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9 Conclusions and Recommendations This study has documented how performance in five very different industries has been improved by contributions from academic research from the educa- tion of graduates with research training at all levels to conceptual breakthroughs and incremental technical advances based on basic and applied research to the development and testing of tools, prototypes, and marketable products, processes, and services. Numerous diverse, robust, and often mutually reinforcing vectors link academic research to industry, including direct hiring of students, graduates, and faculty; temporary exchanges of researchers; faculty consultancies; industry- sponsored research contracts and grants; research centers; consortia; industrial liaison programs; technology licensing; start-up companies; publications; and conferences. Research-trained graduates at all degree levels are critical to the develop- ment, transfer, diffusion, and application of new knowledge and technology in industry. Indeed, the interaction between research-trained individuals in academia and in industry is essential to the exchange of knowledge and technology and to the nation's innovation system. Basic long-term research at universities in many fields of science and engi- neering has had a huge impact on industry. Roughly half of all basic research in the United States is conducted by universities. Basic long-term research is essential to the health of universities as creators of new knowledge and understanding; and the results of basic research in a wide range of disciplines intermingle, build on each other, and eventually find their way by diverse paths into commercial life. Because in most fields it is difficult for individual firms or groups of firms to appropriate return on investment exclusively, commercial firms have little incentive to fund 227
228 THE IMPACT OF ACADEMIC RESEARCH ON INDUSTRIAL PERFORMANCE basic research at universities. As a result, the federal government currently funds the majority of basic research in academia. Contributions from applied research at universities are also very important to industry. The industry studies in this report document that academic researchers and the academic research infrastructure are directly involved in the development of industrial tools, prototypes, products, and production processes, as well as in the delivery of products and services. Academic applied research has led to cumulative, incremental advances that have been of great importance to whole industries; indi- vidual companies have also benefited from university-based researchers working to solve discrete practical problems related to their businesses. University-based re- search centers, with industry participation, have become an important vector for transferring the results of "directed" basic research and applied research to industry. Most of the applied research and "directed" basic research performed at universities is funded by federal agencies (e.g., the U.S. Department of Defense, U.S. Department of Energy, and the U.S. Department of Health and Human Services) looking for solutions to specific problems. Industry funds a small por- tion of applied research in universities, both directly and indirectly by supporting university-based research centers that are largely federally funded. Although the portion of academic research funded by industry increased in the 1990s, it is still only about 7 percent of the total. Universities have benefited greatly from interactions with industry. Despite minimal financial support from industry, questions posed by industry often reveal gaps in knowledge that can be addressed by long-term academic research, thus stimulating fundamental research in many fields. This is apparent in high- technology industries (e.g., network systems and communications and the medi- cal devices and equipment industries). But even in other industries (e.g., financial services or transportation, distribution, and logistics services) that perform little if any R&D but require lots of technology, industry challenges can be important stimuli to both basic and applied research. The impact of university-based research on industry is not limited to research in the natural sciences and engineering. Research in the social sciences, broadly defined, has also made major contributions to industrial success. Research on consumer behavior, for example, has influenced industry decision-making pro- cesses in marketing, product design, and the setting of technical priorities; re- search in economics has informed regulatory decisions, merger and acquisition strategies, the development of financial products, and trade, monetary, and fiscal policy; research in mathematics has had a direct impact on information technol- ogy but has also been crucial to other fields (e.g., cryptography) that affect personal and business transactions daily. In these and other fields, the cumulative effects of academic research have led to changes in the legal and regulatory frameworks essential to successful innovation. Often the contributions of academic research to industry are mediated through other disciplines or embedded in technologies, products, and services derived
