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Government-Industry Partnerships for the Development of New Technologies I INTRODUCTION
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Government-Industry Partnerships for the Development of New Technologies Introduction Public-private partnerships involving cooperative research and development among industry, government, and universities can play an instrumental role in introducing key new technologies to the market. Experience shows that partnerships involving government participation in cooperative research and development with industry, universities, and government laboratories can work. They often contribute to national missions in health, energy, the environment, and national defense and to the nation’s ability to capitalize on its R&D investments. This report presents an overview of the work of the National Research Council’s Committee on Government-Industry Partnerships for the Development of New Technologies, under the auspices of the Board on Science, Technology, and Economic Policy. In its review of a variety of partnership programs in the United States, the Committee has found that partnerships constitute a vital positive element of public policy, helping to address major challenges and opportunities at the nexus of science, technology, and economic growth.1 This chapter introduces some core issues from the Committee’s portfolio of work on public-private partnerships. The first section sets out what public-private partnerships are, introduces some situations in which they might help advance the development of new technologies, and identifies some of the forms that they can take. The second section highlights the programs that have been the focus of the Committee’s analysis and relates some insights gained from this review. The final section of this introduction provides a user’s guide to the Committee’s analysis, which is summarized in this report. 1 See Part II for the Committee’s recommendations.
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Government-Industry Partnerships for the Development of New Technologies PUBLIC-PRIVATE PARTNERSHIPS From the early days of the republic, the United States has benefited from effective public-private partnerships. Cooperation between the government and private firms has contributed to the achievement of many national goals from infrastructure construction to weapons development. In the post cold war period, this cooperation expanded to include knowledge generation and technology development through a wide variety of mechanisms.2 Today’s partnerships frequently involve direct support for research and development carried out by private firms, often in cooperation with universities or national laboratories. Partnerships have represented and continue to represent a pragmatic means of achieving national goals and exploiting technological opportunities that benefit the nation.3 Drivers of Partnerships Private investment to develop a new technology can be impeded by factors such as project scale and cost, dispersed expertise, and technical and commercial risk, even if these investments offer the prospect of substantial benefits to the firm, the industry, and to the society as a whole.4 By helping firms to overcome these barriers to investment, public-private partnerships can contribute to the development of industrial processes, products, and services that might not otherwise emerge spontaneously, and in this way help address government missions and generate greater public welfare. Developing new technologies often require collective action, particularly in the case of high-spillover goods, where technology advances generates 2 For a brief history of partnerships in the United States, see Part III of this report. 3 See David B. Audretsch, Barry Bozeman, Kathryn L. Combs, Maryann Feldman, Albert N. Link, Donald S. Siegel, Paula Stephan, Gregory Tassey, and Charles Wessner, “The Economics of Science and Technology,” in Journal of Technology Transfer, 27, 2002, p. 155-203. The authors note that “‘public/private partnerships’ have evolved from governments’ desire to steer private investment towards certain types of scientific activity and the development and use of new technologies. Thus, the federal government has attempted to establish an environment that is conducive for private sector investment in research and development (R&D), as well as one in which the public and private sectors can be partners in undertaking innovative activity” (p. 156). 4 The Committee’s study of Government-Industry Partnerships suggests that public-private partnerships can provide a practical response to meet national challenges. The study of the Advanced Technology Program (ATP) notes, for example, that ATP was “initiated as a means of funding high-risk R&D with broad commercial and societal benefits that would not be undertaken by a single company, either because the risk was too high or because a large enough share of the benefits of success would not accrue to the company for it to make the investment.” See National Research Council, The Advanced Technology Program: Assessing Outcomes, Charles W. Wessner, ed., Washington, D.C.: National Academy Press, 2001, p. 39.
