The Political Nature of Civilian R&D Management - ACS Symposium

1 The Political Nature of Civilian R&D Management

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STEPHEN A. MERRILL

Downloaded by 80.82.77.83 on May 6, 2018 | https://pubs.acs.org Publication Date: July 6, 1979 | doi: 10.1021/bk-1979-0105.ch001

Committee on Commerce, Science, and Transportation, United States Senate, Washington, DC 20510

Contributors to this symposium and other discussions and studies preceding it share a belief in the desirability of commercializing the products of Federal research and development efforts as a way of serving important public needs and increasing the productivity of Federal expenditures. They are concerned that the results so far are mixed; few doubt that efforts to transfer Federal R&D products to the private sector have encountered difficulties and fallen short of their potential. Often the conclusion is that we must systematically identify the barriers to commercialization, whether in government policies and program management or in the market, and devise ways of overcoming them. It is presumed that program and project managers will follow effective innovation strategies if they are made aware of them. The implication of these assumptions is that the issue is one of means, not ends. A number of observations suggests otherwise, at least with regard to that part of the Federal R&D effort whose purpose is to produce widely distributed social benefits, primarily through the commercialization of new products, processes and services. The growing criticism of direct government interventions in the The views expressed i n t h i s paper are those o f the author, but they r e f l e c t the broader concerns o f the Senate Commerce, Science, and T r a n s p o r t a t i o n Committee and, i n p a r t i c u l a r , i t s Subcommittee on Science, Technology, and Space. The Subcommittee was r e c o n s t i t u t e d i n 1 9 7 7 as a r e s u l t o f the sweeping Senate r e o r g a n i z a t i o n , which enlarged the j u r i s d i c t i o n o f t h e Commerce Committee by g i v i n g i t l e g i s l a t i v e a u t h o r i t y and o v e r s i g h t r e s p o n s i b i l i t y f o r NASA and F e d e r a l research and development p o l i c y g e n e r a l l y as w e l l as t h e O f f i c e o f Science and Technology P o l i c y and the science and technology a c t i v i t i e s o f the Commerce Department.

This chapter not subject to U.S. copyright. Published 1979 American Chemical Society

Ault and Smith; Federal R&D and Scientific Innovation ACS Symposium Series; American Chemical Society: Washington, DC, 1979.


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market i s not confined t o r e g u l a t i o n but extends t o presumably supportive a c t i v i t i e s , i n c l u d i n g c i v i l i a n a p p l i e d research and development. The P r e s i d e n t s FY 1979 budget message notwithstanding, the A d m i n i s t r a t i o n has yet t o take an e n t i r e l y c o n s i s t e n t p o s i t i o n on the r o l e o f p u b l i c l y funded R&D i n s t i m u l a t i n g innovation i n the c i v i l s e c t o r . Congress, too, i s ambivalent. This paper does not question previous government d e c i s i o n s to i n v e s t h e a v i l y i n c i v i l i a n R&D nor suggest what future spending p r i o r i t i e s should be; but i t s premise i s that commitments have o f t e n been made without agreement on goals and means and consequently with d i s a p p o i n t i n g r e s u l t s . Increasing the d e s i r e d returns on f u t u r e expenditures r e q u i r e s the development o f c r i t e r i a f o r e f f e c t i v e government i n t e r v e n t i o n and appropriate arrangements f o r government-industry c o l l a b o r a t i o n . The emerging n a t i o n a l concern about the c o n t r i b u t i o n of i n d u s t r i a l innovation t o A m e r i c a n economic growth and i n t e r n a t i o n a l trade p o s i t i o n creates an unusual opportunity to design b e t t e r procedures f o r planning and executing the broad range of c i v i l i a n R&D programs. Progress i n t h i s d i r e c t i o n depends, however, upon a c l e a r r e c o g n i t i o n of the p u b l i c and p r i v a t e i n t e r e s t s at stake. In degree, both must be served i f -an R&D p r o j e c t i s t o r e s u l t i n a s o c i a l l y b e n e f i c i a l i n n o v a t i o n ; but i n e v i t a b l y , the values and methods of operation of government and p r i v a t e firms are p a r t l y at odds. On the government s i d e , these are matters of law, regul a t i o n and o r g a n i z a t i o n as w e l l as p r o f e s s i o n a l i s m and t r a d i t i o n . Since the essence of the manager*s job — to e x p l o i t common interests,accommodate d i f f e r e n c e s , and r e s o l v e c o n f l i c t s — i s p o l i t i c a l i n the broadest sense, i t follows t h a t the most important problems of R&D management are, inescapably, b a s i c issues of p u b l i c p o l i c y . The

