GOVERNMENT-UNIVERSITY-INDUSTRY
PARTNERSHIPS

Since the 1970s the United States has seen the rise of various forms of collaboration among the sectors of government, academia, and industry. These forms include industry-specific inter-firm research consortia, government-industry technology transfer, and university-industry research centers. Yet the emergence of government-university-industry strategic partnerships is relatively recent, and often fostered by specific federal government programs. This new organizational form owes its development to recent trends in the U.S. research environment in industry, academia, and government.

Industrial research is facing pressures to decrease time-to-market for new inventions, and to conduct research aimed at specific, identifiable customer needs. As a result, traditional basic research activities in corporate laboratories have been scaled back. A survey conducted in 1997 by R&D Magazine found that much of this is directed basic research, closely linked to related applied research activities, rather than exploratory basic research aimed at the creation of new scientific knowledge.

To compensate, most U.S. firms now form extensive relationships with other organizations for research, including small businesses and universities. Partnerships are a way to identify and capture innovations produced by those organizations that have not been implemented by other companies.

The decline in federal research funding has had a great impact on universities, which are the major recipients of extramural federal research support. As a result, more universities have become interested in forming relationships with industry, such as conducting research for specific companies, housing collaborative research facilities, and licensing university inventions to firms.

The academic sector sees industry R&D funding as a potential replacement for federal funding, especially in view of the new interest among corporations in partnering with universities. Universities are also under pressure from another major funding source, the parents of undergraduate students, to address the perceived imbalance between research and teaching in academia. University administrators in turn are placing more pressure on professors to link research to their educational programs, and also to integrate real-world concerns into both teaching and research. These pressures may also force academia to become more applied in its research focus.

These developments mean that the United States government now shoulders more of the burden for funding fundamental, long-term research aimed at producing new knowledge. However, this responsibility is contradicted by calls from the Congress and from taxpayers for greater accountability for government, and formal measurements of program outcomes under the Government Performance and Results Act of 1993 (the GPRA).

One mechanism to link government R&D to tangible outcomes is to form closer relationships, including collaborative research efforts, with industrial and academic research organizations. Collaboration among these sectors brings many benefits, including:

• Sharing of risk and cost for long-term research.
• Access to complementary capabilities.
• Access to specialized skills.
• Access to new suppliers and markets.
• Access to state-of-the-art facilities.
• Creating new opportunities for technological learning.

U.S. agencies are becoming direct participants in R&D collaboration by forming partnerships between agency research facilities and external research organizations. This increase in collaboration calls for new mechanisms for R&D management that take into account the dynamics of working with extramural research organizations as partners rather than grantees or contractors.

SIGNIFICANCE OF GUI PARTNERSHIPS
FOR INNOVATION

Government-university-industry (GUI) strategic research partnerships represent an organizational form designed to integrate disparate pools of intellectual capital. In these cases, participants in the partnership bring to the table very different skills, capabilities, and organizational contexts. The alliance evolves into a shared community of innovation, where each participant retains the legacy of its origins, but joins a network of researchers that evolves its own common values, norms, and vocabulary. The knowledge from each organization can then be integrated within the new context of a community of innovation, and applied by each participant toward its own learning goals.

GUI partnerships play a role of growing significance in national innovation systems. The total process model of innovation outlined by Professor Richard Rosenbloom of Harvard and Dr. William Spencer of SEMATECH emphasizes the importance of flows and linkages between firms and external sources of knowledge. As the global economy evolves toward knowledge-based competition, GUI partnerships are a mechanism for facilitating revolutionary innovation through knowledge fusion.

At the same time this diversity may mean that members lack a shared language of knowledge necessary for effective knowledge sharing. Viewed in the context of dynamic organizational learning, however, even such cultural gaps among GUISP participants can become an advantage. Organizations involved in successful strategic alliances engaged in learning not only at the level of technical knowledge, but also at the level of organizational structure, with participants adopting some of the organizational routines of their partners leading to greater efficiency in learning. Thus, as the gap in relative absorptive capacity narrows among participants in a GUI partnership, they face greater potential to experience radical changes in organization and culture that can lead to more radical innovation.

GUI partnerships may also tend to foster the formation of trust more readily than purely private sector alliances. Multiple industry participants in a GUI partnership are not racing to gain strategic resources from the alliance, as occurs in some industry alliances. Two firms involved in a GUISP could receive the same knowledge from the partnership, but will use it to build very different firm-specific strategic capabilities.

