates, as well as a variety of technical and general business services. The incuba- tors' principal service is to provide clients with access to academic researchers, including faculty, postdocs, and graduate students. In early 1997, there were more than 100 technology business incubators operating in the United States. Roughly half of these were affiliated with research universities (Association of University-Related Research Parks, 1997; National Business Incubators Associa- tion, 1997~.54 ASSESSING TECHNOLOGY TRANSFER FROM UNIVERSITIES AND COLLEGES The preceding review of the major technology transfer mechanisms of U.S. universities and colleges testifies to the dynamism, flexibility, and innovativeness of the nation's academic research enterprise in this area. Since the early 1980s there have been strong fiscal and public-policy-related incentives for academia to engage industry more intensively as a research partner and client. In this context, the highly diverse and autonomous population of U.S. research colleges and uni- versities and their research faculties have had great latitude to experiment with new institutional arrangements to this end. Responding to the economic develop- ment challenge, academic research institutions have expanded their portfolio of technology transfer activities to encompass collaborative research centers, con- sortia, proactive technology licensing offices, venture capital funds, and techni- cal extension programs. While it is difficult to assess the aggregate impact of or attribute specific causality to these experiments, the past 10 to 15 years have witnessed a number of significant readily documented changes in university-industry research inter- action that are at least consistent with the logic of these initiatives. Industrial support for academic research has grown more rapidly than funding by any other sector since 1980. The number of academic research publications cited in U.S. patent applications has increased markedly in the last 5 years. University licens- ing revenues have grown rapidly in the past decade, albeit from a small base. Although most academic researchers involved in collaborative work with indus

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122 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY try still view the advancement of knowledge as their primary research objective, the more entrepreneurial among them are now faced with greater opportunities (and incentives) to become involved directly in the commercialization of tech- nologies developed or seeded within the academy through start-up companies or other mechanisms. Through more intense research collaboration, firms in a num- ber of industries have gained enhanced access to academic researchers faculty, postdocs, and graduate students with highly specialized knowledge. With respect to the impact of academic research and technology transfer on industrial performance there are clearly significant inter-industry variations in experience. As the survey of UIRCs suggests, the relative importance of differ- ent technology transfer mechanisms varies widely according to the nature of the technology being transferred and the industry being served. The extent and nature of a given research university's contribution to the technology needs of a particular industry or company depends largely on the specific characteristics of that industry's key technologies (e.g., whether they are highly science-based or not, whether they are relatively new and dynamic or more mature and stable, whether intellectual property rights are central or tangential to their successful commercialization, etch. For example, patent licensing is a critical instrument of technology transfer in biotechnology, where control of intellectual property rights is essential for the long and expensive development/commercialization cycle of human therapeutic compounds. Yet patents are much less important in software or microelectronics, where the pace of technology life cycles is much shorter. Research universities, which constitute the locus of most basic research in molecular biology and computer sciences in the United States, are considered the most important nonindustrial source of external technology for the relatively new, highly science-based biotechnology and software industries (see Annex II). Yet aside from their critical contribution of well-trained, learning-equipped science and engineering graduates, U.S. research universities have not figured promi- nently as a source of new technology or proto-technology for more technologi- cally mature or established industries (e.g., automobiles, machine tools). Surveys of industrial researchers by Nelson and Levin (1986) and related research by Mansfield (1995) have shown that there are only a few industries where technology transfer from universities in the form of codified intellectual property, or the direct contribution of academic research to the commercializable products and processes are perceived to be important. Here again, software and biotechnology (i.e., new technologies where the step from basic research to appli- cation is direct) are the only two areas where corporate managers see universities as major sources of "invention." From the perspective of most other technology- intensive industries, academic research mainly stimulates and enhances the power of R&D performed by private companies. Those who produce nonbiotech phar- maceuticals assert that they look to academic research primarily to improve their understanding of technologies, particularly new technologies, yet only rarely

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TECHNOLOGY TRANSFER IN THE UNITED STATES 123 for new products. Likewise, electronics manufacturers view academic research as an important source of radically new designs and concepts, but as a relatively insignificant contributor to incremental technological advance in their industry (Rosenberg and Nelson, 1994~. Yet even in less "science-based" industries, bet- ter understanding of technologies, illuminated by academic research, may enable industrial researchers to search more efficiently for incremental changes. In other words, academic research helps identify a much wider range and variety of op- tions for incremental improvement, but the selection among these options for further pursuit can be better done by industrial researchers more intimately famil- iar with all the surrounding constraints and requirements (many of them non- technical). Our understanding (both quantitative and qualitative) of the current nature and dynamics of university-industry partnerships in individual industries and re- search fields remains very limited. However, the large degree of variation in com- pany practices, in the demands of technology in different industries, and in the nature and practices of universities documented in these and other case histories makes it clear that no single set of approaches will fit all situations. From a U.S. perspective, an effective system of collaboration among uni- versities and industry is a keystone of technology policy for economic growth. It is clear that companies and universities are good at different aspects of re- search, development, demonstration, and commercial innovation and that the process of allocation of effort and resources should reflect those differing capa- bilities. It is not clear, however, that either companies or universities know how to be good partners. In many partnerships, the missions, cultures, norms, and concerns of the two organizations could not be farther apart. Corporate technol- ogy strategies call for justifiable R&D expenditures and focus on speeding the contribution of new technology to commercial success. University mission state- ments and culture value contributions to education, learning, and long-horizon fundamental research. Because of these differences, partnerships can be strained, with neither party being particularly satisfied. Indeed, increased emphasis on applied research at universities and growing limitations on the disclosure of aca- demic research results, both fueled by deepening university-industry research ties, may be undermining core strengths of the academic research enterprise and its capacity for serving the less proprietary, more long-term knowledge/research needs of industry. Amidst rising public enthusiasm for and expectations of university-industry partnerships, companies, universities, and public policymakers are faced with a number of critical questions. For companies, there are a host of operational ques- tions as to what can and cannot be accomplished working with universities and which practices work best. For universities, there is an equally complex set of operational questions about how best to serve companies as clients made even more difficult by the educational mission of universities and a long-standing his- torical remove of many universities from commercial concerns. For example,