Context of C i v i l i a n Research and Development

More than two-thirds of Federal R&D spending i s f o r research and technology of use t o the government i n defense, space and other n a t i o n a l missions. Undoubtedly, much of t h i s work has found important c i v i l i a n a p p l i c a t i o n s , f o r example, i n a v i a t i o n , nuclear energy, and e l e c t r o n i c s . ( l ) In an accompanying paper, Rubin Feldman describes the formation of a new f i r m based on the a p p l i c a t i o n o f c e r t a i n coatings designed f o r use i n space f l i g h t t o the p r o t e c t i o n o f o r d i n a r y c o n s t r u c t i o n m a t e r i a l s from f i r e . Much of the technology developed f o r government use, n e v e r t h e l e s s , has not found eager takers i n the p r i v a t e s e c t o r . NASA's Technology U t i l i z a t i o n Program and a v a r i e t y of other s m a l l e r - s c a l e e f f o r t s are attempting t o promote such " s p i n - o f f s . " No one, l e a s t o f a l l i n Congress, disputes the d e s i r a b i l i t y of t r a n s f e r r i n g technology t o the p r i v a t e s e c t o r ; but i t i s e q u a l l y c l e a r that F e d e r a l spending on R&D f o r the government's use must be j u s t i f i e d as meeting the government's o f t e n e s o t e r i c requirements and doing so e f f i c i e n t l y . Not only i s the govern-



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ment the purchaser and user o f t h i s R&D, i n many cases i t i s a l s o the performer. A l t e r n a t i v e l y , government employs the resources of the p r i v a t e s e c t o r through elaborate procurement systems, some of them designed t o s u i t the needs o f p a r t i c u l a r agencies and programs. The procurement process has been m o d i f i e d t o serve other s o c i a l g o a l s , such as equal employment o p p o r t u n i t y ; but commercialization i s not one o f them. In view o f these cons t r a i n t s , i t should come as no s u r p r i s e that p r i v a t e i n d u s t r y has not e x p l o i t e d a great deal o f t h i s technology. As f o r i n f o r m a l and formal technolgoy t r a n s f e r e f f o r t s , i t i s d i f f i c u l t t o judge t h e i r e f f e c t i v e n e s s . One can t r y t o compare t h e i r d i r e c t costs with r e s u l t i n g commercial sales and corporate tax revenues, but what r a t i o i s achievable and what s i z e o f program i s optimal? In the absence of c o n t r o l l e d experiments or estimates of the stock and p o t e n t i a l value o f government-acquired technology, we simply do not know. Thus, while Congress i s d i s posed t o support technology t r a n s f e r a c t i v i t i e s , i t s judgments are u n f o r t u n a t e l y , but perhaps i n e v i t a b l y , guesswork. Over the past decade, i n any event, m i l i t a r y and space R&D spending have dropped s i g n i f i c a n t l y i n constant d o l l a r s and i n r e l a t i o n t o the growing " c i v i l i a n " p o r t i o n o f the Federal R&D budget. Government spending on h e a l t h , energy, t r a n s p o r t a t i o n , housing, a g r i c u l t u r a l , environmental and other c i v i l i a n R&D p r o j e c t s now exceeds $9 b i l l i o n annually. I t has grown from 23% of the R&D budget i n FY 1969 t o an estimated 3&% i n FY 1979- ( 2 ) With the exception o f some b a s i c r e s e a r c h , t h i s p u b l i c investment i s intended t o meet p r e s s i n g p u b l i c needs, p r i m a r i l y through innov a t i o n s i n the p r i v a t e s e c t o r . Often commercialization i s essent i a l even where the products of the R&D are t o be used l a r g e l y or e x c l u s i v e l y by F e d e r a l , State or l o c a l governments, f o r example, i n mass t r a n s p o r t a t i o n , e d u c a t i o n , and law enforcement. There i s a tendency t o t h i n k of government i n t e r v e n t i o n i n the c i v i l s e c t o r as a response t o s o c i a l c r i s e s or market f a i l u r e s , as i n the case of energy; but i n n u c l e a r power, a g r i c u l t u r e , h e a l t h and other areas, the government has undertaken major R&D p r o j e c t s l a r g e l y because o f p e r c e i v e d new o p p o r t u n i t i e s , even i f these investments are j u s t i f i e d i n part by the i n a b i l i t y or unwill i n g n e s s o f the p r i v a t e s e c t o r t o finance them. Whichever the r a t i o n a l e , the c i v i l i a n R&D budget w i l l very l i k e l y continue t o grow and become more d i v e r s i f i e d . With the advent o f the space s h u t t l e system, f o r example, the U.S. i s on the verge o f a v a r i e t y of space a p p l i c a t i o n s i n which the p r i v a t e s e c t o r w i l l p l a y important r o l e s . These i n c l u d e , i n a l l p r o b a b i l i t y , g r e a t l y expanded g l o b a l information and communications systems and, c o n c e i v a b l y , s o l a r energy t r a n s m i s s i o n and even space manufacturing. (3) The Role o f Government The growth of the c i v i l i a n R&D budget does not s i g n i f y a consensus regarding the proper extent o f government i n t e r v e n t i o n i n