One indication of the special significance of GUI partnerships is that this new organizational form is emerging in different nations and different economies. This suggests that there are strong driving forces motivating these partnerships that are common across different national cultures, political structures, and economic systems. While GUI partnerships in different countries have certain unique characteristics shaped by their national environment, they tend to share processes and structures of membership, governance, and interaction that point to the existence of universal critical success factors which apply to all such partnerships.

CASES OF GUI STRATEGIC
RESEARCH PARTNERSHIPS

NSF ENGINEERING RESEARCH CENTERS PROGRAM.

An illustrative case of a GUI research collaboration is the Engineering Research Centers (ERC) Program administered by the U.S. National Science Foundation. The ERC program was developed based on a 1983 study by the National Academy of Engineering, initiated at the request of the NSF Director at that time, which recommended the establishment of a new cooperative program with the following two goals:

• To improve engineering research so that U.S. engineers will be better prepared to contribute to engineering practice; and
• To assist U.S. industry in becoming more competitive in world markets.

Establishment of the ERC program was motivated by the perception that significant engineering advances were occurring through the integration of new developments across traditional disciplinary boundaries, and that engineering education in universities no longer prepared students properly for the way in which engineering research was conducted in industry. This required that the centers established by the programs share the following objectives:

• Provide continual interaction of academic researchers, students, and faculty with their peers, namely, the engineers and scientists in industry, to ensure that the research programs in the centers remain relevant to the needs of the engineering practitioner and that they facilitate and promote the flow of knowledge between the academic and industrial sectors;
• Emphasize the synthesis of engineering knowledge; that is, the research programs should seek to integrate different disciplines in order to bring together the requisite knowledge, methodologies, and tools to solve problems important to engineering practitioners; and
• Contribute to the increased effectiveness of all levels of engineering education.

The ERC Program is managed out of NSF's Engineering Education and Centers (EEC) Division of the Directorate for Engineering. The ERC Program issues solicitations for the establishment of ERCs, each with a specific technological focus, such as Data Storage Systems or Telecommunications Research. Universities submit proposals to host an ERC; these proposals are peer-reviewed by technical researchers and executives from academia and industry.

There were twenty-six ERCs in this program in 1999. Each ERC is funded by the NSF for eleven years, over which time each center is expected to generate funding from sources outside the NSF, so that the center is self-sufficient by the end of the grant period. To illustrate, in fiscal year 1994, the twenty-one centers then in the ERC program received $51.7 million from the ERC Program Office; $53.7 million from industry in cash, in-kind donations, and associated grants and contracts; and $73.5 million from university, nonprofit, and other U.S. government sources.

Each ERC forms several consortia involving university faculty, staff, and students, and multiple industrial firms (and on occasion government research facilities) to pursue specific research projects under the ERC's focus area. By this structure, projects tend to focus on more fundamental research of broad interest to industry, rather than on development of specific product technologies for individual firms.

The academic and industrial researchers exchange knowledge regarding the needs of industry in the research area, relevant developments across engineering disciplines, and the processes of academic and industrial research.

The outputs of the ERCs measured by the ERC Program include the numbers of partnerships formed, patents filed and awarded, licenses granted to industry, and undergraduate and graduate degrees awarded to students involved in ERC projects.

MARCO AND THE FOCUS CENTER RESEARCH PROGRAM.

The Microelectronics Advanced Research Corporation (MARCO) is a not-for-profit research management organization chartered with the establishment and management of a new Focus Center Research Program (FCRP) to fund pre-competitive, cooperative, long-range, applied microelectronics research. This initiative was launched in cooperation with the Defense Advanced Research Projects Agency (DARPA) of the U.S. Department of Defense, the Semiconductor Industry Association, and SEMI/SEMATECH, an organization of semiconductor equipment manufacturers.

The FCRP concentrates on technical challenges very different from those addressed by firms and other organizations in the semiconductor industry. The parameters these challenges must meet include:

• Emphasis on the elimination of barriers via more revolutionary approaches, paradigm shifts, and the creation of multiple options.
• Long-range (beyond eight years to commercialization) research.
• Broader, less granular objectives.
• Fewer industrial business practices applied.
• Heavy emphasis on research efforts with faculty, post-docs, visiting scientists, and students.

The Focus Centers funded by the program will be virtual (or distributed) centers that span multiple universities. This will tap the best expertise across many institutions in order to build the greatest overall capability in a particular technology area.

