For Immediate Release
February 14, 1995

TECHNOLOGY FROM THE FEDERAL LABS: NSF-SPONSORED SURVEY FINDS HIGH RATE OF COMMERCIAL SUCCESS & SATISFACTION

Companies participating with federal laboratories in research and technology development efforts report that more than 22 percent of projects have resulted in new products, processes or services, according to a National Science Foundation-sponsored report done by researchers at the Georgia Institute of Technology.

The survey also found that most industrial participants are satisfied with the results of their company's partnership with the federal laboratory, with 89% of respondents reporting that the project was a good use of their company's resources. However, the interactions were less successful when measured by another criterion -- the creation of new jobs.

"Our limited evidence suggests that laboratory-industry commercial technology interactions can be quite successful, but there are no guarantees," said Dr. Barry Bozeman, director of Georgia Tech's School of Public Policy and the lead author of the study. "There is great variance in the quality and benefit of the interactions. Sometimes the reality of federal laboratory commercial technology lives up to the promise; often it does not."

The Georgia Tech study surveyed 219 companies who worked with federal laboratories in joint technology development projects involving a wide range of activities including cooperative research, equipment use, technical assistance, and purchase of technology licenses. In addition to providing data on levels of commercial product development and industry satisfaction, the study reports information about the economic costs and benefits of federal laboratory-industry technical interactions and assesses the role of partnerships in creating new jobs.

During the past decade, federal legislation has provided mandates and incentives for federal laboratories to work with industry in producing and developing new technology. This attempt to use federal laboratories to enhance U.S. "competitiveness" has been controversial but, according to Bozeman, "the early results show that industry-federal lab technology partnerships have a good deal of promise."

Despite the fact that most of the projects examined have not yet ended and that most began after 1990, 22% have already led to the marketing of a new product. In another 38% of the cases, product development is underway.

"This is certainly a reasonable rate of product development from R&D," Bozeman said. "Not everyone agrees about the percentage of products resulting from industrial R&D, but the best evidence is that it is in the range of 10-20%. So, the federal laboratory partnerships stack up pretty well against industry's own efforts."

The results show that most participants were satisfied, including even some who did not receive an economic return on investment. "The overall satisfaction figures are quite impressive," Bozeman said. "Any time 89% go away as satisfied customers you have to be doing something right. However, the economic cost and benefit data, though generally favorable, is much more equivocal."

Companies' economic returns are positive overall but vary a great deal from company to company. While a handful of companies reported economic benefit in excess of $10 million, in nearly one-third of the projects, costs exceeded benefits. Bozeman cautioned that the interpretation of costs and benefits is particularly difficult given their wide range.

According to Bozeman, "one of the more useful figures is net benefit, the difference between costs and benefits. After subtracting costs, the average benefit is $1,087,000. This figure is inflated by a few projects with enormous benefits, but still indicates that many of the projects are quite successful." From the standpoint of return on investment, the average for all projects is nearly $3 returned for each dollar invested.

The company-federal laboratory interactions enjoyed less success in direct creation of jobs within the participating companies. Industry-federal laboratory partnerships are often sold on the basis of job creation, but the results of the Georgia Tech study show that less than ten percent of the projects result in new hires for the companies involved.

Bozeman believes previous studies may have overestimated the potential for job generation. However, he noted that the study did not examine jobs that may be created indirectly by suppliers or vendors.

The researchers were interested in determining not only the level of success of industry-federal laboratory commercial interactions, but also the reasons for success. According to Bozeman, the more successful projects tended to involve smaller companies with a high percentage of scientific and technical employees and companies that had experience working with the federal lab on more than one project.

"Technologically-based companies can simply make better use of the relatively complex and unfinished products of the labs," he suggested. "Smaller companies probably take the interaction more seriously than large companies."

Bozeman suggests research partnerships with broad goals offer greater opportunity for success than narrowly-focused programs.

"I would suggest that the company needs to be relatively flexible rather than looking for one specific technology or technological need," he said. "The company needs to understand that success is most likely with a research partnership, rather than simply taking the research results of the lab and expecting these results to turn into a product."

The study co-authors are Maria Papadakis from the College of Integrated Science and Technology at James Madison University in Harrisonburg, VA, and Karen Coker from the Department of Political Science of the University of North Dakota in Grand Forks, ND.

The research was sponsored by the National Science Foundation's Research on Science and Technology Program under contract 9220125. The results are reported in a final report, "Industry Perspectives on Commercial Interactions With Federal R&D Laboratories: Does the Cooperative Technology Paradigm Really Work?"

RESEARCH NEWS AND PUBLICATIONS OFFICE
Georgia Institute of Technology
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Atlanta, Georgia 30308

MEDIA RELATIONS CONTACTS:
John Toon (404-894-6986);
Internet: john.toon@edi.gatech.edu;
FAX: (404-894-4545)

TECHNICAL:
Barry Bozeman (404-894-0093), FAX: (404-853-0535);
Internet: barry.bozeman@pubpolicy.gatech.edu

WRITER: John Toon