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the c i v i l s e c t o r or the r o l e o f F e d e r a l R&D i n p a r t i c u l a r . Con s i d e r , f o r example, the present A d m i n i s t r a t i o n ' s views as r e f l e c t e d i n the f i s c a l year 1979 budget and other recent i n i t i a tives. In January 1 9 7 8 , President C a r t e r proposed a s i g n i f i c a n t i n c r e a s e i n b a s i c research funding while r e s t r a i n i n g a p p l i e d r e search and c u t t i n g back development p r o j e c t s and c i v i l i a n R&D i n r e a l terms. The recommended increases were 1 0 . 9 $ * Ί·^%* b.6% and 2 . U # , r e s p e c t i v e l y , compared with a then expected i n f l a t i o n r a t e of 6%. The A d m i n i s t r a t i o n defended the slowdown i n a p p l i e d and c i v i l i a n R&D spending on the b a s i s of "the need t o a v o i d overtaking a c t i v i t i e s that are more a p p r o p r i a t e l y those o f the p r i v a t e s e c t o r , such as developing, producing, and marketing new products and processes . . .," as w e l l as the need t o a v o i d d u p l i c a t i o n and f a i l u r e . (2) What was odd was the j u s t i f i c a t i o n o f the increase i n b a s i c research as a stimulus to i n n o v a t i o n . In h i s State o f the Union message, the President made the encouragement of "a new surge of t e c h n o l o g i c a l i n n o v a t i o n by American i n d u s t r y " the goal of h i s recommendations f o r "a program of r e a l growth o f s c i e n t i f i c research and other steps t o strengthen the Nation's r e s e a r c h centers . . ."; and by i m p l i c a t i o n , at l e a s t , the budget docu ments r e i t e r a t e d t h i s message. (h) Basic research spending can be j u s t i f i e d on various grounds; yet as the D i r e c t o r of the Congressional O f f i c e of Technology Assessment, R u s s e l l Peterson, r e c e n t l y pointed out, the economic argument i s weak. The e f f e c t s o f advances i n knowledge are u s u a l l y d i f f i c u l t t o t r a c e and, f o r the most p a r t , long term. (5) I f the pace of innovation does threaten our economic w e l f a r e , why d i d the President not recommend a comparable boost f o r a p p l i e d c i v i l i a n research and development which, i n theory, have a much more d i r e c t bearing on commercialization? Perhaps the answer i s that the A d m i n i s t r a t i o n p r e f e r s to leave development l a r g e l y t o the p r i v a t e s e c t o r , ameliorate some o f the negative e f f e c t s on i n n o v a t i o n o f current F e d e r a l r e g u l a t o r y , economic, t a x , and a n t i t r u s t p o l i c i e s , and i n s t i t u t e i n d i r e c t i n c e n t i v e s by way o f c r e a t i n g a more f a v o r a b l e economic c l i m a t e . T h i s i s one p o s s i b l e outcome o f the mammoth interagency innovation p o l i c y study, which the President launched i n May 1978 and d i r e c t e d t o produce recommendations by A p r i l 1 , 1979Simultaneously, however, the A s s i s t a n t Secretary o f Commerce f o r Science and Technology plans a new c i v i l i a n R&D i n i t i a t i v e . His o f f i c e i s working on a proposal t o e s t a b l i s h a Cooperative Technology Program, under which the F e d e r a l government would help finance the development o f b a s i c technologies of value t o an e n t i r e i n d u s t r y or s e v e r a l i n d u s t r i e s . S i m i l a r proposals i n the past have been geared t o r e s c u i n g a i l i n g i n d u s t r i e s , but one o f the options under c o n s i d e r a t i o n contemplates j o i n t governmenti n d u s t r y e f f o r t s t o i d e n t i f y and e x p l o i t t e c h n o l o g i c a l opportu n i t i e s i n l e a d i n g sectors of the economy. (6)