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Government-Industry Partnerships for the Development of New Technologies benefits beyond those that can be captured by innovating firms. Partnerships can be a means of encouraging the cooperation necessary for socially valuable innovation.5 New technologies often involve investments in combinations of technologies that may remain unexploited (or silo) in companies or industries. Joint research activities can facilitate the cooperation necessary to achieve the commercial potential of these technologies. Partnerships encourage firms to undertake socially beneficial R&D. The return on R&D investment, even for promising technologies, can be perceived to be too low when firms heavily discount distant income streams or when risks related to technical development and commercialization are seen as substantial. Firms may not invest in R&D when they do not expect to be able to capture enough of the revenue from the resulting innovations. This occurs when the potential market for the company’s new technology is broader than the firm can secure. Reduced R&D investments by private firms can also occur when they find it difficult to assign or enforce intellectual property rights, lowering expectations for returns on investments. Each of these factors can affect firms’ internal “hurdle rates” with regard to investments in new products or processes that may be beneficial to many firms or the economy as a whole.6 Partnerships are also a versatile means of achieving pressing national objectives—a point discussed further below. In times of national need, such as the current struggle with terrorism, partnerships can be an effective means to accelerate the development of the technologies required to meet the multifaceted challenges of national security. As a recent Academy report observed,7 5 Technological knowledge is considered by many to be peculiar in that it is inherently “slippery”— that is, it can be replicated and transmitted at very low marginal cost. If its generation contributes a positive externality to society, the gross social benefit of R&D activity can exceed private benefit. Neoclassical theory argues that in such cases R&D activity is likely to be undersupplied relative to some social optimum. See Richard N. Langlois and Paul L. Robertson, “Stop Crying over Spilt Knowledge: A Critical Look at the Theory of Spillovers and Technical Change.” Paper prepared for the MERIT Conference on Innovation, Evolution, and Technology, August 25-27, 1996, Maastricht, Netherlands. The authors analyze the idea of knowledge spillovers, noting that the processes are more complex and context dependant than portrayed in the neoclassical literature. 6 See Albert N. Link, “Enhanced R&D Efficiency in an ATP-funded Joint Venture,” in The Advanced Technology Program, Assessing Outcome, op.cit. For a review of why firms might under-invest in R&D, see Albert N. Link, “Public/Private Partnerships as a Tool to Support Industrial R&D: Experiences in the United States,” Final Report to the Working Group on Innovation and Technology Policy of the OECD Committee for Scientific and Technology Policy, January 1999. 7 National Research Council, Making the Nation Safer: The Role of Science and Technology in Countering Terrorism, Washington, D.C.: National Academy Press, 2002.
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Government-Industry Partnerships for the Development of New Technologies For the United States to take advantage of the significant scientific and technical expertise residing in the private sector, and to overcome the market disincentive for single firms to invest in improving their security, the federal government must explore creative and flexible ways to motivate and to develop and adopt counter-terrorism technologies. For the government and private sector to work together on increasing homeland security, effective public-private partnerships and cooperative projects must occur. There are many models for government-industry collaboration—cooperative research and development agreements, the NIST Advanced Technology Program, and the Small Business Innovative Research program to cite a few. Varieties of Partnerships In the United States, the advancement of new technologies in support of national missions or the generation of welfare-enhancing products or processes has often been pursued through a wide range of public-private partnerships.8 The proliferation of these programs and the diversity of their structures and goals underscore the need for a better understanding of the conditions contributing to their success. This study of public-private cooperation has focused on three types of partnerships. These are: Industry consortia: In an R&D consortium a certain portion and type of a participating company’s R&D is funneled into a separate organization where it is carried out collectively and where the research results are shared among the member firms. Consortia are particularly useful in the case of high-spillover technologies, where each firm may be reluctant to contribute to the production of goods that by their nature become widely available to others at little or no cost. In a consortium, firms can lower R&D costs or increase R&D efficiency while continuing to compete privately through their own product-related R&D programs. The role for government in the case of industry consortia is to legally enable this cooperation and when appropriate contribute funding and/or re- 8 An illustrative list here could include partnerships in such sectors as electronic storage, flat-panel displays, turbine technologies, new textile manufacturing techniques, new materials, magnetic storage, next-generation vehicles, batteries, biotechnology, optoelectronics, and ship construction. For example, the Partnership for a New Generation of Vehicles (PNGV) is a cooperative R&D program between the federal government and the U.S. Council for Automotive Research, whose members are Daimler Chrysler, Ford Motor Company, and General Motors. Its purpose is to develop a new generation of automobiles with up to three times the fuel economy of a 1993 mid-size automobile. Seven annual reviews of the technical developments related to PNGV have so far been undertaken. Most recently, see National Research Council, Review of the Research Program of the Partnership for a New Generation of Vehicles: Seventh Report, Washington, D.C.: National Academy Press, 2001.