Rather than depending on only one institution to manage research in a given technology area, the FCRP will create communities of innovation linking researchers at multiple universities. The research will be long-range but still linked directly to industry imperatives by setting priorities through the National Technology Roadmap for Semiconductors, an industry-wide strategic-planning process. Industry and government support can lead to direct interaction between the university researchers and the end-users of the knowledge generated under the FCRP, contributing to a common view of technical challenges and wider dissemination of new knowledge.

MEDEA.

The Microelectronics Development for European Applications (MEDEA) initiative, based in Paris, was launched on July 1, 1996 as a collaborative project under the EUREKA program. The initiative integrates microelectronics into application systems to foster the market-oriented and industry-driven needs of the electronics systems industry.

Funding for MEDEA projects is split between the European Union Commission, the member states, and firms, with participating firms providing at least 50 percent of the program's budget. These member nations are Germany, France, The Netherlands, Italy, Belgium, and Austria. Nearly two-thirds of MEDEA funding will support development of applications.

The MEDEA structure ensures that governmental decision making on research priorities supports the needs of industry, cementing the link between the two through its cost-sharing requirements. Also, the moderate subsidy from the European Commission leverages that investment across national borders, encouraging further collaborative research. By involving multiple firms, universities, and research institutions in MEDEA, the program can facilitate the wide diffusion of new innovations.

THE FRAUNHOFER GESELLSCHAFT.

The leading organization focused on applied research in Germany is the Fraunhofer Gesellschaft (FhG) and its 47 worldwide institutes. Founded in 1949, FhG conducts applied research for industry on a contract basis, using the facilities and personnel of regional polytechnics or universities.

By forging a stronger bond between academia and business, FhG aims to speed the commercial application of new technologies. The institutes receive all their financial support from industry and the German government, both paying equal shares. All contracts must be worth at least DM100,000 to receive government support. Furthermore, the exact level of funding is dependent upon the technical and economic risks of the proposal. Finally, the projects must be perceived as potentially profitable.

The FhG, as a contract research body partnering with sources of research capabilities, serves as a neutral organization for coordinating flows of knowledge among and between its clients and research affiliates. The Institutes of the FhG themselves comprise the transorganizational knowledge management infrastructure for each technical field by managing the interactions between diverse research partners. The FhG also has the influence to spark learning in a GUI setting through this interaction.

LESSONS LEARNED ABOUT GUI
PARTNERSHIP MANAGEMENT

A cross-sectional analysis of empirical findings from representative case studies fields a preliminary list of key considerations and respective strategic management skills that firms must develop to participate in useful GUI alliances (see Table 1).

TASK DEFINITION.

Government, university, and industry have different strengths in the conduct of R&D, and differing priorities that drive their participation in GUI alliances. Therefore, firms must recognize both the strengths and limitations of each type of partner in a GUI alliance, and negotiate appropriate roles for each. For example, a university-industry research center at Case Western Reserve University focusing on materials science met with success when industry partners asked their university counterparts to focus on long-term, fundamental research that still had practical importance to firms but were beyond their research

Key Success Factors in GUI Partnerships	Focus (External vs. Internal)	Nature (People-vs. Technology-Driven)	Bias (Positive-sum vs. Zero-sum	Outlook (Strategic vs. Tactical)
Task Definition	BLoth	Both	Positive-sum	Tactical
Leadership & Authority	External	People-driven	Positive-sum	Strategic
Allocation of Benefits	External	People-driven	Positive-sum	Strategic
Stakeholder Management	External	People-driven	Positive-sum	Tactical
Lifecycle Management	Both	Both	Positive-sum	Strategic

time horizons. The center conducted research into biodegradable polymers, which had enormous long-term potential impact in the plastics industry, but which no firm could afford to pursue.

LEADERSHIP AND AUTHORITY.

A GUI alliance also requires the identification of a lead player who has the authority and legitimacy to make fundamental decisions about the direction of the alliance and its operations. Although the lead player must enjoy the support and confidence of the other partners in the alliance, that entity must also be able to act without requiring the unanimous consent of the entire alliance for every operational decision.

GUI alliances operating as pure democracies will tend to degenerate into factions, due to the polarizing differences in organizational objectives among the partners. Often, the lead player emerges due to personalities and individual roles, not at the organizational level. For example, one GUI alliance organized under a Defense Department program ended up with a leader whose technical expertise garnered the respect of other researchers in the alliance, but whose organizational position also provided him with the authority and influence to work the management structures of the different partners.

ALLOCATION OF BENEFITS.

A key issue for GUI alliance management is the creation of processes for the fair and appropriate allocation of the benefits from the alliances to the various partners. The most critical aspect of this is in the division of intellectual property rights from research.

