Mindful of all these caveats, I would offer the following summary assessment.
Government–university–industry R&D ‘partnerships’ may be said to be working and to have become an accepted and established part of the US national innovation system, as follows:
• A sufficiently ‘robust’ series of evaluation findings, addressing different partnership forms, emphasizing different outcome variables, employing different criteria for success, and employing a diverse set of methodologies, exists that points to the social benefi ts of public/private technology partnerships. (In addition to the individual studies and review articles already cited, see Feller and Anderson, 1994; Ruegg and Feller, 2003.) As phrased succinctly by Scott, ‘SRPs (strategic research partnerships) are socially useful because they expand the effective R&D resources applied in innovative investment’ (Scott, 2001, p. 195).
• Retention of industrial membership in several of the longer-standing R&D partnership programs (for example, NSF’s Industry–University Cooperative Research Center Program) has remained high (Gray et al., 2001).
• Universities continue aggressively to seek industrial sponsorship of faculty research, to invest in research/innovation parks, and increas- ingly to enter into equity relationships with start-up fi rms (Feldman et al., 2002).
But this summary also leads to a number of analytical and policy questions about the form, staying power and future of R&D partnership arrange- ments. Overall, they no longer represent major policy or organizational innovations. Instead, they appear to be experiencing incremental modifi ca- tion both quantitatively (number and relative importance) and qualitatively (characteristics of partners, range of activities). Indeed some curtailment may occur. To employ the familiar metaphor of the S-shaped logistic function to describe the diffusion of an innovation, my conjecture is that, after a period of policy and interorganizational trial and error in the 1970s and early 1980s and a period of accelerated adoption from the late 1980s
to the 1990s, the fi rst decade of this new century may be one of maximum penetration, consolidation and marginal changes for various forms of university–industry–government R&D partnerships.
Several factors point in this direction. They include the uncertain prospects for future funding from federal and state governments and what appears to be the ceiling to industry’s investment in academic R&D (or, more precisely, US universities) as part of its diversifi ed portfolio of internal and external sources of new scientifi c and technological knowledge, and increasingly vocal industry displeasure about aspects of university patent and licensing practices. Some brief observations may be made about each of these trends.
First, ‘Nothing ever gets settled in this town. It’s a seething debating society in which the debate never stops, in which people never give up’, observed former Secretary of State George Schultz (as quoted in H.
Smith, 1989, p. 566). Much the same may be said about the ATP and MEP programs established under the 1988 Omnibus Trade and Competitiveness Act. The continuing ideological battle about the rectitude of government support of private sector R&D activities means that evaluation studies that demonstrate that a program has positive impacts is no guarantee of program growth or survival. (Nor, for that matter, do evaluations that point to the ineffi ciency of programs necessarily mean that they are terminated or even kept from increasing in size.) As noted, few federal technology programs, for example, have been examined as systematically and rigorously as the MEP or ATP programs. Findings from these evaluations consistently point to the economic gains (value added, sales, employments) of fi rms that participate in these programs (relative to a comparison group). These fi ndings, however, have been no protection against administration and congressional decisions to reduce drastically the program’s budget in FY2005 (from $109m. to
$36m.). The ATP is in a similar situation: a compendium of studies that show positive impacts consistent with legislative intent (Ruegg and Feller, 2003) have provided little protection against the Bush Administration’s efforts to terminate the program. Current and looming sizeable federal budgetary defi cits can be expected to exert further downward pressures on domestic discretionary expenditures, weakening yet further the parlous political setting in which these and related domestic R&D programs fi nd themselves. Indeed, of these various R&D programs, the SBIR seems to be the best positioned to withstand budgetary strictures, but this is more a comment on the program’s political base of support than evidence dem- onstrating its relative economic or technological impact.
Second, state government support of R&D partnerships continues to exhibit roller coaster tendencies: strong support in one administration, abrupt termination in the next. Thus, almost coincidentally in time, as the
Shane 01 intro 23
Shane 01 intro 23 19/9/05 09:28:3219/9/05 09:28:32
National Governors Association issues A Governor’s Guide to Strengthening State Entrepreneurship Policy (2004), a number of states, including Alaska, Michigan, New Jersey and Texas (the last three being leaders in the state cooperative technology movement of the 1980s) have terminated or severely reduced the magnitude of their programs. In part, these cutbacks refl ect the dire fi scal conditions of many states in recent years, with the technology component of economic development programs being one of a set of
‘discretionary’ programs (support of higher education being another) that have experienced sharp reductions. In part, too, they refl ect dissatisfac- tion (or impatience) with the trickle of tangible, downstream, fi rm- and job-creation benefi ts fl owing from these programs. But the cutbacks also have a deeper source in their rejection of governmental responsibility for engendering entrepreneurial behavior. As stated by Jim Clark, Chief of Staff to Alaska’s Governor, ‘funding entrepreneurship is not an essential function of government’ (as quoted in Geiger and Sa, 2004, p. 12). On the other hand, reports in the State Science and Technology Institute’s bulletins throughout 2004 point to budgetary increases for some programs and the relaunching (often in new directions) of erstwhile state programs.