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Government-Industry Partnerships for the Development of New Technologies search facilities (e.g., national laboratories) to advance research on technologies of mutual interest.9 Innovation funding: Small businesses often face major constraints in bringing innovations to market. Financial markets often operate under conditions of imperfect information, often to the disadvantage of small firms working on less routine, more innovative projects. Small firms may also decide not to develop an innovation if they are not able to capture enough of the pay-off from this work—the so-called appropriability problem. Imperfections in capital markets can sometimes pose major challenges to small firms trying to bring their innovations to market. Federal partnerships such as the Small Business Innovation Research program (SBIR) and the Advanced Technology Program (ATP) provide awards that can help to address the early-stage funding requirements faced by firms engaged in the innovation-to-market process. Laboratory-based science and technology clusters: Promoting innovation-led growth by encouraging knowledge clusters around the nucleus of national laboratories and research facilities is an important aspect of public-private partnerships in the United States. Traditional S&T parks are expected to diffuse knowledge and technology and thus provide an engine of growth for a region. In practice, however, the goals of these Science and Technology parks are often extensive, with imperfect definitions, and achievement can be correspondingly difficult to assess. The review of the Sandia S&T Park and the Ames S&T Park stresses the importance of clearly articulated goals and frequent assessment. OVERALL LESSONS ABOUT PARTNERSHIPS The Committee’s Focus and Approach Numerous public-private partnerships at the federal, state, and local levels are underway in the United States; one compendium, from the mid-1990s, listing partnerships in the United States is itself over 600 pages long.10 At the same time, public debate about partnerships has tended to be long on rhetoric and short on practical analysis. Addressing this point, Berglund and Coburn note that “the debate should address not whether these [partnership] programs will endure, but whether they are shaped properly—at the program and aggregate levels—to achieve 9 The National Cooperative Research Act (NCRA) in 1984 revised existing antitrust laws and penalties were seen to be too restrictive, possibly impeding the ability of U.S. companies to compete in global markets. This act encouraged U.S. firms to collaborate on generic, pre-competitive research. 10 See Dan Berglund and Christopher Coburn, Partnerships, A Compendium of State and Federal Cooperative Technology Programs, Columbus, OH: Battelle Press, 1995.