A major stumbling block to numerous GUI alliances is the fundamental contradiction between the importance of well-defined and protected rights for industry partners, and the desire for the open dissemination of information by researchers. Today, the success of university technology transfer also means that some academic partners may want to own some of the IPRs that they can then market to outside organizations. For example, agreements that require universities to assign all patent rights from an alliance to the industry members will cause universities to at least hesitate, and often to refuse participation in an alliance. Creating processes for distributing these benefits to satisfy all partners is more art than science, given the competing priorities of the partners.

STAKEHOLDER MANAGEMENT.

Related to the above point, firms that take a lead role in GUI alliances must be skilled at stakeholder management, especially in answering the concerns of stakeholders who are not direct members of the alliance. For example, one GUI alliance sponsored by the Defense Department required the lead industry partner to take into consideration how to communicate the benefits of the alliance to Congress. This helped to assure the alliance of continued funding with minimal interference from the oversight committees involved in national security.

LIFE-CYCLE MANAGEMENT.

Since GUI alliances are dynamic entities, industry participants must be sensitive to how the alliance and each of its members evolves over time, and how that evolution may change the motivations for the alliance. For example, alliances must have clear processes for members to enter and exit as needed, as the alliance expands or moves into new areas and away from old ones. Also, firms must recognize that GUI alliances in general are highly situation-specific.

Changes in the underlying conditions of the alliance may render the alliance obsolete or moot. Therefore, alliances must also be managed as a dynamic, evolutionary process, with the clear recognition up-front that the alliance may outlive its usefulness and therefore must have processes in place for the graceful termination of the alliance at such a time.

Using a framework developed by Carayannis and Alexander (1998), GUI partnerships can be categorized along four variables:

• R&D Agreement (R&DA), structured as a grant, cooperative agreement, or contract;
• R&D Focus (R&DF), looking at the time-frame and nature of research outputs;
• R&D Performer (R&DP), where research is primarily conducted (among university, industry, government, or other organizations);
• R&D Location (R&DL), at the program and project levels, in terms of geographic location and organizational location (centralized or decentralized).

The resulting categorization is shown in Table 2. This analysis shows that among these three examples, GUI partnerships are intended to leverage the capabilities and resources of different research performers to address research agendas of varying time horizons and using a range of governance mechanisms. The key design issue in structuring GUI partnerships is matching the governance mechanisms, and in particular the interface mechanisms for facilitating knowledge transfer, with the capabilities and research focus of the partnership.

Some pertinent factors to consider in the structure of GUI partnerships are the differing time horizons and cultures of partners from government, university, and industry. These examples of GUI collaborations raise two significant points about this new mode of research support and conduct.

First, global pressures on national and corporate innovation provide a common motivation for the formation of the collaborative efforts, indicating that the

	ERCs	MARCO	MEDEA	FhG
R&DA	Cooperative Agreement	Cooperative Agreement	Cooperative Agreement	Contract
R&DF	Long-range, applied	Long-range, basic	Medium-range, applied	Short-to-medium range, applied
R&DP	Primarily university	Primarily university	Primarily industry	For-profit independent institutes
D&DL: program project	US-centered Centralized	US-centered Distributed	EU-centered Distributed	Global Centralized

globalization of R&D has a comparable impact across nations. Implementing transorganizational knowledge management through GUI partnerships will reengineer some aspects of the national science and engineering enterprise, as barriers to knowledge sharing across economic sectors are broken down through repeated instances of collaboration.

Second, the design of GUI partnerships and their intelligent transorganizational knowledge interfaces is influenced by the past history and current structure of the science and engineering enterprise in each company. Therefore, cross-national comparisons are some-what difficult, as knowledge-management practices in one culture may not apply in another setting. This suggests that further research is necessary to understand the extent to which GUI partnerships are a tool for international as well as national transorganizational innovation.

The lessons learned from GUI partnerships show that there are distinct skill sets that firms must develop if they are to derive the full benefits of the alliances from participation. GUI strategic R&D alliances constitute an ongoing process of learning, introspection, and discovery.

Case studies of GUI partnerships can show the importance of learning proper alliance management skills to firm success, particularly given the specific pressures and dynamics introduced by knowledge-based competition. It can also show how these alliances are useful tools in initiating and accelerating learning at all levels within and across organizations, enabling firms to maneuver more nimbly in the complete game of business.

For these partnerships to contribute effectively to firm-level and national competitiveness and innovation, the participants must develop new competencies in the mechanisms and processes for managing GUI partnerships, which are different from other forms of inter-organizational alliances.