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Government-Industry Partnerships for the Development of New Technologies IV ACCOUNTABILITY AND ASSESSMENT
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Government-Industry Partnerships for the Development of New Technologies This page in the original is blank.
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Government-Industry Partnerships for the Development of New Technologies Accountability and Assessment THE NEED FOR GOALS, METRICS, AND ASSESSMENT In many high-technology industries the burgeoning development costs for new technologies, the dispersal of technological expertise, and the growing importance of regulatory and environmental issues provide powerful incentives to form government-industry-university partnerships. Even though policy makers have yet to arrive at a consensus on the issue, cooperative programs reflecting public-private partnerships have expanded substantially. SEMATECH was established under the Reagan Administration after much debate.1 The first Bush Administration saw the creation of the Advanced Technology Program (ATP) within the National Institute of Standards and Technology. The Clinton Administration came to office with an emphasis on civilian technology programs, substantially expanding the ATP and creating the Technology Reinvestment Project (TRP).2 The rapid expansion of these programs generated significant opposition, rekindling the national debate on the appropriate role of the government in fostering new technologies. 1 For an overview of SEMATECH, see National Research Council, Securing the Future: Regional and National Programs to Support the Semiconductor Industry, op. cit. For a comprehensive assessment of SEMATECH in comparison with MCC, see John B. Horrigan, op. cit. 2 For an analysis of ATP, see National Research Council, The Advanced Technology Program, Challenges and Opportunities, op. cit., and National Research Council, The Advanced Technology Program, Assessing Outcomes, op. cit. For an excellent analysis of the TRP, see Jay Stowsky, “Politics and Policy: The Technology Reinvestment Program and the Dilemmas of Dual Use.” Mimeo, University of California, 1996. See also, Linda R. Cohen, “Dual-use and the Technology Reinvestment Project,” in Branscomb and Keller, op. cit., pp. 174-193.
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Government-Industry Partnerships for the Development of New Technologies Broader philosophical questions about the appropriate role for government in partnership with industry have tended to obscure the need for policy makers to draw lessons from current and previous cooperative efforts. A virtue of the study of partnerships is that it has not addressed the ideological debates that often have obscured the need for careful analysis of the structure, goals, mechanisms, and metrics for measuring the success of a public-private partnership. Such measurement of success is often analytically difficult, particularly in the absence of a clear articulation of program goals and metrics. As we illustrated with the case of S&T parks, the goals of partnerships often vary. Consequently, the standards by which we are to gauge their success also vary.3 This is why it is so important to include an assessment program as an integral part of the organization of a partnership. Programs such as the ATP, which incorporate a rigorous, competitive selection process with an independent evaluation of the project’s technical merit, commercial worthiness, and potential for broad-based economic benefits, serve as a model in this respect. As the results of the assessment activity are integrated more and more into the operations of the programs, the knowledge generated helps the partnership adapt in ways that foster better results. Similarly, an important contribution of this NRC analysis is to inform U.S. policy by providing a pragmatic, results-oriented perspective. To this end, the study has applied a variety of economic assessment methods to partnership activity, ranging from laboratory S&T parks to the accomplishments of the SBIR program. These techniques are described below. The Role of Analysis The analysis of public-private partnerships is of growing importance, given the considerable change in federal research and development budgets since the end of the Cold War and the reduced role of many centralized laboratories in the private sector.4 Such analysis has a variety of functions. Analysis—rather than doctrinal claims—contributes to a better appreciation of the role of partnerships between government and industry in the development of the U.S. economy. Writing 20 years ago, Richard Nelson of Columbia University observed that Americans are still remarkably uninformed about the long history of policies aimed at stimulating innovation.5 The past decade has seen the 3 See Michael Luger and Harvey Goldstein, Technology in the Garden, Research Parks and Regional Economic Development, op. cit. 4 See Richard Rosenbloom and William Spencer, Engines of Innovation: U.S. Industrial Research at the End of an Era, 1996, op. cit. 5 See Otis L. Graham, Losing Time: The Industrial Policy Debate. Cambridge, MA: Harvard University Press, 1992, p. 250. Graham cites Richard Nelson’s observations at the end of the Carter
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Government-Industry Partnerships for the Development of New Technologies introduction of the geo-positioning satellite, the Internet, and the genome revolution—innovations that are changing how we live and are affecting the prospects for economic advance. Even so, a recent comprehensive report on government support for computing research opens by stating that it is “difficult to recall and acknowledge” the federal government’s major role in launching and sustaining the computer revolution, both in terms of innovation and infrastructure.6 While many Americans appreciate the contribution of technology to robust economic growth, there is little evidence that they are aware of the major contributions—from radio to the Internet—of federal support for technological innovation.7 Analysis can help to inform the public and policy makers of the risks and opportunities involved in government support. Perhaps a more compelling argument for assessment is that government involvement in market processes is fraught with risk. There are cases of major successes resulting from federal support of the computer or semiconductor industries, where the Department of Defense served as a source of R&D and as a reliable, early buyer of products.8 There are also cases of major frustration; illustrative landmarks here would include projects such as the supersonic transport, the Synfuels Corporation, and the Clinch River breeder reactor. 9 These were open-ended, large-scale demonstration projects quite different from the limited time and funding allocated to Administration. The situation may not have improved. Writing in 1994, James Fallows makes a simi-lar observation (see Looking into the Sun: The Rise of the New East Asian Economic and Political System. New York: Pantheon Books, 1994, p. 196). See also Thomas McCraw’s “Mercantilism and the Market: Antecedents of American Industrial Policy,” in The Politics of Industrial Policy, Claude E. Barfield and William A. Schambra, eds., Washington, D.C.: American Enterprise Institute for Public Policy Research, 1986, pp. 33-62. 6 See National Research Council, Funding a Revolution: Government Support for Computing Research, op. cit, p. 1. 7 Ibid., pp. 85-135 and pp. 169-83. The report provides a thorough review of government support for computers, the Internet, and related technologies and infrastructure. 8 See Graham, op. cit., p. 2. 9 These programs are frequently cited as failures, though in many cases the merit of these claims are difficult to assess, not least because contemporary political developments shape outcomes and the subsequent perceptions can color the assessments of these programs. Linda Cohen and Roger Noll present an interesting review of technology development programs, mainly from the 1970s. Their analysis is less negative than the title suggests. The volume identifies successful R&D projects, such as the photovoltaic electricity program and the authors point out that government support for a wide range of technologies has proved to have had a positive impact. See Cohen and Noll, The Technology Pork Barrel, op. cit., pp. 97, 178, 217-320. The programs reviewed here reflect the policy lessons of the 1970s; current partnerships tend to be much smaller in scope, limited in time, and often require cost share as a means of preventing open-ended commitments.
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Government-Industry Partnerships for the Development of New Technologies partnerships today. Analysis of the elements of these failures has contributed to policy changes. The development of cooperative mechanisms for partnering on advanced R&D is indeed desirable. This is because, looked at as a whole, the opportunities from effective partnerships greatly outweigh the risks. Failures will (and do) occur. Yet federal funding of research and development has led to such advances as atomic energy, the Internet, the Global Positioning System, lasers, solar-electric cells, communications satellites, jet aircraft, genetic medicine, and a wide array of advanced materials and composites.10 Even critics of some technology programs are careful to note that the overall result of public support of new technologies has been highly positive.11 They recognize that government support for a wide range of technologies has helped build the foundations of the modern economy.12 The Need for Regular Assessments These successes demonstrate the promise of “game changing” technologies, like wide-body jets, satellites, and—of course—the Internet. Yet, however profound, these successes in no way negate the need for regular assessments. Technology development is inherently risky. Promising projects will fail. The commitment of public funds requires that realistic but effective assessments be regularly undertaken. Regular assessment through cost-sharing requirements with private funds can serve as an effective means to ensure continued technical viability. Assessment can also help guard against the “political capture” of projects, as occurred with some of the large commercial demonstration efforts of the 1970s.13 Even successful partnerships face the challenge of adapting programs to rapidly changing technologies.14 Assessment thus becomes a means of keeping programs technologically and commercially relevant. 10 Office of Science and Technology Policy, Fact Sheet on How Federal R&D Investments Drive the U.S. Economy, Executive Office of the President, June 15, 2000, <http://www-es.ucsd.edu/stpp/whouse(rp).htm#06153.doc>. 11 See Cohen and Noll, The Technology Pork Barrel, op. cit., p. 3. 12 Ibid. 13 Ibid., pp. 242-257, Cohen and Noll stress that political capture by distributive congressional politics and industrial interests are one of the principal risks for government-supported commercialization projects. In cases such as the Clinch River project, they extensively document the disconnect between declining technical feasibility and increasing political support. Shared-cost partnerships of limited duration address this risk. 14 One of the strengths of SEMATECH was its ability to redefine goals in the face of changing conditions. See National Research Council, 1996, op. cit., p. 148. See also Grindley, et al., “SEMATECH and Collaborative Research: Lessons in the Design of High-technology Consortia,” Journal of Policy Analysis and Management, 1994, p. 724.