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Government-Industry Partnerships for the Development of New Technologies the desired benefits.”11 Reflecting this viewpoint, the Committee decided not to conduct a necessarily broad review of all these cooperative activities. Instead, it elected to carry out in-depth studies of selected partnerships that are particularly illustrative of the pubic policy issues related to technology partnerships. Notably, the Committee has focused on: The Small Business Innovation Research (SBIR) program, the largest U.S. partnership program, currently funded at approximately $1.3 billion per year across 10 government agencies; The Advanced Technology Program (ATP), which was one of the most politically controversial and yet is also recognized as one of the most effective of the major innovation funding partnership programs today12; SEMATECH, arguably one of the most prominent U.S. partnerships; The Ames and Sandia S&T Parks, which are representative examples of positive interactions between national laboratories and local communities interested in the development and/or the exploitation of technology clusters; and The Committee also focused on the growing need for new resources for research in areas related to information technology, and for greater cooperation in responding to emerging needs and strategic opportunities in biotechnology and information technology. Many see enhanced cooperation and reinforced research in disciplines related to information technology as fundamental to sustaining the positive technology-based growth that has recently characterized the U.S. economy. To meet its objective of policy-relevant analysis the Committee has focused additionally on positive lessons or “best practices,” rather than the experiences of less successful partnerships, although it is certainly true that much can be learned from failures as well as successes.13 This selective focus has enabled the Com- 11 Ibid. 12 The controversy surrounding this program has receded. In a recent report, Secretary of Commerce, Donald Evans, broadly endorsed the program, albeit with recommendations for some changes in its operation. The debate is now more traditional, focusing on levels of funding and rates of expenditure rather than on the program itself. In a recent report, the Senate also endorsed the program, remarking that it had been subject to a large number of assessments by different organizations, including the study by the Academies. See National Research Council, The Advanced Technology Program: Assessing Outcomes, op.cit.; Senate Appropriations Committee Report 107-47; Department of Commerce, The Advanced Technology Program: Reform With a Purpose, Washington, D.C., February 2002. 13 In one case the Committee did commission an analysis of lessons that might be learned from comparing the experience of a less successful and a successful partnership, see John B. Horrigan, “Cooperating Competitors: A Comparison of MCC and SEMATECH.” Monograph, Washington, D.C.: National Research Council, 1999.
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Government-Industry Partnerships for the Development of New Technologies mittee to identify more clearly some of the characteristics of successful partnerships. The Committee has also enhanced the value of its work—and affirmed its relevance—by responding to a series of requests from Congress and the Executive Branch for careful, objective analyses of current partnerships.14 Conditions for Successful Partnerships To be effective, partnerships as venues for joint R&D activities require that several of the multiple actors—entrepreneurs, firms, government agencies, and non-profit organizations—be able to work together productively. The innovation environment for partnerships conditions and shapes their performance. The federal government policies also collectively shape the larger environment in which innovation takes place. For example, federal policies affecting capital formation and corporate governance play important roles in competitive performance.15 The range and diversity of these policies are substantial. They include government policies related to taxation, especially capital gains; fiscal and monetary matters; education and training; trade promotion and expansion; regulatory policies (e.g., for anti-trust and the environment), intellectual property protection, government procurement, and export control.16 These policies can all directly affect the process of innovation, sometimes decisively.17 At an operational level, the organizational features of the partnership clearly matter. Although partnerships vary in scale, mission, and scope, successful partnerships appear to share some similar broad characteristics. These include: 18 The Value of Industry Leadership: Industry leadership provides partnerships with technical expertise, experienced management, and proven flexibility while also enhancing the consortium’s credibility with its mem- 14 These requests are noted in the Preface. 15 See National Research Council, U.S. Industry in 2000: Studies in Competitive Performance, Washington, D.C.: National Academy Press, 1999, p. 5. 16 See, for example, the observations of Ed Zchau, a member of Congress in the 1980s from Silicon Valley, in his article, “Government Policies for Innovation and Growth” in National Research Council, The Positive Sum Strategy, Harnessing Technology for Economic Growth, Washington, D.C.: National Academy Press, 1986, pp. 535-39. 17 We are indebted to Ralph Landau for this and related observations. For example, intellectual property protection plays a key role in the continued development of the biotechnology industry. See Wesley M. Cohen and John Walsh, “Public Research, Patents and Implications for Industrial R&D in the Drug, Biotechnology, Semiconductor and Computer Industries” in National Research Council, U.S. Industry in 2000: Studies in Competitive Performance, op. cit., pp. 4-5. The interaction of supportive technology policies and restrictive trade policies proved effective in some countries in the 1970s and 1980s. See Daniel I. Okimoto, Between MITI and the Market: Japanese Industrial Policy for High Technology, Stanford, California: Stanford University Press, 1989. 18 These factors are interrelated. They are listed separately to improve analytical clarity.
