Government-Industry Partnerships for the Development of New Technologies (2003) / Chapter Skim
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V. The Role of Partnerships in Current Technology Policy
V. The Role of Partnerships in Current Technology Policy
Pages 75-108
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· Funding New Ideas Partnerships can help overcome funding gaps for needed R&D and for new products. In the real world, new innovative firms face substantial obstacles in their search for equity financed Even though venture capitaliSee Joshua Lerner, "Public Venture Capital: Rationale and Evaluation," in National Research Council, The Small Business Innovation Research Program, Challenges and Opportunities, C
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3, Adam B Jaffe, Joshua Lerner and Scott Stern, eds., Cambridge, MA: MIT Press, 2002.
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In 1998, NIH laboratories entered into 166 CRADAs, and in 1999 NIH's Small Business Innovation Research Program awarded more than $300 million to small companies. See Leon Rosenberg, "Partnerships in the Biotechnology Enterprise" in National Research Council, Capitalizing on New Needs and New Opportunities: Government-Industry Partnerships in Biotechnology and Information Technologies, op cit., pp.
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Toward More Effective Partnerships The need to advance new technologies, often in support of national missions, and often involving national laboratories, universities, and large and small firms
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engineering research centers, NSF's science and technology centers, the National Institute of Standards and Technology's Manufacturing Extension and Advanced Technology Program, and the multi-agency Small Business Innovation Research program, among others. University-industry cooperation is also on the upswing, with a significant percentage of university R&D now provided by industry and through innovative cooperation efforts, such as the MARCO program.
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" in National Research Council, A Review of the New Initiatives at the NASA Ames Research Center, C Wessner, ea., Washington, D.C.: National AcademyPress,2001,p.119.
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NASA's Ames Research Center is a case in point. Located in the heart of Silicon Valley, Ames seeks to enable NASA to achieve its mission by providing economical access to technological capabilities external to NASA.
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NASA's Ames Research Center, at Moffett Field, California, has developed a strategic approach to the use of its extensive human and physical resources consistent with NASA's overall mission in order to leverage its own particular research capabilities and exceptional location in the heart of Silicon Valley.22 i9National Research Council, Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative, C Wessner, ea., Washington, D.C.: National Academy Press, 1999.
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Recognizing this, the Committee's study of publicprivate partnerships has focused on the case of SEMATECH not as a model to be 23Given the scope and ambition of these objectives, the then NASA Administrator, Daniel Goldin, asked the NRC's Board on Science, Technology, and Economic Policy to review the Ames initiatives. See National Research Council, A Review of the New Initiatives at the NASA Ames Research Center, op.
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If most or all firms follow the same strategy, the optimum amount of innovation is not achieved. See Kenneth Flamm, "SEMATECH Revisited: Assessing Consortium Impacts on Semiconductor Industry R&D," in National Research Council, Securing the Future: Regional and National Programs to Support the Semiconductor Industry, op.
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and thus, in a "virtuous circle," increase the overall level of innovation activity in the industry. Partnership roles for government in the case of consortia include legally enabling such cooperation, contributing to the funding of research activities, supporting research cooperation with national laboratories, and through grants or facilities to encourage advanced research on shared platform technologies.30 The reasons for government participation vary; they can invoke broad goals such as national security or the international competitiveness of a domestic industry or in developing technologies that offer substantial environmental benefits.
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As Kenneth Flamm notes, "in terms of size, visibility, and public policy impact, SEMATECH has perhaps been the most significant private R&D consortium formed in almost two decades that have passed since the passage by the U.S. Congress of the National Cooperative Research Act of 1984, which granted partial antitrust exemption to registered U.S.
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38See the presentation by Gordon Moore in Securing the Future: Regional and National Programs to Support the Semiconductor Industry, op.
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cit. 4iSee comments by Gordon Moore in the Proceedings of National Research Council, Securing the Future: Regional and National Programs to Support the Semiconductor Industry, op cit.
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Some of what exists is flawed in terms of the assumptions underlying its econometrics. For a review of the literature and an updated assessment, see Kenneth Flamm, "SEMATECH Revisited: Assessing Consortium Impacts on Semiconductor Industry R&D," op.
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, which in part reflected the belief that the Japanese cooperative programs had been instrumental in the success of Japanese producers.49 · Industry Leadership After an early focus on developing a manufacturing facility to help solve manufacturing problems (rather than rely on a lab) , the consortium eventually focused on three goals that involved improving: .
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cit. 55See the presentation by Gordon Moore in National Research Council, Securing the Future: Regional and National Programs to Support the Semiconductor Industry, op.