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Government-Industry Partnerships for the Development of New Technologies Assessment also reminds policy makers of the need for humility before the “black box” of innovation. As one informed observer notes, “Experience argues for hedged commitments, constant reappraisal, maintenance of options, pluralism of advice and decision makers.”15 “Picking Winners and Losers?” In the United States, discussions of best practices concerning partnerships between the government, industry, and universities often include statements to the effect that the government cannot—or should not—”pick winners or losers.” Many of these arguments have been articulated with regard to the relatively modest, but high profile Advanced Technology Program at the Department of Commerce. For example, a recent General Accounting Office study described two views of the ATP as follows: “ATP is seen by some as a means of addressing market failure in research areas that would otherwise not be funded, thereby facilitating the economic growth that comes from the commercialization and use of new technologies in the private sector.” Advocates of programs such as the ATP believe that the government should serve as a catalyst for companies to cooperate and undertake important new work that would not have been possible in the same period without federal participation. Critics of the program view the same arrangement as industrial policy, or the means by which the government rather than the marketplace picks winners and losers.16 The use of the expression “picking winners and losers” does little to advance understanding of U.S. policy, often obscuring more than clarifying the issues associated with public-private partnership.17 Generally, the expression means that: 15 See Otis L. Graham, Losing Time: The Industrial Policy Debate, op. cit., p. 251. Graham is referring to work by Richard R. Nelson in Government and Technological Progress, New York: Pergamon Press, 1982, p. 454-455. 16 U.S. General Accounting Office, Advanced Technology Program: Inherent Factors in Selection Process Could Limit Identification of Similar Research, op. cit., p. 5. 17 As with the private sector, the government’s judgment and capability do not insulate it from failure. Both the private sector and the government face the same uncertainties. Each must place bets, albeit for different reasons. Each cannot avoid the certainty of loss. Each can cover enough points to be assured of some winners. “In short, winners and losers are an inevitable by-product of the process of innovation. Picking winners and losers is the wrong metaphor to characterize the socially useful and necessary activity of government in supporting that process. Government is actually placing bets on our collective future, and from the public standpoint, the magnitude of the potential social gains are sufficiently large to provide a comfortable margin for error in choosing among technologies to back.” See the testimony of Professor Michael Borrus, University of California at Berkeley, before the House of Representatives Committee on Science, Subcommittee on Technology, April 10, 1997, <http://www.house.gov/science/borrus_4-10.html>.
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Government-Industry Partnerships for the Development of New Technologies The government does not have the capability to make judgments concerning new technologies or firms; The government should not substitute its judgment for that of the market by selecting among technologies or firms; Government intervention in the market is unwarranted and constitutes a form of corporate welfare.18 These arguments are obviously interrelated, and their appeal is grounded in the popular perception of a U.S. economy regularly transformed by individual investors and entrepreneurs. This view of the role of entrepreneurs is well founded, of course, both in terms of American economic history and in terms of today’s economy. Yet, it is equally true that the federal government has long played a nurturing role; indeed, the U.S. innovation system is the result of a complex interaction of public and private initiative. Arguments that do not consider this interaction ignore important aspects of the history of technology development in the United States. They also fail to reflect key elements of recent and current practice that have played critical roles in the development of such platform technologies as the Internet, contributed to such enabling technologies as semiconductors, or supported research and development in the pharmaceutical, medical device, and biomedical industries.19 Further, the government has demonstrated a capacity to make judgments with respect to new technologies. It has been instrumental in developing major new 18 See, for example, the testimony by Edward L. Hudgins before the Senate Committee on Commerce, Science, and Transportation, August 1, 1995. In addition to recommending the abolishment of the Department of Commerce and NIST, Hudgins argues that “in the area of advanced commercial technologies, that is, the high-tech revolution of the past 15 years, the private sector already does a world-class job in developing new products and technologies. Thus, ATP is unnecessary. The way a competitive market system—as opposed to a corporatist or socialist system—works is that if there is a prospect for a profit, entrepreneurs will risk investing in order to reap profits. Not all entrepreneurs share this view. David Morgenthaler, for example, believes that [the ATP] is an excellent program for developing enabling, or platform, technologies, which can have broad applications but are long-term, risky investments. Venture capitalists are not going to fund these opportunities, because they will feel that they are at too early a stage of maturity. Government can and should fund these technologies. In fact, it should do more than it is doing.” 19 Public grants to non-profits and private companies constitute a significant portion of NIH funding. In FY2000 $1.0 billion, or nearly 7 percent, of NIH funding for research grants and R&D contracts went to for-profit organizations. An additional $1.4 billion, or 10 percent, went to non-profit institutes, some of which are reported to be closely associated with for-profit firms. For NIH funding by performer in FY2000, see <http://silk.nih.gov/public/cbz2zoz.@www.trends00.fy9100.per.htm>. For increasing relationships between non-profit research institutions and for-profit firms, see Chris Adams, “Laboratory Hybrids: How Adroit Scientists Aid Biotech Companies with Taxpayer Money— NIH Grants Go to Nonprofits Tied to For-profit Firms Set up by Researchers,” Wall Street Journal, January 30, 2001, A1.
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Government-Industry Partnerships for the Development of New Technologies industries through a variety of means, including awards for demonstration projects, provision of long-term R&D support (e.g., the National Advisory Committee for Aeronautics),20 support of a regulatory framework, and provision of early assured markets through government procurement. One of the great strengths of the U.S. economy is that the government sees its central role as an arbiter of economic competition among private actors. To a remarkable degree this is accurate, yet the fact remains that the government does intervene in the market in many ways, be it through the provision of R&D support, development of a favorable regulatory framework, or procurement decisions for technologies for government missions in defense, space exploration, and health. The government role, of course, is not confined to investment incentives. Its role in infrastructure building, support for research—both early and applied— and for training are all integral parts of the government’s support for economic growth. Although not without controversy, the exercise of government’s regulatory responsibilities has played a key role in the computing and telecommunications industries. For example, antitrust actions in the 1950s were intended to facilitate the entry of other companies and more rapid innovation in the computer industry.21 Since the Telecommunications Act of 1996, government and industry have been closely involved in an ongoing debate concerning the optimal regulatory regime.22 In short, the government has demonstrated the capability to make judgments concerning new technologies; it also must make such decisions to carry out its various responsibilities. The NRC’s assessments of the SBIR and ATP programs have resulted in the development and application of useful methodologies. Moreover, the Committee’s evaluations have contributed in significant ways to improved assessment standards. This NRC study’s assessment of several programs are described below. 20 Founded in 1915, NACA made major contributions to the development of aeronautics in the United States, as noted above, until 1958, when it was incorporated into NASA. NASA is continuing its research. 21 National Research Council, Funding a Revolution, op. cit., p. 33. 22 Since the Telecommunications Act of 1996, P.L. No. 104-104, 110 Stat. 56 (1996), the stakes for firms with incumbent positions and startups with different technologies and business plans have been enormous. Some are seeking new spectrum allocations (or re-allocations), others regulatory support through active enforcement of the act. The government’s role is a critical component in the competitive position of many firms.