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Government-Industry Partnerships for the Development of New Technologies bers and the policy community. The experience of the SEMATECH consortium underscores the need19 for the commitment of senior management of the participating firms in a consortium. Their active participation on the SEMATECH Board and their assignment of top-quality staff were essential for the full benefit of government support for the consortium to be realized. Effective leadership of a multi-firm consortium is an asset in resolving differences among consortium participants over competing objectives. Strong links to members enhance the consortium’s legitimacy when redirecting the research program and establishing objectives and metrics for project performance. Effective public leadership is also an asset in conveying the message of the consortium to the government and to other interested parties. For government programs that fund innovation, identifying effective management teams is an important part of the grant and evaluation procedures. Effective leadership in the management of S&T parks, such as those at Sandia and Ames, has proven essential for the benefits of relationships between the national laboratory and nearby firms to be realized. The Importance of Roadmaps: The Committee’s recognition of the importance of technology roadmaps draws from SEMATECH’s experience, where the industry perceived early on that problems of coordination could arise with a complex technology, multiple participants, and many ways of proceeding. This realization led to cooperative efforts with the Semiconductor Industry Association (SIA), the Semiconductor Research Corporation (SRC), and other parties to develop a technology roadmap setting out the relationships among science, technology, and applications as a point of reference for the researchers, technologists, project managers, suppliers, and users involved in and affected by the consortium’s work. As a general approach, roadmaps can advance similar coordination functions in other industry partnerships and in this way contribute to more efficient and more cooperative research.20 19 Specifics relating to the circumstances faced by firms in the semiconductor industry at the time of SEMATECH’s birth and consequent development will differ, of course, from the realities faced by other industry consortia. While not all details of SEMATECH’s experience can be generalized, broader lessons can be drawn from its largely positive experience, but much depends on the particular circumstances of a given partnership. 20 The Roadmap, now the International Roadmap for Semiconductors, continues to be a central focus of research activity at what is now International SEMATECH (ISMT). In addition to its close cooperation with SEMI, the equipment and suppliers consortium, ISMT maintains cooperative activities with other consortia in Europe (IMEC) and information exchanges with Japan’s SELETE program in an effort to stay on the industry’s exceptional productivity curve, which has resulted in a 25 percent cost per function decrease each year. See International SEMATECH Annual Report 2001, at <www.sematech.org>.
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Government-Industry Partnerships for the Development of New Technologies The Significance of Shared Commitment and Costs: Success in a cooperative partnership depends on each of the participants acting in ways that advance the joint objectives of the partnership. This motivation can be enhanced if the participant makes a commitment in funds or other resources to the partnership. Consortia work best when there are clear gains through participation or increased costs when cooperation is reduced. Having a sizeable stake in the outcome of the partnership enhances the motivation of those involved to make the partnership succeed; similarly, private contributions to consortia also provide a powerful incentive to terminate efforts that are not meeting objectives.21 In the case of early-stage innovation funding, individual entrepreneurs are motivated to qualify for awards in order to reap, ultimately, the financial rewards of a marketable technology. The government’s goal is to leverage the motivation of the marketplace to meet government objectives.22 These objectives include accelerating the development of new products to improve health with new medical products, aid the environment with new energy sources, enhance national defense with better communications, and to strengthen international competitiveness of national industries, such as textiles, automobiles, batteries, and electronics. The Vital Role of Assessment: The inclusion of an appropriate and ongoing assessment program is an integral part of the organization of a well-constructed partnership. The measurement of success in turn requires a clear articulation of a partnership’s goals and desired outcomes. As the Committee’s study of the Ames and Sandia S&T parks shows, the goals of partnerships vary, along with the standards by which we are to gauge their success. The assessment process of the Advanced Technology Program is in many respects a model, because it incorporates a rigorous competitive selection process with an independent evaluation of the project’s technical and commercial merit, as well as its potential for broad-based economic benefits. Importantly, the ATP awards are regularly followed and rigorously assessed. As the results of the assessment activity are integrated more into the operations of the program the knowledge generated can help the partnerships adapt in ways that foster better results. The multiple assessments undertaken by this study have contributed to the literature on partnerships, first by the application of a variety of economic assessment methods to partnership activity and, second, by gathering a great deal of tacit knowledge about various programs, including their goals, metrics, mode of operation, and current challenges. 21 This is the case with the matching requirement of the ATP, a provision further buttressed by the program’s regular assessment and review. 22 The SBIR program may best exemplify this approach.