CONCLUSIONS AND RECOMMENDATIONS 229 from other industries. The five industry studies show how academic research in physics, biology, and chemistry has led to new knowledge and capabilities in microelectronics, genetic engineering, and other fields that have directly contrib- uted to the creation of high-value, high-technology products and services. They also show how contributions from academic research to major cross-sector tech- nologies information technology in particular have directly benefited mul- tiple industries. Information technology is critical to the technical and market performance of aircraft and medical devices, for example, and has profoundly changed the structure and performance of the financial services industry and the transportation, distribution, and logistics services industry. The industry studies also reveal the multidisciplinary character of many innovations in products and services. The development of new medical devices, for example, requires not only advances in the life sciences, but also advances in physical sciences and engineering. Many innovations in the network systems and communications industry depend on complementary progress in several fields of engineering and in the physical, social, and behavioral sciences. The committee's review clearly indicates that academic research provides benefits to industry and has had a long-term, positive impact on industry perfor- mance. However, it is difficult to identify specific mechanisms by which this impact can be maximized for several reasons. First, the nature of university- industry interactions varies from industry to industry; each of the industries stud- ied has a distinctive environment and poses different challenges for university researchers. Second, research competencies, ability to interface with industry, quality of infrastructure, and many, many other circumstances vary from one university to another. Third, in general, companies, not industries, interface with universities. Companies in a given industry also vary in their ability to manage that interface, in their expectations of what academic researchers can provide, in the complexity of their research needs, and in their time horizons. All of these factors vary over time and under different circumstances (e.g., economic cycles). When this study began, high-technology industries, such as network systems and communications, were booming, attracting academic re- searchers and potential graduate students to well funded industry laboratories, growing operations, and new start-up companies. When the study came to a close, this same industry had suffered decreased sales, lower stock prices, lower investments, cutbacks in research funding, and lower employment. As this real- world example shows, the unique characteristics of individual academic institu- tions and the changes wrought by economic cycles both affect the impact of academic research. GENERAL RECOMMENDATIONS The general recommendations in this study address six challenges high- lighted in the industry studies: (1) ensuring that universities remain repositories
230 THE IMPACT OF ACADEMIC RESEARCH ON INDUSTRIAL PERFORMANCE of expertise and resources in many disciplines by maintaining a balance of re- search projects; (2) cultivating interactions between academic and industry re- searchers; (3) harnessing academia's broad disciplinary base and potential for cross-disciplinary research and training to meet the needs of service businesses more effectively; (4) assessing the impact on the core research and educational missions of universities of an increasing emphasis on intellectual property devel- opment and management; (5) strengthening the contributions of academic re- search to both regulatory agencies and the overall understanding of how regula- tion and deregulation affect industrial growth and development; and (6) increasing the contribution of academic research to the management of information for private gain and/or public benefit in the information age. General Recommendation 1. Because the contributions of academic research are diverse and often indirect, a broad and balanced portfolio of academic re- search should be maintained. Recent trends in federal funding indicate that fund- ing levels for research in the physical sciences, engineering, and the social and behavioral sciences should be increased. . . Congress and the administration should restore the balance in federal funding of academic research by increasing support for research in the physical sciences, engineering, and the social and behavioral sciences to complement and leverage the results of recent heavy investments in the life sciences and medical sciences. Federal funding of academic research should continue to emphasize long- term basic research, as well as applied research (typically funded by mission agencies). Multidisciplinary research should be encouraged through support of project-specific research teams and other institution- alized mechanisms, such as engineering research centers and other university-industry research centers. General Recommendation 2. Industries and universities should continue to explore mechanisms and pathways for bringing the benefits of academic re- search to industry, keeping in mind that what works well in one industry may not work well in another. Both partners should experiment with new approaches. University-industry research linkages should be adaptable, and universities should be on the lookout for opportunities to link up with new industries and explore leading-edge industry research activities and challenges. Given the importance of personal relationships among academic and indus- trial researchers for productive collaboration and knowledge transfer, universities and industry should foster interactions between university- and industry-based scientists and engineers in the following ways:
CONCLUSIONS AND RECOMMENDATIONS . . 231 A major program of fellowships should be established to attract and sup- port graduate students in science and engineering. · Sabbatical programs should be established and/or expanded to encourage academic and industry researchers to spend time in each other's home research settings. More balanced participation by academic researchers and their industry counterparts in major conferences on specific sectors, technical systems, and disciplines should be encouraged. New ways of supporting personal interactions across academia-industry boundaries, including using technology to support collaboration, should be explored. · University-industry research centers should be structured to facilitate close interaction between academic and industry researchers. Academic reward structures, such as promotion and tenure criteria, should be reviewed and modified (as necessary) to encourage and reward re- searchers who attract research support from industry and/or address sig- nificant research questions of direct importance to industry. · Intellectual property rights policies and practices that facilitate pro- ductive research collaboration with industry should be promulgated at universities. General Recommendation 3. The ability of academic researchers to contribute to services industries and the receptivity of leaders in the services industries to the potential contributions of academic research must both be improved. The following steps would have immediate benefits: . . Academic research contributions and capabilities relevant to each indus- try should be documented and promoted in the targeted communities to educate senior managers about how academic research might improve company performance in the marketplace. · Common legal frameworks acceptable to industry and academia should be established detailing the terms of confidentiality and related conditions to facilitate academic researchers' access to operational networks and real-time data. Federal mission and regulatory agencies with primary responsibility for the services industries (e.g., Securities and Exchange Commission, Inter- nal Revenue Service, Federal Communications Commission, and U.S. Department of Health and Human Services) should consider funding aca- demic research in ways that encourage greater participation by the ser- vices industries. Engineering research centers funded by the National Science Foundation and university transportation centers funded by the U.S. Department of Transportation could serve as models.
232 THE IMPACT OF ACADEMIC RESEARCH ON INDUSTRIAL PERFORMANCE General Recommendation 4. Individual researchers and organizations, such as the Association of University Technology Managers, that gather data on univer- sity research and technology-transfer activities should continue to monitor and assess the effectiveness of incentives for transferring academic research results (particularly intellectual property policies and practices) and the impact of entre- preneurial activity by academic researchers on the traditional university missions of education, research, and service. The following issues should be addressed: · The costs to institutions of patenting research results, including the costs of maintaining and defending patents, should be assessed and compared to the benefits, in terms of income from licenses and royalties. · Steps being taken to disseminate patent information to improve the chances of commercialization should be reviewed and best prac- tices identified. · Best practices in the long-term management of patent inventories should be shared among research institutions. · The effectiveness of technology transfer via patented inventions should be assessed and compared to transfer via more traditional mechanisms, such as publications. The benefits to faculty and universities should also be compared. The impact of university-industry research collaboration and technology transfer activities on undergraduate, graduate, and continuing education, the composition of academic research, the stability of academic research funding, the private and social returns from academic research, the many traditional service roles of the university, and other related issues should be assessed. . General Recommendation 5. Government regulatory agencies, including the Food and Drug Administration, the Environmental Protection Agency, the Fed- eral Communications Commission, and the Securities and Exchange Commis- sion, should be encouraged to maintain and strengthen their productive inter- action with academic researchers and to continue to explore new mechanisms for bringing scientific and engineering advances, including scientifically based con- cepts and tools, to bear more rapidly and effectively on regulatory processes. General Recommendation 6. Government, industry, and universities should work together to meet the challenges and opportunities created by information technologies. The following steps would be beneficial: · Boost federal funding for fundamental research in information technolo- gies, as part of an effort to redress the imbalance in federal funding for various disciplines in academic research.
CONCLUSIONS AND RECOMMENDATIONS . . 233 Increase public and private sector investment in software research, with an emphasis on (1) engineering methods for assessing and improving quality and (2) software that is more flexible and responsive to changing business conditions. Support more interdisciplinary research on existing and potential infor- mation technologies that combines engineering methods and the social and behavioral sciences.