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The point of mentioning these anomalies i s not to c r i t i c i z e current p o l i c i e s but to suggest that the nature and extent of the government's r o l e i n c i v i l i a n R&D are hardly c l o s e r t o being s e t t l e d than they were i n previous a d m i n i s t r a t i o n s . (7) While impressive i n the aggregate, the government's involvement represents a s e r i e s of piecemeal responses t o s p e c i f i c s o c i a l needs and perceived o p p o r t u n i t i e s . In some cases, Congress created an R&D program f o r l a c k of any b e t t e r a l t e r n a t i v e ; the appearance of t r y i n g to solve a problem can assume as much importance as i t s accomplishment. This pattern may be changing, however, with the emergence of three general concerns. One concern mentioned e a r l i e r i s that c i v i l i a n research, development and demonstration programs, i n contrast to m i l i t a r y and space a c t i v i t i e s , have not been h i g h l y s u c c e s s f u l i n producing important innovations. ( i t should be noted that there i s doubt among economists even about the s p i l l - o v e r b e n e f i t s of defense and space R&D expenditures. (8)) As Frank Press commented i n a 1977 Science e d i t o r i a l , " I t s impact on meeting p u b l i c expectations — on f i l l i n g the everyday needs of people — o f t e n seems d i s a p p o i n t i n g . " (9) And a recent report f o r the OTA observed, "Federal expenditures f o r demonstrat i o n p r o j e c t s . . . have grown t o over $1 b i l l i o n annually, and f u r t h e r growth appears l i k e l y . Yet t h e i r e f f e c t i v e n e s s has been l i m i t e d . " (lO) This growing i n s i s t e n c e that R&D prove b e n e f i c i a l i s p r i n c i p a l l y a r e s u l t of energy concerns and c o n s t r a i n t s on the F e d e r a l budget as a whole. I t may be that we l a c k a systematic e v a l u a t i o n of R&D programs or t h a t the r e s u l t s simply r e f l e c t the r i s k i n e s s of R&D i n general; but these q u a l i f i c a t i o n s are not very persuasive when i t comes to the expenditure o f p u b l i c funds on urgent n a t i o n a l problems, e s p e c i a l l y when the experts are g e n e r a l l y c r i t i c a l of the government's performance. Secondly, there i s concern that the innovation which both p r i v a t e and p u b l i c R&D are supposed t o f u e l i s s e r i o u s l y l a g g i n g and that the f a i l u r e of American firms t o market more new products and i n s t i t u t e new manufacturing processes i s r e s p o n s i b l e i n l a r g e measure f o r the nation's s l u g g i s h economic and p r o d u c t i v i t y growth and d e c l i n i n g trade competitiveness. Among the various i n d i c a t o r s that have been c i t e d as evidence of t h i s t r e n d , two were s i n g l e d out as most d i s t u r b i n g by witnesses before the Senate Subcommittee on Science, Technology, and Space: •There has been an a s t o n i s h i n g drop i n the c r e a t i o n of small high technology companies which i n the past have been r e s p o n s i b l e f o r i n t r o d u c i n g a d i s p r o p o r t i o n a t e share of innovations. Several years ago, two or three hundred venture companies entered the market with new issue underwritings each year; i n 1977 there were U6.