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Government-Industry Partnerships for the Development of New Technologies As reflected in Table 1, the characteristics of successful partnerships tend to be complementary in furthering partnership performance.23 TABLE 1 Structuring Incentives Within the Context of a Partnership Strategy Objective Improving Motivation Improving Knowledge Improving Coordination Effective Leadership Agreement, Roadmaps, Goals & Metrics of Progress Improving Cooperation Shared Costs & Shared Stakes in Outcome Regular Evaluation, & Member Feedback A GUIDE TO THIS REPORT Public-private partnerships are increasingly recognized as an important, sometimes critical policy component of technology-based growth, affecting both the process of innovation and the pace of technology development.24 This report presents a summary of the Committee’s analysis, which has included a significant but necessarily limited portion of the variety of cooperative activity that takes place between the government and the private sector. The Committee’s desire to carry out an analysis of current partnerships that is directly relevant to contemporary policy making has conditioned the selection of the specific programs reviewed. Part III of this report notes that a growing body of economic thought—often articulated in terms of New Growth Theory—which argues that the composition 23 The four factors identified by the Committee as bearing on the success of partnerships find analytical support in the New Institutional Economics literature. This literature addresses problems of collective action governing activities involving jointly produced outcomes. Partnerships are a prime example of collective action. To be successful, partnerships need to help participants overcome incentive problems related to motivation and information asymmetries that condition the cooperation and coordination necessary for successful outcomes. See Donald E. Campbell, Incentives: Motivations and the Economics of Information, Cambridge, UK: Cambridge University Press, 1995. See also, Mancur Olson, The Logic of Collective Action, Cambridge, MA: Harvard University Press, 1965. Finally, see Elinor Ostrom, “A Behavioral Approach to the Rational Choice Theory of Collective Action,” American Political Science Review 92 (1) 1998. 24 See National Research Council, Funding a Revolution; Government Support for Computing Research, Washington, D.C.: National Academy Press, 1999. This report documents the substantial investments in information technologies, including platform technologies such as the Internet. The report also notes the difficulty many have in recognizing the scale and effectiveness of public contributions to the innovation process.
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Government-Industry Partnerships for the Development of New Technologies of the economy matters and that high technology industries in particular bring special benefits to regional and national economies.25 Part IV of this report points to the breadth, diversity, and significance of public support for technological innovation, knowledge generation, and infrastructure development in the United States. It provides a brief historical overview of federal support for new technologies and new products. It shows that federal public-private partnerships have served the nation throughout its history by accelerating innovation and enhancing national security. Partnerships have contributed to improvements in agricultural productivity, major infrastructure development, and the development of new enabling technologies. Federally supported partnerships have thus helped the nation respond to a variety of national missions, stretching from before the Civil War (the telegraph) to the Cold War (semiconductors and computers) to today’s struggle with terrorism (vaccines). Indeed, while the U.S. economy has and continues to be distinguished by the extent to which individual researchers and entrepreneurs take the lead in developing innovations and starting new businesses, they have frequently acted in conjunction with public investments. America’s entrepreneurs often harvest crops sown on fields made more fertile by the government’s long-term investments in research and development. Maintaining national capacities for science-based growth (i.e., keeping these fields fertile through sustained investments in basic research across a broad range of disciplines) is therefore a key policy concern. As noted in Part IV it is normal that the federal research portfolio should evolve in response to new scientific opportunities and shifting national needs. Reallocations with respect to individual agency budget priorities, however, have led to unplanned declines in federal support for the disciplines underpinning information technologies. These declines have potentially significant negative ramifications for future economic growth. The impact of changes in the distribution of support across disciplines is all the more significant given that the frontiers of knowledge are increasingly interdisciplinary. As Marvin Cassman of the National Institutes of Health points out, biology and the biotechnology industries are today confronted with more information than they can assimilate. Biologists really have no alternative but to draw on tools from chemical engineering, physics, and computer science in order to construct a quantitative dynamic structure for biological systems.26 This demands that support for research, even in priority areas, be based more broadly. To over- 25 This view is held by policymakers around the world. For an informed perspective, see Richard R. Nelson, The Sources of Economic Growth, Cambridge, MA: Harvard University Press, 2000. See Box A of this report for additional citations and discussion of the various facets of the New Growth Theory as it applies to partnerships. Also see Michael Porter, Clusters of Innovation: Regional Foundations of Competitiveness, Washington, D.C.: Council on Competitiveness, 2001. 26 See Marvin Cassman, “Exploiting the Biotechnology Revolution: Training and Tools,” in National Research Council, Capitalizing on New Needs and New Opportunities: Government-Industry Partnerships in Biotechnology and Information Technologies, C. Wessner, ed., Washington, D.C.: National Academy Press, 2002, p. 134.
