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Industry gets needed research, universities get funding, society gets new products and technology. It's a balancing act in which everyone has a shot at winning.

The number of research partnerships between corporations and universities has increased dramatically over the past 20 years. This trend has been driven in part by the steady decrease in federal funding for academic research. But a greater influence has been industry’s need to remain competitive by outsourcing specific research projects to universities. To remain competitive in the global economy, it is imperative that corporations accelerate their innovation process.

Companies are able to bring their products to the market faster by forming partnerships with universities, which result in obvious benefits for both parties. The industry gains expertise in areas they need the most, and they have a hand in producing graduates who are better equipped to enter the business world. Universities gain needed funding, financial benefits, and more recognition from society. We cannot deny that industry has benefited immensely from these partnerships. But we also must address some of the basic issues that have arisen from such collaboration. Can we achieve a balance between industry’s need to protect proprietary information and academia’s need for disclosure? Can industry fund applied research without shortchanging academia’s mission to teach basic research? Can university professors benefit from the businesses they help to establish without developing conflicts of interest?

Truces, trade, and technology

Industrial–academic research partnerships have become an important part of corporate R&D. Several basic trends have fueled these alliances. They include the decrease in government funding of academic research mentioned above, an explosion in technology, a robust economy, and greater competition within industries. Over the past 20 years, all of these factors created an environment that fosters a codependency between industrial and academic research departments. The results of these partnerships are mainly positive for all parties involved; however, these alliances have also created new issues that may significantly affect the future of scientific research and education.

The United States’ unprecedented period of economic expansion has been made possible by a unique combination of three powerful elements:

• The continuous expansion of world peace, manifested in the general reduction of military conflicts, and a period of expanding constructive relations among the most powerful nations in the world.
• The lowering of international trade barriers around the world.
• The technological revolution, chiefly anchored in the development of microelectronics and most visibly present in the proliferation of new information systems and novel technologies: the Internet, cell phones, handheld and laptop computers, over-the-counter diabetes tests, and laser surgery, to name a few.

These three trends have had a profound influence on our daily lives. The way we work, communicate, and interact has been changed in a manner that none of us would have dared to describe only two decades ago. Trade barriers and politics used to dictate with whom we did business. Today, we trade with and invest in countries such as Russia, Vietnam, China, Hungary, Armenia, and Latvia that only a few years ago were on our list of enemies or did not exist.

Totally new technologies emerged, and giant companies appeared with names that not long ago would have sounded like the names of board games or trendy new restaurants. New industries and professions that would not have been found in the most obscure crossword puzzles now are household names. Words like Celera, eBay, Lucent, Amazon.com, day trader, webmaster, and gene therapy are now common in our vocabulary.

No one knows how long these three trends will continue or where and how we will end up. But for industrial and academic researchers, anything that starts or ends with “tech” makes us feel at home. This is the area in which we are all active, the area that we understand and can contribute to.

Bottom-line issues

Science and technology have an unquestionable significance in today’s society. It may be difficult to make a quantitative connection between science, technology, and the economy, but the scientific community intuitively feels these connections do exist.

In a U.S. News & World Report interview, Michael Boskin of Stanford University estimated that half of all long-term economic growth in industrialized nations since World War II is due to technological progress (1). A recent BankBoston study shows that research at the Massachusetts Institute of Technology has had an enormous impact on the entire New England region. More than a thousand MIT-related companies in Massachusetts employ over 125,000 people and generate an excess of $50 billion in global sales. The same companies employ more than a quarter of a million people around the world (2).

In the United States, we live in an affluent society with high standards of living. Our infrastructure is intricate and sophisticated; people are well-educated; environmental laws and regulations are real and expanding. All of this makes operating and manufacturing very expensive. Although it would seem that this would also make us less competitive, we have actually become the most competitive nation in the world.

Our “new economy”, marked by economic expansion, low inflation, and a tight labor market, is a direct result of the interplay between science, technology, and the economy. The huge improvements in productivity, driven by new technologies, are helping to keep inflation rates low in spite of tight labor markets. Technology has taught us to “do more with less”. The productivity of American industry is increasing at a rate that future historians will probably call revolutionary, and the key role of science and technological innovation in this new phenomenon cannot be denied. There is no question that technology is a very powerful tool in keeping the United States competitive.

Staying ahead of the game

Today, more than ever, the only way for any American industrial organization to stay competitive is to be more creative, more innovative, and faster than the competition. American industry needs to continuously introduce better and less expensive products and technologies, improve its business models, and become faster and more flexible in everything it does. Time has never been as important a competitive weapon as it is now. Time-to-market, speed of innovation—American industry is obsessed, and rightly so, with these concepts.

American industry focuses less on measuring the magnitude of its research investments and more on measuring their effectiveness. R&D productivity, aimed at being first to market with better products, has become a matter of survival. The new challenge for industrial R&D organizations is to accelerate the product development process. We want to discover and create new products and technologies that will result in revolutionary changes, and we want to make them a little faster than anybody else does.

The mission of the industrial R&D laboratory has changed. It is no longer just an in-house facility where researchers develop new products for their firms. It has become the gatekeeper of technology, responsible and accountable for making companies technological leaders. The R&D department now comprises technology scouters as well as technology developers.

Corporate managers are working hard to replace the old enemy, the “NIH” (not invented here) syndrome, with the “IA” (invented anywhere) attitude. It is no longer of any consequence whose invention it is as long it can make a significant impact and as long as our company is the first to commercialize it.

Who benefits from partnerships?

First and foremost, we in industry receive answers to problems that we are not equipped to answer ourselves. Occasionally, we encounter a specific invention or technology with significant commercial value, as we did with Dalhousie. Working with the academic community exposes industrial researchers to the most advanced technical thinking, new research trends, and novel experimental techniques. Dialogues with academic scientists also provide a way to test the validity of our own thinking and directions. We gain discussion partners who challenge our beliefs and conclusions.

The Patent and Trademark Law Amendments Act (also known as the Bayh–Dole Act of 1980) allowed private institutions to take ownership of the inventions generated from federally funded projects (3). This legislation, along with the mounting public pressure to demonstrate more directly the benefits of federally funded projects on civilian life, had a profound influence on academic research. The Bayh–Dole Act created a financial incentive for institutions that receive federal research funds to find commercial applications for their projects and made a clear-cut assignment for the ownership of the intellectual property. The act also gave industry a strong incentive to search for commercially valuable projects at universities.

In the past 20 years, the close collaboration between universities and industrial organizations helped develop products that affect our lives directly. In 1998, industrial–academic partnerships resulted in the introduction of 385 new technologies, including weather prediction software, faster modems, Internet search engines, and cancer treatments (4). Everyone has benefited from at least one of these important products.

Universities benefit from industrial funding. The percentage of funding that universities receive from industry has risen sharply, from 2.6% in 1970 to 7.1% in 1997 (5). The reduction of tension in the world led to a reduction in military spending and in turn to significantly reduced military-funded R&D, which has been partially replaced by industry-funded research. In 1998, colleges and universities were awarded more than 2600 patents, a 14% increase over 1997. Royalties from these inventions exceeded $576 million, up 29% from 1997 (6).

Industrial–academic collaboration also allows universities to better prepare their students to enter the industrial work force: obviously, a mutual benefit. By working on industry- funded projects, students gain greater and earlier exposure to marketing, manufacturing, business processes, and environmental concerns—factors that are of great importance to industry. These experiences facilitate the transition from academia to industry and increase productivity of these young people once they join an industrial organization.

Regardless of the benefits of these partnerships, the university’s main mission always has been, and will continue to be, supplying highly educated and trained people to work in government, public, and industrial institutions. Universities also act as centers of learning by providing a broad-based knowledge. None of the other benefits that we claim here will ever come close to being as important as these core missions.

Is there a downside?

It is relatively easy to see how everyone profits from these partnerships. However, these alliances have the potential for some ill effects that we should not ignore. Let’s examine some of them:

Does industry place unfair restrictions on publishing the results of joint research?

In a survey of more than 1000 technology managers and faculty in the United States, 39% reported that corporations restricted their academic partners from sharing results of their research (7). In another survey, Carnegie Mellon University found that more than 50% of corporations force a delay in publishing the results of joint research, and more than 33% of respondents reported that industry sometimes deletes information from papers before publication (5).

Universities and society in general have long benefited from the free exchange of the results of academic research. We have to ensure that advances in research are shared with our colleagues in public forums. Although industry has legitimate concerns about disclosing proprietary information, university scientists must be able to publish their findings. Restrictions and delays associated with joint publishing partnerships will eventually lead to slower rates of innovation. Currently, there are no universal standard guidelines or rules to govern this issue. Basically, it is being worked out on a case-by-case basis. But both industry and academia would benefit from clearer and more uniform rules and guidelines.

Does industry force universities to de-emphasize teaching the basics of scientific research?

Industry places less importance than academia on making basic scientific discoveries. But when industries partner with universities, industries decide what type of research they should fund. Industries are not in the position of funding research that will not directly benefit their companies, even if the research would be scientifically significant. As a result, many universities are devoting less time to basic research and more time on applied research. Academic institutions should establish a clear policy for governing these issues. A well-drafted and published policy of this kind would have numerous benefits, including creating and communicating research priorities and attracting new faculty and graduate students.

The basic research that universities traditionally have performed has led to many technological breakthroughs. This process historically took 20 to 30 years, but the pace is accelerating. Basic research was crucial to important developments such as the Internet, advanced telecommunications, novel and better materials, and new drugs and medical treatments. Universities must continue to perform the research that leads to these discoveries.

Are educators and university researchers forced into conflict-of-interest situations?

Some academic researchers establish new companies as a result of their corporate or federally funded research. These scientists have a personal financial stake in the results of their research. Their dual roles as researchers and business people sometimes make it difficult to direct their research. Should they explore the areas where they feel an important scientific contribution is likely to be made? Or should they explore the areas that are likely to make a profit? Some universities forbid scientists to hold managerial positions in companies that they found, and some do not. We should have standardized and universal rules to deal with this very important issue.

Adding up the balance

The expanding global economy and the ever-growing need for American industry to stay competitive create a pressure on industry to continue increasing the speed of innovations. Time-to-market is a new and a critically important competitive weapon of a modern firm. Industry relies more heavily now on the constructive engagement with universities to satisfy the need for improving the rate of developments of novel technologies and new product introductions. As the interests of universities and commercial enterprises intersect, researchers in academia and industry must ensure that the delicate balance of long-term and short-term benefits is maintained.

1. Gergen, D. The 7 percent solution. U.S. News & World Report, May 19, 1997, p 79.
2. Conrades, G. Vital Speeches of the Day 1999, 65 (15), 472.
3. Patent and Trademark Law Amendments Act. Public Law 96-517, 1980; 35 U.S.C. 200-212.
4. Association of University Technology Managers, AUTM Licensing Survey, Fiscal Year 1998. http://128.200.222.12/pubs/survey/1998/ PR98FINALWEB.html (accessed June 30, 2000).
5. Florida, R. Issues Sci.Technol. 1999, 15 (4), 67.
6. Blumenstyk, G. Chronicle of Higher Education 1999, 46 (16), A44.
7. Rahm, D. Policy Studies Journal 1994, 22, 267–278.

Felek Jachimowicz is vice president of research and development for the Grace Performance Chemicals division of W. R. Grace and Co. (62 Whittemore Ave., Cambridge, MA 02140; felek.jachimowicz@grace.com). He has held several research and managerial positions at W. R. Grace’s Washington Research Center in Columbia, MD, and at Grace Performance Chemicals’ headquarters in Cambridge, MA. He holds a Ph.D. in physical organic chemistry from the University of Basel, Switzerland.

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