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• E x i s t i n g firms i n R&D-intensive i n d u s t r i e s have t r a n s f e r r e d some investments from major new product and manufacturing innovations t o r e l a t i v e l y minor product and process improvements promising short-term returns. Although t o t a l i n d u s t r i a l R&D spending has somewhat more than kept pace with i n f l a t i o n , there apparently has been a s i g n i f i c a n t s h i f t from research t o development as w e l l as a d e c l i n e i n i n v e s t ments i n new p l a n t and equipment which may incorporate new technology. Admittedly, the s h i f t has been hard to q u a n t i f y , i n part because the conventional R&D categ o r i e s do not apply as r e a d i l y to i n d u s t r y as government; but the impression i s widely shared t h a t i t i s occuring and even accelerating. ( l l , 12) F i n a l l y , many observers are alarmed that our c h i e f f o r e i g n competitors are i n v e s t i n g i n c r e a s i n g shares of t h e i r GNP's i n research and development and a f a r higher p r o p o r t i o n of government R&D i n the c i v i l i a n s e c t o r and that they are reaping handsome returns i n p r o d u c t i v i t y gains and exports from these i n v e s t ments. T o t a l U.S. expenditures on R&D have d e c l i n e d from 3% of GNP i n 196k t o about 2.3% i n 1 9 7 6 , i n contrast t o increases i n Japan and Germany i n the same p e r i o d . According t o OECD f i g u r e s , 36% of U.S. government R&D funds i n 1975 were spent on economic development, energy, h e a l t h , community s e r v i c e s , and the advancement of knowledge, compared with 92% i n Japan, 85% i n Germany, and 65? i n France. (13) These governments are p l a y i n g a d i r e c t r o l e i n the development of major technologies such as computers and e l e c t r o n i c devices as w e l l as a v i a t i o n and nuclear energy by supporting networks of i n d u s t r i a l research i n s t i t u t e s , c o s t sharing arrangements and other means, although they have a l s o v i g o r o u s l y pursued a "market p u l l " s t r a t e g y through government procurement, tax i n c e n t i v e s , loans, manipulation of market s t r u c t u r e s , and p r o v i s i o n of c a p i t a l t o new venture companies. (ik) We cannot assume that there i s a c a u s a l r e l a t i o n s h i p between our competitors p u b l i c l y supported research and development programs and t h e i r s u p e r i o r trade performance, but n e i t h e r can we a f f o r d t o assume that there i s none. In s h o r t , concerns i n Congress, the A d m i n i s t r a t i o n , and the p r i v a t e sector about the p r o d u c t i v i t y of F e d e r a l R&D go beyond the achievement of s p e c i f i c goals t o the s t a t e of American indust r i a l technology i n general. For the f i r s t time, t h e r e f o r e , there i s a b a s i s and some urgency t o address the r o l e of government R&D as a whole, as w e l l as the e f f e c t i v e n e s s of R&D i n t r a n s p o r t a t i o n , energy, a g r i c u l t u r e , h e a l t h and so on. The issues are both complicated and c o n t r o v e r s i a l : To what extent i s the economic 1



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climate so adverse t o innovation that R&D r e s u l t s are stymied regardless of t h e i r source? Can the climate be improved by removing d i s i n c e n t i v e s , c r e a t i n g new i n c e n t i v e s , or by changes i n the s t r u c t u r e and behavior of the p r i v a t e sector? To what extent can p u b l i c investment i n R&D stimulate innovation? In what circumstances does i t d r i v e out p r i v a t e investment o r , f o r that matter, c o n t r i b u t e t o overinvestment? What should be our goals and where can the government be e f f e c t i v e ? A concerted e f f o r t to answer some of these questions e n t a i l s certain risks. The debate could d r i f t a i m l e s s l y , as s i m i l a r d i s cussions have b e f o r e , l e a v i n g i n d u s t r y , government, l a b o r and p u b l i c i n t e r e s t p a r t i c i p a n t s more s k e p t i c a l of one another's motives. Furthermore, the l a c k of p u b l i c awareness underscores the magnitude o f the task of l e a d e r s h i p . The importance o f innovation t o the n a t i o n a l welfare has yet t o capture the a t t e n t i o n even o f the Administration's economists, l e t alone the imagination of the p u b l i c . On the other hand, there are o f f i c i a l s i n the Executive branch and members of Congress w i l l i n g t o assume l e a d e r s h i p . The p r i v a t e s e c t o r i s l e n d i n g i t s support t o both the domestic p o l i c y review and congressional i n q u i r i e s . The circumstances w i l l not improve i f the present opportunity i s missed. Managing Government and Industry