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Government-Industry Partnerships for the Development of New Technologies come the intellectual and disciplinary biases that hinder interdisciplinary collaboration, government funding for “glue grants” for new disciplines such as bioinformatics and for computational research should be expanded. 27 The Committee’s work has highlighted also the “best practices” lessons from the SEMATECH consortium. Leading industrialists and expert economists in the United States and abroad see the consortium as having contributed to the resurgence of the U.S. semiconductor industry to its current position.28 Acting on this perception, governments around the world have launched numerous national and regional partnership programs, each providing substantial support for research and pre-competitive product development to national or regional semiconductor industries. In light of these efforts and the genuine technical challenges facing the industry, continued United States leadership in the semiconductor industry cannot be taken for granted.29 The decrease in support for basic research in the disciplines that underpin the growth of the U.S. economy should be reversed. Indeed, renewed cooperation among firms, laboratories, and universities is likely to prove essential to maintaining the health and vitality of the industry. As illustrated above, partnerships can represent a pragmatic response for firms and government agencies unable to independently and efficiently undertake needed investments. One goal of partnerships is thus to encourage the development of industrial processes, products, and services that firms cannot carry out alone and in this way develop new knowledge to apply to government missions in health, environmental protection, and national security. Lastly, given that they can be formed as necessary to draw together dispersed talents and capacities across the nation, partnerships can be an effective tool to address urgent national missions, such as the new war on terror. 27 See Recommendations in National Research Council, Capitalizing on New Needs and New Opportunities, op. cit., p. 67. 28 See National Research Council, Conflict and Cooperation in National Competition for High Technology Industry. Washington, D.C.: National Academy Press, 1996, and as part of this series, National Research Council, Securing the Future: Regional and National Programs to Support the Semiconductor Industry, op. cit. (forthcoming). 29 See Jeffrey T. Macher, David C. Mowery, and David A. Hodges, “Semiconductors,” U.S. Industry in 2000: Studies in Competitive Performance, David C. Mowery, ed., Washington, D.C.: National Academy Press, 1999.