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For a recent review, see National Research Council, Small Wonders, Endless Frontiers: A Review of the National Nanotechnology Initiative, Washington, D.C.: National Academy Press, 2002. 58For more discussion of some of the technical, resource, and organizational challenges facing the semiconductor industry in maintaining the pace predicted by Moore's Law, see National Research Council, Securing the Future: Regional and National Programs to Support the Semiconductor Industry, op.
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141-51. 60See remarks by Bill Spencer in the Proceedings section of National Research Council, Partnerships for Solid-State Lighting, Report on a Workshop, op.
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cit. 63Solid-state lighting, by replacing less efficient lighting devices, is expected to yield significant gross energy savings and environmental benefits.
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A consortium would appear to hold considerable potential to contribute to a range of valuable national goals. GOVERNMENT AWARDS TO FUND INNOVATION Firm Size and Sources of Innovation Small business is widely believed to be a significant source of innovation and employment growth a perception that has considerable basis in fact.65 Certa~nly in the nineteenth century the individual inventor played a central role in U.S.
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Galbra~th later argued that the source of innovation was more plausibly the large firm, which he believed, had the resources available to invest at sufficient scale, not the individual innovator.67 Concentration and centralization in research and development, which character~zed the early years of the twentieth century, did seem consistent with the ideas about firm size and innovation hypothesized by Schumpeter and Galbra~th. The great corporate research laboratories were established at companies such as DuPont, General Electric, and AT&T.
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venture capital industry, which helped high-growth firms to exploit the commercial potential of promising new technologies.7i To some extent, science and technology policy in the 1980s and l990s reflected this emphasis on the innovative role of small and rapid-growth business. Cooperation as a Policy Goal In the 1970s and 1980s the United States recorded slow economic growth relative to postwar norms, sluggish productivity performance, and a loss of global market share and technological leadership in key U.S.
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12-40. For a review of the main features of the East Asian economic success story, see World Bank, The East Asian Economic Miracle: Economic Growth and Public Policy, Policy Research Report, New York: Oxford University Press, 1993.
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; the NSF's Research Centers program (which includes the engineering research centers, the industry/university cooperative research centers, the materials research science and engineering centers, and the science and technology centers) ; and the Small Business Technology Transfer (STTR)
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102 G O VERNMENT- IND US TR Y PA R TNER SHIP S 80Adapted with NRC modifications from Berglund and Coburn, op.
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Moreover, that knowledge is likely to be insufficient to perfectly predict potential payoffs. The result is "statistical discrimination" whereby financiers are motivated to withhold funds, even for promising opportunities, because it is too costly and often impossible to gather the information needed to assess potential investment payoffs.82 8iSee Joshua Lerner, "Public Venture Capital: Rationale and Evaluation" in National Research Council, The Small Business Innovation Research Program, Challenges and Opportunities, C
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The Committee's study of the SBIR program and ATP highlight specific issues related to the performance of public-private partnerships for which the federal government provides innovation funding to help small firms overcome early-stage financing hurdles. The role of assessment, taken up in the next section, follows a summary below of the features of the SBIR and ATP programs.
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In Phase III, which normally does not involve SBIR funds, grant recipients should be obtaining additional funds either from an interested agency, private investors, or the capital markets to move the technology to the prototype stage and into the marketplace. Initially the SBIR program required agencies with R&D budgets in excess of $100 million to set aside 0.2 percent of their funds for SBIR.
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The evaluation is also expected to include estimates of the benefits, both economic and non-economic, achieved by the SBIR program, as well as broader policy issues associated with public-private collaborations for technology development and government support for high-technology innovation, including benchmarking of foreign programs to encourage small business development. The assessment is to gauge the contributions of the SBIR program with regard to economic growth, technology development, and commercialization, and contributions by small business awardees to the accomplishment of agency missions.
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These have included adaptive learning systems, component-based software, digital data storage, information infrastructure for health care, microelectronics manufacturing infrastructure, manufacturing technology for photonics, motor vehicles and printed wiring boards, new tissueengineering technologies, big-polymer repairs, and tools for DNA diagnostics.~°i These technologies are technically promising but commercially risky. This means that significant portions of the ATP-funded projects are likely to fail.~02 This is to be expected; no failures would suggest insufficient risk.
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Based on his research on the SBIR program, Joshua Lerner describes this as a "certification effect." See J Lerner, "'Public Venture Capital': Rationales and Evaluation," in National Research Council, The Small Business Innovation Research Program: Challenges and Opportunities, op.
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