Collaboration

What may be l e s s apparent i s the simultaneous opportunity t o r e s o l v e the s o - c a l l e d "operational' problems of c i v i l i a n R&D management, many of which are not so f a r removed from issues o f high l e v e l p o l i c y as some might suppose or o f t e n wish. Within the past few y e a r s , a s u b s t a n t i a l research e f f o r t has been mounted t o i d e n t i f y the f a c t o r s a s s o c i a t e d with success or f a i l u r e i n implementing the r e s u l t s o f F e d e r a l research. This l i t e r a t u r e includes the House and Jones study ( 1 5 ) , the A. D. L i t t l e report f o r ETIP i n 1976 ( l 6 ) , the Rand Corporation a n a l y s i s of F e d e r a l l y funded demonstration p r o j e c t s i n 1976 (17), and a recent study f o r ETIP, Management o f F e d e r a l R&D f o r Non-Federal A p p l i c a t i o n s , by the Stanford Research I n s t i t u t e ( l 8 ) . The SRI report i s based on a q u a n t i t a t i v e a n a l y s i s o f data obtained from interviews with agency o f f i c i a l s , R&D performers, and p o t e n t i a l b e n e f i c i a r i e s of h6 p r o j e c t s i n v a r i o u s programs o f eleven F e d e r a l agencies. I t s appearance i s an appropriate occasion t o take stock of the accumulated f i n d i n g s . At the r i s k of o v e r - s i m p l i f y i n g , SRI's r e s u l t s , which are presented as a set o f g u i d e l i n e s f o r p r o j e c t management, g e n e r a l l y confirm the t h r u s t of pervious s t u d i e s . P r o j e c t s should be s e l ected on the b a s i s of user needs and designed t o accommodate market u n c e r t a i n t i e s . Commercialization i s much more l i k e l y t o occur i f s t a t e d and agreed to as a g o a l . It i s important f o r the agency and R&D performer t o cooperate i n developing a deployment s t r a t e g y from the beginning of the p r o j e c t . Communication among 1



10

FEDERAL

R&D

AND

SCIENTIFIC

INNOVATION

managers, performers, manufacturers and users i s e s s e n t i a l . Costsharing can increase the stakes i n cooperation and thus improve the chances of success. So much o f t h i s borders on common sense that one wonders why these procedures are not more r o u t i n e l y followed. Yet time and again, SRI found that the f a c t o r s regarded as c r u c i a l by government respondents were not p r e d i c t i v e of success and t h a t , g e n e r a l l y speaking, " . . . C i v i l i a n agencies with R&D programs destined f o r the non-Federal sector have not been f o l l o w i n g R&D management p r a c t i c e s t h a t , i f followed, would l e a d t o greater commercialization r e s u l t s . " (l8) Several p r o p o s i t i o n s are i m p l i c i t i n the SRI and other studies but need t o be emphasized. In order to be of b e n e f i t , c i v i l i a n research and development must serve the purposes o f i n d u s t r y as w e l l as government. I t s conduct and outcome are shaped by the v a l u e s , i n t e r e s t s and p r o f e s s i o n a l p e r s p e c t i v e s of a l l of the p a r t i c i p a n t s . Some of these i n t e r e s t s may be c r o s s c u t t i n g ; f o r example, program d i r e c t o r s and i n d u s t r y executives are l i k e l y t o be concerned with end r e s u l t s , researchers and engineers with t e c h n i c a l s o p h i s t i c a t i o n and success. By f a r the most problematic r e l a t i o n s h i p , however, i s that between government and i n d u s t r y . The government seeks t o spread economic b e n e f i t s , the p r i v a t e f i r m to capture them. The F e d e r a l agency may d e s i r e a major t e c h n o l o g i c a l advance while the manufacturer i s i n c l i n e d to r i s k marketing only an i n c r e mental one. Industry g e n e r a l l y r e s i s t s e x t e r n a l i n t e r f e r e n c e i n the l a t e r - s t a g e development and marketing d e c i s i o n s which are thought to be c r u c i a l to a p r o j e c t ' s success but a l l too o f t e n ignored by R&D d e c i s i o n makers. I r o n i c a l l y , such i n c o n g r u i t i e s between p u b l i c and p r i v a t e i n t e r e s t s , which cloud the prospects of commercialization, are f r e q u e n t l y the very reasons f o r government i n t e r v e n t i o n . The problem, t h e r e f o r e , i s not simply that p r o f i t a b i l i t y does not govern p u b l i c d e c i s i o n s . Administrators must s a t i s f y a l a r g e number of c o n s t i t u e n c i e s , i n c l u d i n g but not l i m i t e d to producers and consumers of p a r t i c u l a r goods and s e r v i c e s . P u b l i c a u t h o r i t y i s h i g h l y fragmented among committees of the Congress, agencies of the executive, and various l e v e l s o f the bureaucracy. Complex procedural c o n s t r a i n t s r e f l e c t the t r a d i t i o n a l tensions between government and the p r i v a t e s e c t o r . For example, program and p r o j e c t d i r e c t o r s cannot be expected to consider r e g u l a t o r y or other i n c e n t i v e s t o commercialization of R&D i f such i n s t r u ments are outside t h e i r r e s p o n s i b i l i t y or t h e i r agency's authority. They are u s u a l l y bound by procurement procedures developed f o r the government's own missions. They are f r e q u e n t l y r e s t r i c t e d i n granting property r i g h t s and i n s e t t i n g up advisory committees. And i n c r e a s i n g l y , they are subject t o o r g a n i z a t i o n a l c o n f l i c t of i n t e r e s t r u l e s which may discourage advocacy by i n d u s t r y and c o n t i n u i t y of c o l l a b o r a t i o n with p a r t i c u l a r firms i n the name of o b j e c t i v i t y and competition. (19)



1.

MERRILL

Civilian R&D

Management

11

Government needs to be b e t t e r educated i n the r e a l i t i e s of the marketplace; but even i n c i v i l i a n research and development, i t s a c t i o n s cannot be guided s o l e l y by them. Nor i s the reconc i l i a t i o n of government and i n d u s t r y i n t e r e s t s simply a matter of c o n s u l t i n g one another. I f the previous hypotheses are c o r r e c t , what i s r e q u i r e d i s the i n s t i t u t i o n a l i z a t i o n of p r i v a t e sector p a r t i c i p a t i o n i n p u b l i c p o l i c y d e c i s i o n s and management. This p r o p o s i t i o n i s r a d i c a l l y at odds with the more extreme v e r s i o n s of the "hands o f f " philosophy of some executives i n i n d u s t r y and the "arm's l e n g t h " philosophy of some o f f i c i a l s i n government. " I n s t i t u t i o n a l i z a t i o n " does not mean the establishment of permanent r e l a t i o n s h i p s between agencies and firms or i n d u s t r i e s . R&D f o r commercialization implies a l i m i t e d government i n t e r vention and eventual withdrawal. Nor i s i t necessary, even i f i t were p o s s i b l e , to e s t a b l i s h elaborate R&D and dissemination networks such as the a g r i c u l t u r a l extension s e r v i c e . Rather, the task i s t o formalize procedures and ground r u l e s f o r n e g o t i a t i n g l i m i t e d c o l l a b o r a t i o n among government, i n d u s t r y and u n i v e r s i t i e s f o r s p e c i f i c mutual goals, f a c i l i t a t i n g r e c o n c i l i a t i o n o f i n t e r ests that are at odds, and p r o t e c t i n g the p u b l i c i n t e r e s t i n pres e r v i n g competition. While t h i s i s no simple t a s k , the development of c r i t e r i a f o r Federal c i v i l i a n R&D investment, and by i m p l i c a t i o n , non-intervent i o n , i s a longer term e f f o r t ; indeed, the l a t t e r i s an e v o l u t i o n ary g o a l . Yet the i n s t i t u t i o n a l i z a t i o n of p r i v a t e s e c t o r p a r t i c i p a t i o n i n R&D programs would f a c i l i t a t e the flow o f information and counsel from i n d u s t r y t h a t i s needed t o inform d e c i s i o n s about where, under what circumstances, and t o what extent the government ought t o commit i t s resources. A recent O f f i c e of Technology Assessment report p o i n t s out the opportunity to develop such procedures under the 1977 Grant and Cooperative Agreement Act. (20) Whatever the v e h i c l e , i t w i l l not happen a u t o m a t i c a l l y . Nor w i l l the s e n s i t i v e p o l i t i c a l issues of R&D management be addressed adequately i n the context of p a r t i c u l a r programs when they are a f f e c t e d by governmentwide norms and p o l i c i e s . Unless c i v i l i a n R&D e f f o r t s are perceived t o have a bearing on the nation's economic problems, i t i s l i k e l y that p o l i c i e s which are i n i m i c a l to the requirements of commercialization w i l l be adopted, debates w i l l be prolonged over such matters as government patent p o l i c y , and f o r t u i t o u s o p p o r t u n i t i e s such as the advent of cooperative agreements w i l l be missed. In s h o r t , the o p e r a t i o n a l problems of R&D management should be a prominent part of the n a t i o n a l d i s c u s s i o n o f i n d u s t r i a l innovation p o l i c y .