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Government-Industry Partnerships for the Development of New Technologies Part V turns to the Committee’s extensive work in reviewing three types of public-private partnerships in the United States: consortia, innovation funding, and laboratory-based science and technology clusters. As noted above, the Committee analyzed the challenges facing the global semiconductor industry, explored the contributions of consortia, and documented the expansion of national and regional programs to support this industry. The Committee also convened leading experts from industry and academia to review the prospects and potential of a solid-state lighting consortium. A properly constructed consortium could accelerate technological progress, rendering this new technology more versatile, more economical, and therefore more acceptable to consumers. The widespread use of solid-state lighting technologies might yield substantial energy savings and reduce the environmental impact of power generation. The reviews of the Small Business Innovation Research Program (SBIR) and the Advanced Technology Program (ATP) highlight specific issues related to assessing the performance of public-private partnerships for which the federal government provides awards to small firms to help overcome early-stage financing hurdles or to facilitate the development by large and small firms of a promising technology or product. ATP and SBIR complement each other and address different points in the innovation process. Because proposals are developed by private companies, the ATP selection process is essentially industry-driven. ATP funds are matched by awardees and are directed to pre-commercial research rather than product development. SBIR awards are smaller and are intended to develop the scientific and technical merit of research ideas in order to facilitate their commercialization and meet the federal agency goals.30 The Committee’s examination of S&T parks focuses attention on the availability of funding over sustained periods, the presence and willingness of individuals and teams in the private sector to commercialize some of the knowledge generated, availability of physical infrastructure and quality-of-life amenities, and the need for effective leadership to facilitate and guide park development. The goals of the parks themselves, however, often vary substantially. The Sandia 30 To provide for an objective assessment of the SBIR program, a part of the program’s recent reauthorization, the Congress tasked the National Research Council with a multi-year, multi-agency review of the SBIR program at the five agencies. See HR5667, Section 108. While complementary, it should be emphasized that the ATP and SBIR programs are different, targeting different points in the innovation process. In terms of rigorous and regular assessment the ATP effort is of high quality. The ATP has also been the subject of an extraordinary amount of outside review and analysis, the most comprehensive being the Committee’s own analysis. See National Research Council, The Advanced Technology Program: Assessing Outcomes, op. cit. Objective external assessment of SBIR is much more limited, aside from the commendable efforts of the Department of Defense, which reviewed its program and designed innovations to encourage greater commercialization. The National Research Council review of the DoD SBIR program was broadly positive. See National Research Council, The Small Business Innovation Research Program: An Assessment of the Department of Defense Fast Track Initiative, C. Wessner, ed., Washington, D.C.: National Academy Press, 2000.
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Government-Industry Partnerships for the Development of New Technologies S&T Park is designed to encourage cooperation between Sandia National Laboratories and the private sector on common technical challenges and to contribute to regional development. By contrast, the Ames S&T Park is intended to draw in expertise from Silicon Valley to help NASA achieve its missions. Effective assessment of these parks has to reflect their particular goals. This requires well-defined objectives and metrics early in the parks’ development. Part VI emphasizes that assessments can not only improve the operations of a partnership but can also help to inform the public and policy makers of the risks and benefits from this type of cooperation. Regular assessments of public-private partnerships can also help to ensure the continued technical viability of funded projects and maintain the relevance of the research—thereby facilitating the innovation process. Finally, Part VII places U.S. public-private partnerships in a global context. It notes that while the competition in high-technology industries is not new, it does seem to be accelerating as new entrants put in more resources, often in new or expanded partnerships.31 The belief in many nations that the government should support new technologies or industries considered strategic or simply important to the national economy is accelerating interest in partnerships as effective policy tools for encouraging innovation. The terms and nature of this aid vary greatly across countries, but in supporting their high-technology industries, many governments are looking to models of success arising out of partnership experiments in the United States. SEMATECH in particular has inspired similar ventures in Japan, Europe, and in the newly industrializing countries of East Asia. In addition, there is increasing interest in the structure, goals, and evaluations of program awards aimed at commercializing university inventions. Interest in award programs such as ATP and SBIR, is particularly strong among European governments, research institutes, and such international organizations as the Organisation for Economic Cooperation and Development. • • • This review of past, current, and potential partnerships is intended to advance public understanding of the nature and potential of partnerships. By helping to bring the benefits of science to the marketplace, partnerships can play a vital role in realizing national missions, encouraging economic growth, and enhancing the well-being of the American people. 31 See Thomas R. Howell, “Competing Programs: Government Support for Microelectronics,” in National Research Council, Securing the Future: Regional and National Programs to Support the Semiconductor Industry, C. Wessner, ed., Washington, D.C.: National Academy Press, Forthcoming.
Representative terms from entire chapter: