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THE IMPACT OF ACADEMIC RESEARCH ON INDUSTRIAL PERFORMANCE NATIONAL ACADEMY OF ENGINEERING OF THE NATIONAL ACADEMIES THE NATIONAL ACADEMIES PRESS Washington, D.C. www.nap.edu
THE NATIONAL ACADEMIES PRESS · 500 Fifth Street, N.W. · Washington, D.C. 20001 This study was supported by Grant No. 97-3-4 between the National Academy of Sciences and the Alfred P. Sloan Foundation and by the National Academy of Engineering Fund. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the authoress and do not necessarily reflect the views of the organizations or agencies that provided support for the project. International Standard Book Number 0-309-08973-5 (Book) International Standard Book Number 0-309-52602-7 (PDF) Copies of this report are available from the National Academies Press, 500 Fifth Street, N.W., Lockbox 285, Washington, DC 20055; (800) 624-6242 or (202) 334- 3313 (in the Washington metropolitan area); online at http://www.nap.edu. Copyright 2003 by the National Academy of Sciences. All rights reserved. Printed in the United States of America
THE NATIONAL ACADEMIES Advisers to the Nation on Science, Engineering, and Medicine The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Wm. A. Wulf is president of the National Academy r - ~ OI . ~nglneerlNg. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. Wm. A. Wulf are chair and vice chair, respectively, of the National Research Council. www. nationa l-academies.org
COMMITTEE ON THE IMPACT OF ACADEMIC RESEARCH ON INDUSTRIAL PERFORMANCE JEROME H. GROSSMAN (IOM), chair, Lion Gate Management Corporation and Harvard University, Cambridge, Massachusetts LILLIAN C. BORRONE (NAB), Port Authority of New York and New Jersey (retired), New York, New York COLIN CROOK, Citicorp (retired), New York, New York DONALD M. ENGELMAN (NAS), Yale University, New Haven, Connecticut DAVID J. FARBER, University of Pennsylvania, Philadelphia ANNETINE C. GELIJNS, Columbia Medical Center, New York, New York DANIEL GREGORY, Greylock Management Corporation, Boston, Massachusetts GEORGE H. HEILMEIER (NAB), Telcordia Technologies, Inc. (retired), Morristown, New Jersey ADAM B. JAFFE, Brandeis University, Waltham, Massachusetts JACK L. KERREBROCK (NAB), Massachusetts Institute of Technology (retired), Cambridge KENT KRESA (NAB), Northrop Grumman Corporation, Los Angeles, California H. DONALD RATLIFF (NAB), Georgia Institute of Technology, Atlanta J. DAVID ROESSNER, Georgia Institute of Technology, Atlanta ROBERT F. SPROULL (NAB), Sun Microsystems, Inc., Burlington, Massachusetts MORRIS TANENBAUM (NAB), AT&T Corporation (retired), Short Hills, New Jersey V
PANEL ON THE NETWORK SYSTEMS AND COMMUNICATIONS INDUSTRY ROBERT F. SPROULL (NAB), chair, Sun Microsystems, Inc., Burlington, Massachusetts ALFRED V. AHO (NAB), Columbia University, New York, New York JOHN M. CIOFFI (NAB), Stanford University, Stanford, California DAVID J. FARBER, University of Pennsylvania, Philadelphia GEORGE H. HEILMEIER (NAB), Telcordia Technologies, Inc. (retired), Morristown, New Jersey STEPHEN WOLFF, Cisco Systems, Inc., Washington, D.C. PANEL ON THE MEDICAL DEVICES AND EQUIPMENT INDUSTRY ANNETINE C. GELIJNS, chair, Columbia Medical Center, New York, New York PAUL CITRON (NAB), Medtronic, Inc., Minneapolis, Minnesota DONALD M. ENGELMAN (NAS), Yale University, New Haven, Connecticut JEROME H. GROSSMAN (IOM), Lion Gate Management Corporation and Harvard University, Cambridge, Massachusetts HOMER PIEN, SRU Biosytems, Woburn, Massachusetts FREDERICK W. TELLING, Pfizer Inc., New York, New York PANEL ON THE AEROSPACE INDUSTRY JACK L. KERREBROCK (NAB), chair, Massachusetts Institute of Technology, Cambridge ANTONIO L. ELIAS (NAB), Orbital Sciences Corporation, Dulles, Virginia KENNETH C. HALL, Duke University, Durham, North Carolina ROBERT J. HERMANN (NAB), Global Technology Partners, LLC, Hartford, Connecticut KENT KRESA (NAB), Northrop Grumman Corporation, Los Angeles, California v
PANEL ON THE TRANSPORTATION, DISTRIBUTION, AND LOGISTICS SERVICES INDUSTRY H. DONALD RATLIFF (NAB), chair, Georgia Institute of Technology, Atlanta CYNTHIA BARNHART, Massachusetts Institute of Technology, Cambridge ROBERT E. BIXBY (NAB), ILOG, Inc., Houston, Texas LILLIAN C. BORRONE (NAB), Port Authority of New York and New Jersey (retired), New York, New York A. RAY CHAMBERLAIN, Parsons Brinckerhoff, Inc., Denver, Colorado ADAM B. JAFFE, Brandeis University, Waltham, Massachusetts PANEL ON THE FINANCIAL SERVICES INDUSTRY COLIN CROOK, chair, Citicorp (retired), New York, New York CAMILO C. GOMEZ, private consultant, Santa Fe, New Mexico ADAM B. JAFFE, Brandeis University, Waltham, Massachusetts BLAKE D. LeBARON, Brandeis University, Waltham, Massachusetts JOHN M. MULVEY, Princeton University, Princeton, New Jersey MORRIS TANENBAUM (NAB), AT&T Corporation (retired), Short Hills, New Jersey NAE PROGRAM OFFICE STAFF PROCTOR P. REID, Study Director DIANE ALBERT, J. Herbert Hollomon Fellow (until January 1999) CAROL R. ARENBERG, Managing Editor THOMAS C. MAHONEY, Consultant ROBERT P. MORGAN, NAE Fellow and Senior Analyst (through January 1999), and Consultant (after January 1999) PENELOPE J. GIBBS, Program Associate NATHAN KAHL, Senior Project Assistant vim
Preface American universities are integral to the success of American industry. The core mission of the university, educating much of the American workforce, is essential to productivity growth, innovation, technological progress, and virtually every other national economic and societal objective. Academic research in physical sciences, social sciences, computer sciences, and engineering provides a constant flow of ideas, analyses, and breakthroughs that vitalize industry. The strengths of academic research principally the resources to focus on long-term, fundamental, risky goals and to mount broad collaborative projects comple- ment the applied research and development (R&D) performed by industry. Uni- versities are a source not only of scientific and technological ideas that lead to new products and processes, but also social and political insights that strengthen the nation' s ability to adapt to new technologies and, therefore, to embrace con- tinued innovation. As industries have become more dependent on innovation, new skills, and technological prowess, academic contributions have become in- creasingly critical to economic success. To assess and document the contributions of academic research to industry, the National Academy of Engineering initiated a study of the impact of academic research on five diverse industries: network systems and communications; finan- cial services; medical devices and equipment; transportation, distribution, and logistics services; and aerospace. All five industries are important in terms of sales and employment, technological intensity, and expected growth rates; each provides a distinct example of current and historic patterns of interaction with academia. The study is based on the opinions and judgments of a 15-member committee of experts from industry and universities, supported by five panels . . vat
Viii THE IMPACT OF ACADEMIC RESEARCH ON INDUSTRIAL PERFORMANCE (one for each industry) that reported to the study committee. The committee's deliberations were informed by surveys of industry executives and leading aca- demics, workshop discussions, and reviews of relevant publications. These five industries illustrate the wide range of contributions of aca- demic research to industrial performance: graduates trained in modern re- search techniques; fundamental concepts and key ideas emerging from basic and applied research; and the development of tools, prototypes, and market- able products, processes, and services. The impact of academic research derives from many disciplines, including the natural sciences and engineering as well as the social and behavioral sciences, with the value of research in one field often heavily dependent on advances in complementary fields. Contri- butions also emerge from the broad base of knowledge resident at universi- ties, which provide environments where ideas developed in one context often flourish in very different contexts. This broad knowledge base often results in contributions in areas essential to successful innovation but beyond any specific technology or field; examples include industry regulation and deregu- lation and the development of industry standards. The study identifies major cross-cutting challenges for university-industry research collaboration, including a growing imbalance in federal funding for academic research, an underdeveloped interface between research universities and services industries (roughly 80 percent of the U.S. economy), and reconcil- ing traditional university missions of teaching, research, and service with the increased emphasis on the management of intellectual property. The commit- tee recommends actions to meet these challenges for government, universities, and industry. On behalf of the National Academy of Engineering, I want to thank the study chairman, Jerome H. Grossman, the chairs of the industry panels, Colin Crook, Annetine C. Gelijns, Jack L. Kerrebrock, H. Donald Ratliff, and Robert Sproull, and other members of the study committee and the five industry panels (named on pp. iv-vi) for their considerable efforts on this project. I also want to thank Proctor P. Reid, the study director, who managed the project and helped the committee members reach consensus. Thomas C. Mahoney, consultant to the committee and lead staff support to the aerospace industry panel, and Robert P. Morgan, former NAE Fellow and lead staff support to the panels on the medical devices and equipment industry and the network systems and communications industry were extremely helpful throughout the project, particularly during the closing phase of the study. Diane Albert, former NAE J. Herbert Hollomon Fellow, provided lead staff support to the panel on transportation, distribution, and logistics services throughout the fact-finding phase. Penelope Gibbs and Nathan Kahl from the NAE Program Office provided critical administrative and logistical support. Carol Arenberg, NAE managing editor, was instrumental in preparing the report for publication.
PREFACE MIX I want to extend the committee's thanks to everyone from government, in- dustry, and academia who contributed to the project. In particular, I want to express our appreciation to the participants in the fact-finding workshops, roundtables, and e-mail surveys during the initial stages of the project (see ad- denda to chapters 2 through 6) and to those who briefed the committee. Finally, I would like to express my appreciation to the Alfred P. Sloan Foundation for its generous support of this project. Wm. A. Wulf President National Academy of Engineering
Acknowledgments This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures ap- proved by the NRC's Report Review Committee. The purpose of this indepen- dent review is to provide candid and critical comments that will assist the institu- tion in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confi- dential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report: Chris Caplice, SABRE Group; Irwin Feller, Pennsylvania State University; James Flanagan, Rutgers University; James F. Gibbons, Stanford University; Cliff Goodman, The Lewin Group; Patrick T. Harker, University of Pennsylvania; David Heebner, Heebner Associates; Kenneth H. Keller, University of Minnesota; Ed Lazowska, Univer- sity of Washington; Robert W. Lucky, Telcordia Technologies, Inc.; Hans Mark, University of Texas at Austin; Richard Nelson, Columbia University; George L. Nemhauser, Georgia Institute of Technology; John Parrish, Harvard Medical School and Massachusetts General Hospital; Sholom Rosen, Citibank (retired); Chester S. Spatt, Carnegie Mellon University; Donald E. Strickland, Southern Illinois University; Marie C. Thursby, Georgia Institute of Technology; Chelsea C. White III, Georgia Institute of Technology; David C. Wisler, GE Aircraft Engines; Ben T. Zinn, Georgia Institute of Technology Although the reviewers listed above have provided many constructive com- ments and suggestions, they were not asked to endorse the conclusions or recom- mendations nor did they see the final draft of the report before its release. The review of this report was overseen by NAB member Elsa Garmire, Dartmouth x~
Xii THE IMPACT OF ACADEMIC RESEARCH ON INDUSTRIAL PERFORMANCE College appointed by the National Academy of Engineering, who was respon- sible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review com- ments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.
Contents Executive Summary 1 Introduction Setting the Context, 16 Assessing the Impacts, 20 Sector-Specific Studies, 23 2 Report of the Panel on the Network Systems and Communications Industry Definition of the Industry, 30 Innovation System, 34 Contributions of Academic Research, 46 Mechanisms for University-Industry Cooperation, 59 Findings and Recommendations, 60 Addendum, 71 3 Report of the Panel on the Medical Devices and Equipment Industry Definition of the Industry, 79 Innovation System, 82 Contributions of Academic Research, 88 Impact on Industrial Performance, 102 . . . x~ 1 15 29 77
XiV THE IMPACT OF ACADEMIC RESEARCH ON INDUSTRIAL PERFORMANCE Recommendations, 104 Addendum, 109 4 Report of the Panel on the Aerospace Industry Scope of the Study, 116 Innovation, 121 Findings, 123 Conclusions, 135 Addendum, 138 5 Report of the Panel on the Transportation, Distribution, and Logistics Services Industry Definition of the Industry, 146 Integrated Logistics: A Competitive Differentiator, 147 Innovation System, 152 Contributions and Impact of Academic Research, 154 Findings, 162 Recommendations, 165 Addendum, 167 115 145 6 Report of the Panel on the Financial Services Industry 173 Definition of the Industry, 174 Innovation System, 178 Contributions of Academic Research, 183 Transfer Mechanisms, 188 Opportunities for Future Academic Research, 191 Findings and Recommendations, 192 Addendum, 198 7 The Contributions and Impact of Academic Research 205 Patterns of University-Industry Interaction, 205 The National Innovation System, 206 Contributions of Academic Research, 208 Vectors of Contribution, 213 Impact of Contributions, 214 X Challenges for the Future Services, 219 The Regulatory Climate, 220 219
CONTENTS Intellectual Property, 221 Information Technology, 223 A Balanced Research Portfolio, 223 Keeping Pace and Moving Forward, 225 9 Conclusions and Recommendations General Recommendations, 229 Biographical Information xv 227 235