Source: Mowery (1981, chap. 2).
The Changing Role of External Sources of R&D:
University-Industry Research Relationships in the U.S.
Nelson (1988, p. 325) described the industrial research laboratory as the
"heartn of the U.S. national innovation system. This pillar of the U.S.
research system, however, now is undergoing change. Faced with escalat- ing costs and intensified competitive pressures, many U.S. firms are moving away from the virtually exclusive reliance on intra-firm sources of technol- ogy that characterized the post- 1945 period. Alternatives include university- industry research partnerships, alliances or consortia with other domestic or foreign firms, and publicly sponsored cooperative research programs. Faced withspiralling R&D costs, greater demands to monitor a broader array of - scientific and engineering fields, and increased competitive pressure from other U.S. and foreign firms to get products to market rapidly, U.S. firms have had to develop research relationships with an array of external insti- tutions that could complement and enhance the payoff from their in-house R&D activities.' Such relationships provide lower-cost windows on emerging technologies, allow firms to detect emerging commercial opportunities more rapidly, and spread the risks of failure among a larger number of research performers and research budgets.
Some of these alternatives and experiments represent a revival of inter- institutional research linkages that were strong before 1940 and were dis- 'A recent O E C D study quotes a Xerox Corporation research executive's description of t h e firm's investment in t h e Center for Integrated Systems a t Stanford University:
"Xerox's contribution t o CIS is very small compared t o what we are investing internally in t h e same kind of research. For little additional investment we enlarge our perspective by participating in a broad program of basic research. We envision opportunities for joint interaction with t h e university and with other companies, as well as t h e ability t o recruit students. O n a per-dollar basis i t should be a good investment." (Quoted in OECD, Industry and University: New Forms of Ceoperation and Communication, (Paris: OECD, 1984), p. 47).
112 Implications for R&D Organization placed by the upsurge of federal funding for research in universities and industry that followed U.S. entry into World War 11. Few of these contempo- rary experiments and initiatives are organized as strictly market-mediated, arms-length, contractual enterprises. Instead, one finds an array of "hybrid"
forms of economic organization, blending elements of long-term investment, organizational links and managerial controls with market-based incentives and transactions.
This wave of proposed or actual change has important implications for our conceptualization of the historic role of the in-house industrial research laboratory. Rosenberg (1982) argued that the industrial research laboratory strengthened the links among science, technology, and profit and made the scientific research agenda more responsive to economic factors. Recently, however, change in the competitive and technological environment has re- duced the capacity of the in-house industrial research laboratory within a t least some U.S. firms to influence the direction of scientific research and thereby exploit linkages between basic and applied research. Does this ap- parent change imply a new role for in-house and external research laborato- ries? A brief discussion of university-industry research collaboration in the U.S. may shed some light on these issues.
University-Industry Cooperation
During the past decade, financial support from industry has established a number of research facilities on U.S. university campuses to conduct research with potential commercial value. Support for these initiatives has come from the federal government as well as private industry, as the National Science Foundation has funded the establishment of a number of engineering research centers on university campuses. The centers focus on engineering research that is often linked to engineering research with such traditional scientific disciplines as biology and physics, and have emphasized advanced computer applications. The financial structure of these centers also is novel, since it combines "seed-money" support from the federal government (as well, in many cases, as state and local governments) with major contributions from private corporations that are affiliated with the centers.
Many of these new university-industry research facilities reflect the grow- ing importance of a multidisciplinary approach to important problems in both science and technology. Industry-supported multidisciplinary univer- sity research institutes provide an organizational "home" for the pursuit of this new cross-disciplinary research agenda. Moreover, these institutes can
David
C.
Mowey 113 train young scholars and prospective industrial researchers in new techniques and research perspectives.What benefits does U.S. industry obtain from collaboration with uni- versity researchers? By virtue of their mission as educational as well as research institutions, U.S. universities are important sources of industrial scientific and engineering personnel. Participants in university-industry col- laborations can utilize these ventures as "filtersn for hiring research person- nel, observing the performance of potential employees before making costly hiring commitments. Moreover, the importance of people as a critical chan- nel for the transfer of scientific and technological knowledge means that the hiring by firms of the graduates of these programs facilitates the trans- fer of knowledge and technology from university t o industry. The rotation of industry personnel through university research facilities serves a similar function. Interestingly, this source of industrial benefit need not rely on any
"handoffn of specific research results by a university t o industry.g
In most cases, university-industry research ventures, like other forms of external research, operate as complements t o the in-house R&D of par- ticipating firms. Federal government support for NSF engineering centers and other university-industry collaborative research centers builds on ear- lier NSF experiments in this area. The University-Industry Cooperative Research Centers Program began in 1973 as an experiment designed "to determine if federal cost-sharing during a 5-year period would enable the creation of industry-funded permanent cooperative research centers." (Na- tional Science Foundation, 1979, p. v). Cooperative research centers would improve the innovative performance of their client industries, NSF argued, by tapping the research expertise of universities. Of the three experimental programs established within the NSF program, however, only the one serving a relatively research-intensive client industry (the MIT Polymer Processing program, which included Eastman Kodak, General Motors, and Xerox Cor- poration among its participants) survived the cessation of public funding in 1978 (the other two programs, which respectively conducted research in
'Gray and Gidley's survey of NSF university-industry research centers found that 9 h e benefits seen [by industry respondents] se most likely to accrue to companies were improved research projects in the company (mean, 2.60; l=scarcely likely, 4=almost certain) and better personnel recruitment (mean, 2.54). Patentable products (1.62) and commercialized products (1.75) were Been as benefits which were 'somewhat' to 'scarcely likely' to accrue through Center participation." (1986, p. 29). Once again, the most commonly mentioned sources of benefit hinge on the presence within a participant firm of an R&D facility.
114 Implications for R&D Organization energy conservation technologies for the New England region and in tech- nologies for the furniture industry, both were terminated).
The results of this NSF experiment suggest that as in the case with independent, for-profit contract research institutes, university research was most effective as a complement to the in-house R&D activities of client firms.
The NSF evaluation of the program noted that:
The nature of the industrial participation in the cooperative research efforts varies widely. At one extreme are large companies with substantial research activities such as General Motors, Xerox, and Kodak, and at the other extreme is a small construction firm participating in the NEEDS [New England Energy Development Systems] solar technology center at Dartmouth. The more substantial participation has come from the large research-oriented companies that can understand and use the research out- puts of the cooperative efforts. Companies with little research background, such as the utilities and furniture companies, are traditionally conservative with respect to new technology and are traditionally dependent on their suppliers for whatever changes they adopt. (National Science Foundation,
1979, p. 30).
The successful exploitation of university-industry research collaborations for these purposes virtually requires that a participating firm maintain some in-house research capability. Indeed, successful absorption of the results of university research frequently requires that a participant firm maintain a
"shadow," parallel research project within its in-house laboratories (such
"shadow" projects also appear to improve technology absorption by partic- ipants in non-university research consortia).