A special problem also arises in assessing the impact of state R&D partnership programs. The impacts of national programs are typically measured in terms of variables related to macroeconomic conditions, long- term growth rates and international competitiveness. From these vantage points, more detailed questions about the spatial location of the new fi rms and jobs within a country are second-order considerations. Location of benefi ts, however, is the essence of state programs. In terms of conventional shift-share analysis, states may be seen as competing for a larger share of the new industries and employment opportunities associated with the shift in the structural characteristics of the national economy. States, however, differ in the scale of their R&D partnership programs and the strategies embedded in these programs. Thus, even if a state program satisfi es selected effi ciency criteria, say a high benefi t–cost ratio or a high rate of return, it does not follow that the state’s share of the new economic sector will necessarily grow.
Indeed, given the ubiquitous and imitative character of much of what the states are doing – 41 states were reported to be investing in biotechnology initiatives in 2001 (Battelle, 2001) – these initiatives are equally well viewed as maintenance as much as expansionary undertakings.
Third, for all of the attention paid since the 1980s to the formation of university–industry and university–industry–government R&D partner- ships, these partnerships remain modest parts of the R&D activities of both universities and fi rms. More importantly for the future, they appear to have peaked. Industrial funding of academic R&D grew rapidly over the past three decades, reaching an estimated 8 per cent of total academic R&D
in 2000 (but down to 6.8 per cent in 2001: National Science Foundation, 2003). Even with this rate of growth, industry funds accounted for one of the smallest shares of academic R&D. Viewed from the perspective of industry, ‘funding of academic R&D has never been a major component of industry-funded R&D … Since 1994, the share has steadily declined from 1.5 per cent to 1.2 per cent’ (National Science Foundation, 2002, pp. 5–13).
Further leading to conservative projections about the future course of industry willingness to enter into cooperative university–industry R&D partnerships is that one of the major reported motivations for a fi rm to participate in such programs is the opportunity to leverage the far larger federal government investment. Deceleration of rates of federal expendi- tures for some of these programs coupled with terminations and sharp reductions in funding for others is likely to be matched by smaller industry commitments.
Fourth, industry’s interest and willingness to outsource its R&D activities to American universities under any of a variety of funding mechanisms may be lessening as a result of what are perceived to be excessive claims for ownership of intellectual property rights fl owing from industry-funded research and excessive compensation for licensing university-held patents (Industrial Research Institute, 2001). Globalization of R&D capabilities in universities and research institutes in other countries has opened up new sources of expertise in basic research for many R&D-intensive industries.
The logic of industry–university R&D partnerships may continue; it is just that industry’s partners will be non-US universities.
Again the tenor with which these observations are offered must be emphasized. University–industry–government R&D partnerships are presented here as having yielded benefi ts to each of the partners and of becoming an established, if in places thinly rooted, part of the US national technology development and commercialization system. But these partner- ships also are ‘mature’ policy and program innovations, with what appear to be modest prospects for future growth. Indeed, at the risk of stretching the analysis to its limits, it may be that the recent attention to entrepreneurship, especially the emphasis on fi rm formation, represents a search for the next potent growth-stimulating policy prescription.
Finally, to return to the theme broached in this chapter’s opening about the problematic connections, analytically and programmatically, between university–industry–government R&D partnership programs and academic entrepreneurship programs, one question that emerges from this review is this: what in fact is their relationship? Each set of activities has its roots in the same general analytical and policy ground, namely, the dependence of national and state-level economies on the birth and growth of technology-
Shane 01 intro 25
Shane 01 intro 25 19/9/05 09:28:3219/9/05 09:28:32
intensive fi rms, the need for (or legitimacy of) public sector subventions to encourage this birth and growth, and the contention (buttressed by various evaluation studies) that some goodly number of these subventions are effective and effi cient.
But little is known about the extent to which there is overlap among the participants in each set of programs, or the extent to which there is overlap, whether the performance of those who participate in both activities exceeds that of those who participate only in one. Of course, performance of either group must then be compared with that of like individuals who participate in neither. Evidence of the ‘value-added’ of entrepreneurship education programs is found in the Charney–Libecap study of graduates from the University of Arizona’s program (2003). They found that graduates of the entrepreneurship program, on average, were three times more likely to be involved in the creation of a new business venture than were their non- entrepreneurial business school cohorts, were more likely to be employed with fi rms that license new technology or that license technology to others, and that, among self-employed entrepreneurship graduates, were more likely to own a high-technology fi rm than non-entrepreneurship graduates who owned their own fi rm. Missing from this analysis, however, is any infor- mation about the connection between the careers of the entrepreneurship graduates, either as employees of high-tech fi rms or as owners of such fi rms, and government–university–industry R&D partnerships, either in absolute terms or relative to the non-entrepreneurship graduates.
Embedded here are an increasingly more complex set of evaluative and thus policy evaluative questions. For example, to what extent do participants in academic entrepreneurship programs become high-tech entrepreneurs?
To what extent do those individuals who fi rst participate in academic entrepreneurship programs and then go on to launch R&D fi rms perform differently from a comparable set of fi rms that participate in none of the above? In short, a whole new agenda of research, evaluation and policy questions awaits.