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Government-Industry Partnerships for the Development of New Technologies ASSESSING SMALL BUSINESS INNOVATION RESEARCH: THE DEPARTMENT OF DEFENSE FAST TRACK As noted above, the SBIR program sets aside 2.5 percent of the R&D budget for the 10 federal agencies with annual extramural R&D budgets above $100 million. While the Small Business Administration is charged with coordinating the SBIR program, the dispersal of the program across departments and agencies with very different missions and modes of operation results in considerable variation within a common program framework across agencies. As in the case of DOD and NIH, the missions the program supports also vary substantially. The 1992 mandate to increase the focus on commercialization has consequently generated a very diverse response.23 One of the most important responses has come from the Department of Defense, which has the largest SBIR program. Based on an earlier initiative by the Ballistic Missile Defense Organization (BMDO), the DOD in October 1995 launched what was called a broader Fast Track initiative to attract new firms and encourage commercialization of SBIR-funded technologies throughout the department.24 Fast Track seeks to improve commercialization through preferential evaluation and efforts to close the funding gap that can develop between Phase I and Phase II grants. The time lag, from the conclusion of Phase I and the receipt of Phase II funds, can create cash-flow problems for small firms. The Fast Track pilot addresses the gap by providing expedited review and essentially continuous funding from Phase I to Phase II as long as applying firms can demonstrate that they have obtained third-party financing for their technology.25 Two years after the launch of the Fast Track initiative the Under Secretary of Defense asked the National Research Council’s Board on Science, Technology, 23 See Otis L. Graham, Losing Time: The Industrial Policy Debate, op. cit. 24 Information about the DOD’s Fast Track can be found at the following Web site: <http://www.acq.osd.mil/sadbu/sbir/overview/overview.htm#fasttrack>. As of April 2000, 164 Phase I projects had qualified for Fast Track by attracting the required investment. Ninety-five percent of these were selected for Phase II awards. By contrast, on average, only 40 percent of DOD Phase I projects are selected for Phase II. Because the survey of Fast Track companies reported in this volume focused on Fast Track firms that had advanced to Phase II, the survey was sent only to firms from the first Fast Track solicitation, FY1996, a total of 48 firms. However, surveys were also sent to early BMDO awardees that employed a similar approach. 25 In this context third-party financing means that another company or government agency has agreed to invest in or purchase the SBIR firm’s technology; it can also mean that a venture capitalist has committed to invest in the firm or that other private capital is available. The expedited decision-making process for the Phase II award is justified from the agency’s perspective because outside funding validates the commercial promise of the technology. Some states have also developed innovative loan programs to address this gap. See <http://www.state.nj.us/scitech/sbirinfo.html> for a full description of the New Jersey program.
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Government-Industry Partnerships for the Development of New Technologies and Economic Policy (STEP) to assess Fast Track and related SBIR policy matters.26 The Under Secretary’s request focused on three issues. Whether Fast Track projects are achieving or appear likely to achieve greater success in SBIR than comparable non-Fast Track projects. Whether Fast Track projects progress at different rates than non-Fast Track projects. What do companies perceive as advantages and disadvantages of Fast Track participation.27 The request also permitted the Committee to review other issues relevant to the operation and performance of the SBIR program. Given the near absence of academic research on the SBIR program, it was necessary to commission field research on the program with a special emphasis on the Fast Track initiative. The research team assembled by the Committee examined the SBIR program awards and the Fast Track initiative from three perspectives: Survey Research: As a first step the research team developed a survey instrument and then commissioned an outside consulting firm experienced with the program to carry out a large-scale survey of DOD SBIR awardees, using a sample of firms that have participated in Fast Track and a control group. The roughly 300 firms28 (294 firms doing 379 projects) queried constituted the largest survey to have focused on the Fast Track pilot. The survey response rate was high (reflecting the diligence with which the survey was pursued), with approximately 72 percent of the firms responding. Case Studies: In parallel, members of the research team conducted a series of case studies of SBIR companies, including when possible both Fast Track and non-Fast Track participants. The 55 case studies looked at firms in several major regions, such as New England, the southeast, and the southwest. Empirical Analysis: Using survey results and case studies, the researchers also examined whether SBIR-funded technologies would have been pursued without the SBIR award and what the social returns to SBIR-funded technologies were. These case studies, surveys, and empirical research suggest that the Fast Track initiative is meeting its goals of encouraging commercialization and at 26 See National Research Council, SBIR: An Assessment of the Department of Defense Fast Track Initiative, op. cit. 27 Ibid. 28 Ibid. Separate surveys for each of the 379 projects were sent to 294 firms.