12

FEDERAL R&D AND SCIENTIFIC INNOVATION

LITERATURE CITED

1. Schnee, Jerome Ε., "Government Programs and the Growth of High-Technology Industries," Research Policy (1978), 7, pp. 2-24.


2. U.S. Office of Management and Budget, "Special Analyses: Budget of the United States Government," 306-07, Washington, January 1978. 3. U.S. Senate Subcommittee on Science, Technology, and Space, "Symposium on the Future of Space Science and Space Applications," 40-55, Washington, 1978. 4. The President's State of the Union Message, January 1978. 5. Peterson, Russell W., "The Role of R&D in Meeting Societal Objectives," Remarks to the R&D Colloquium of the American Association for the Advancement of Science, Washington, June 20, 1978. 6. U.S. National Bureau of Standards, "What Will the Nature of the Cooperative Technology Program Be? Issues and Answers," Prepared for the Office of the Assistant Sec retary for Science and Technology, Department of Com merce, Washington, April 17, 1978. 7. Eads, George, U.S. Government Support for Civilian Technology: Economic Theory Versus Political Practice," Research Policy (1974), 3, pp. 2-16. 8. U.S. National Science Foundation, "Preliminary Papers for a Colloquium on the Relationships Between R&D and Economic Growth/Productivity," Washington, November 9, 1977. 9. Press, Frank and George Busbee, "Intergovernmental Science and Technology," Science (May 27, 1977), 196. 10. U.S. Congress Office of Technology Assessment, "The Role of Demonstrations in Federal R&D Policy," ix, Washington, July 1978.


1.

MERRILL

Civilian R&D Management

11. Mogee, Mary Ellen, "Industrial Innovation and Its Rela tion to the U.S. Domestic Economy and International Trade Competitiveness: Analysis of Hearings Held by Subcommittees of the Senate Committees on Commerce, Science, and Transportation; and Banking, Housing and Urban Affairs; and the House Committee on Science and Technology," Congressional Research Service: Washington, October 13, 1978.


12. Shapley, Willis and Don I. Phillips, "Research and Development: AAAS Report III," 53-71, American Asso ciation for the Advancement of Science: Washington, 1978. 13. U.S. National Science Board, "Science Indicators 1976," 5, 186-7, Washington, 1977. 14. M.I.T. Center For Policy Alternatives, "Government Involvement in the Innovation Process," 59-68, Office of Technology Assessment: Washington, 1978. 15. House, Peter W. and David W. Jones, "Getting It Off the Shelf: A Methodology for Implementing Federal Research," Westview Press: Boulder, Colorado, 1977. 16. Little, Arthur D., Inc. "Federal Funding of Civilian Research and Development," Prepared for the Experi mental Technology Incentives Program of the National Bureau of Standards, Washington, 1976. 17. Baer, Walter S., et al, "Analysis of Federally Funded Demonstration Projects," The Rand Corporation: Santa Monica, California, 1976. 18. McEachron, Norman Β., et al, "Management of Federal R&D for Commercialization," SRI International: Menlo Park, California, 1978. 19. Rawicz, Leonard, "Organizational and Individual Con flicts of Interest: Impact of the Rules on Contract ing," Paper presented to the Federal Bar Association/ Bureau of National Affairs Conference on Government Contracts, Philadelphia, March 13-14, 1978. 20. U.S. Congressional Office of Technology Assessment, "Applications of R&D in the Civil Sector: The Opportunity Provided by the Federal Grant and Coopera tive Agreement Act of 1977," Washington, June 1978. RECEIVED March 14,

1979.


The Political Nature of Civilian R&D Management - ACS Symposium

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