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Government-Industry Partnerships for the Development of New Technologies tracting new firms to the program. Consequently, the Committee recommended that Fast Track be continued and expanded where appropriate.29 The Committee further noted that regular assessment of the SBIR program results and their comparison with the results of the Fast Track, both at DOD and at other participating agencies, would provide a valuable means of understanding the operation of this approximately $1.3-billion program. Such assessments of the program’s efficiency and effectiveness were seen as even more critical given that the SBIR program budget is destined to increase.30 Surveys, case studies, and empirical analyses were also conducted in the Committee’s assessment of the Advanced Technology Program, taken up next. ASSESSING THE OPERATIONS OF THE ADVANCED TECHNOLOGY PROGRAM The National Institute for Standards and Technology, in response to a request by the U.S. Senate, commissioned the National Academies to conduct an external review of the operations of the Advanced Technology program.31 This ATP review was undertaken under the terms of reference of its study of government-industry partnerships. The Committee’s report noted that ATP’s reliance on peer review—by both industry business experts and government technical experts—ensures to the extent possible the technical quality of proposals and thus enhances the potential for economic impact. At the same time, it noted that the requirement of a plan for commercialization—required in ATP proposals—encourages but cannot ensure a pathway to commercial development. Rather, it noted, the commercialization plan requirement is designed to ensure that projects that cannot offer at least a potential pathway to development are not supported with public funds.32 29 Ibid., See Recommendations and Findings. 30 Although the research overseen by the Committee represents a significant step in improving our understanding of the SBIR program, these findings should be appreciated for what they are, that is, a preliminary and limited effort by independent researchers and an informed Committee to understand the operation of an important government-industry partnership. The Committee did not recommend that Fast Track be applied to the entire SBIR program at DoD, considering that to do so might put at risk other goals, such as research and concept development. Finally, the Committee recognized the need for additional research to validate these results over time For the complete Recommendations and Findings, see National Research Council, SBIR: An Assessment of the Department of Defense Fast Track Initiative, op. cit. Congress accepted this view and has mandated (under Section 108 of H.R. 5667 of the 106th Congress) that the National Research Council undertake additional research on the SBIR program. 31 In Senate Report 105-235 the Advanced Technology Program was directed to arrange for a well-regarded organization with significant business and economic experience to conduct a comprehensive assessment of the ATP, analyzing how well the program has performed against the goals established in its authorizing statute, the Omnibus Trade and Competitiveness Act of 1988. 32 For an overview of the ATP selection process, see the analysis by Alan P. Balutis and Barbara Lambis, “The ATP Competition Structure,” op. cit. For an assessment of the impact of the program,
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Government-Industry Partnerships for the Development of New Technologies P To avoid open-ended commitments of public funds to uncertain technologies the ATP has incorporated features that serve as reality checks, most notably, the matching expenditure of private funds by for-profit firms. This cost-share requirement, the limited financial commitment of the government through one-time awards, and the limited duration of the awards protect ATP against the criticism of open-ended government-led technology commercialization programs that some analysts believe characterized some of the major government initiatives of the 1970s and early 1980s.33 Compared with these 1970s programs, ATP is a much smaller, more limited, and more focused effort with different mechanisms (e.g., one-time competitive awards) focused on technologies more likely to diffuse across the economy.34 Its encouragement of company-university-laboratory cooperation and coordination with other public and private efforts is another distinguishing characteristic.35 Its concept reflects the lessons of previous public policies and the recognition (discussed above) of the contributions small firms make in exploiting promising new technologies. ATP’s support for innovation, which is intended to generate significant spillovers yielding broad national economic benefits, has to be evaluated in the context of risks and benefits inherent in funding innovation. While its approach poses risks,36 ATP’s interest in enabling technologies with high spillover potential means that it is also a source of substantial potential benefit for the economy. By definition, the high-risk, high-payoff strategy means that many ATP projects will not achieve success.37 The program deliberately seeks projects requiring the catalytic effect of a government award to bring together the industry-university partners to achieve significant technological advances.38 After an extensive assessment, the ATP was revealed to be an effective program—one that is achieving its legislated goals.39 However, this partnership pro- see the analysis by Maryann P. Feldman and Maryellen R. Kelley, “Leveraging Research and Devel-opment: The Impact of the Advanced Technology Program,” op. cit. 33 See Cohen and Noll, op. cit. 34 Feldman and Kelley, op. cit., find that projects and firms selected by the ATP are more willing to share their research findings and tend to be firms that open new paths of innovation by drawing on multiple technical areas through R&D partnerships. 35 Ibid. Universities play a significant role in over half the ATP projects. See National Research Council, The Advanced Technology Program: Assessing Outcomes, op. cit., p. 91. 36 See Lewis Branscomb and Philip Auerswald, Taking Technical Risks: How Innovators, Managers, and Investors Manage Risk in High-Tech Innovation, Cambridge, MA: MIT Press, p. 145. 37 ATP successes, insofar as they can be judged, are about 16 percent of the program—a rate comparable to venture capital programs that normally operate later in the development cycle. For an overview of the ATP record of achievement, see the analysis by Rosalie Ruegg, “Taking a Step Back: An Early Results Overview of Fifty ATP Awards,” in National Research Council, The Advanced Technology Program, Assessing Outcomes, op. cit. 38 See Jeffrey Dyer and Benjamin Powell, “Perspectives on the Determinants of Success in ATP-sponsored R&D Joint Ventures: The Views of Participants,” in National Research Council, The Advanced Technology Program, Assessing Outcomes, op. cit. 39 Following Senate report 105-235 NIST requested that the Board on Science, Technology, and
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Government-Industry Partnerships for the Development of New Technologies gram is one that could benefit from a more stable and robust funding.40 ATP is best understood as one effective and valuable element of a national innovation system that employs a portfolio of policies and instruments to encourage the discovery, development, and exploitation of new technologies.41 It is not a panacea for the challenges facing the U.S. economy. Rather, as the assessment carried out by the Government-Industry Partnerships Committee suggests, the ATP is achieving its goals with a degree of success commensurate with the technical and commercial difficulties associated with the program’s objectives. Its awards hold the potential of advancing commercially and socially valuable technologies. As with any program, it could be improved, and the Committee’s report recommended some ways to do so. It is also important to remember that the ATP carries out a much more rigorous review and assessment effort than any other U.S. partnership program. The Advanced Technology Program arguably represents a “best practice” in the United States in terms of the concept, management, regular assessment, and potential contributions.42 • • • Whatever improvements might be made in the ATP and SBIR programs, the policy dialogue surrounding such programs certainly can be improved. Careful research, regular assessment, and attention to the initiatives under way around the world are more informative than sloganeering about “picking winners and losers.”43 A constructive dialogue about measures to capitalize on the substantial and growing U.S. R&D investment in areas of great promise needs to be advanced. Such a dialogue can help avoid misallocation of public funds and capture the substantial benefits of new technologies for the U.S. economy. Economic Policy conduct an assessment of ATP in January 1999 as a part of its broader review of Government-Industry Partnerships for the Development of New Technologies. 40 See National Research Council, The Advanced Technology Program, Assessing Outcomes, op. cit., p. 94. 41 See Richard R. Nelson, ed, National Innovation System: A Comparative Study, New York: Oxford University Press, 1993. 42 See National Research Council, The Advanced Technology Program, Assessing Outcomes, op. cit. 43 With regards to “winners and losers,” the government’s awards are in fact often made to firms in technologies that do not succeed (i.e., losers). This is normal. High-risk, potentially high-payout investments result in frequent failure, literally by definition. The ATP and SBIR programs also provide awards to firms with technologies that do succeed. These successes outweigh the costs of failed awards and permit advances in welfare growth and the success of national missions that would not otherwise occur in the same time frame, if at all.
Representative terms from entire chapter: