3 A072
3 A072
3 A072
ENTREPRENEURIAL SCIENCE
MIT and the Rise of Entrepreneurial Science is a timely and authoritative book
that analyses the transformation of the university’s role in society as an
expanded one involving economic and social development as well as teaching
and research. The Massachusetts Institute of Technology invented the format
for university–industry relations that has been copied all over America and
latterly the rest of the world. This excellent book shows that these ground-
breaking university–industry–government interactions have become part of the
foundations of modern successful economies.
Henry Etzkowitz has written a book that will be of great interest not only to all
those with a connection to MIT, but also to anyone with a more general
interest in entrepreneurial universities, innovation and economic development
as a whole.
MULTINATIONAL FIRMS
The global–local dilemma
Edited by John H. Dunning and Jean-Louis Mucchielli
Henry Etzkowitz
Acknowledgements ix
Notes 152
Index 163
ACKNOWLEDGEMENTS
ix
INTRODUCTION
MIT and the rise of the entrepreneurial university
MIT has played a distinctive role in US academia, creating formats for interac-
tion with industry and then diffusing them to other schools. Although the idea
of science as the basis of economic development is not new, policies encour-
aging the university to become a driver of the science-based economy are
relatively new and sometimes controversial. Logically, however, much of that
controversy should dissipate in the light of how the university’s engagement in
this key economic role is inherent in its first mission, teaching, and manifest in
its second, research. Nevertheless, just as tension has persisted between
teaching and research even as it has been found to be fruitful to locate them
jointly in the same institution, so may we expect a continuing friction between
the university’s newest mission and its older ones.
The MIT model, combining basic research and teaching with industrial
innovation, is displacing Harvard as the academic exemplar. Until quite
recently, pursuing the “endless frontier” of basic research was the primary ideo-
logical justification of elite US academic institutions.1 Harvard University was
the model, with numerous schools identifying themselves as the “Harvard” of
their respective regions. Such claims are seldom heard anymore. With an
entrepreneurial mode increasingly followed at Harvard, and at academic institu-
tions that model themselves upon it, the prediction that MIT would eventually
conform to the traditional US research university mode has been disconfirmed.
Instead, the reverse process has occurred as liberal arts research universities
adopt a mission closer to the “land grant” tradition of regional economic devel-
opment, MIT’s founding purpose and historic forte.
The thesis of this book is that a new academic model – the entrepreneurial
university – is created as universities combine teaching and research with the
capitalization of knowledge. The university’s assumption of an entrepreneurial
role is the latest step in the evolution of a medieval institution from its original
purpose of conservation of knowledge to the extension and capitalization of
knowledge. As the university increasingly provides the basis for economic
development through the generation of social and intellectual, as well as
human, capital, it becomes a core institution in society.
1
INTRODUCTION
2
INTRODUCTION
Through his college roommate, Laurence K. Marshall, Bush made the acquain-
tance of a group of Boston financiers. They invested in several technical
enterprises, such as the Spencer Thermostat Company, that Bush helped orga-
nize as a consultant during the post-World War I years. Through a series of
mergers, the Thermostat firm eventually became part of Texas Instruments.3
These instances inspired MIT Treasurer Horace Ford’s 1930s vision of a
3
INTRODUCTION
4
INTRODUCTION
legitimated academic technology transfer and closed the gap between academia
and industry opened up by the endless frontier linear model of government
funding of academic research. Before Bayh-Dole, there had been no assurance
that the results from publicly funded research would be transferred to industry.
Thus, the loop in a spiral of institutional innovation, begun in the mid-
nineteenth century, was completed in the mid-twentieth century. In the
interim, many of the firms in the textile and metalworking industries had disap-
peared, but they were replaced during the post-war era by electronics and
computer firms. These companies were often started in the abandoned factories
of older industries, and now, in turn, they are being displaced by genetic engi-
neering and software firms. Although the firms and technologies have changed
over the decades, the vision of knowledge-based industrial development that
William Barton Rogers expounded to a nineteenth-century industrial leader-
ship in the Boston region has been realized, and has since spread widely.
Just as a research ethos was universalized throughout the academic sphere, so
now is a concern with maximizing the economic uses of research that was
formerly the province of a specialized academic sector – the land grant schools.4
Still, industrial research funding and receipts from licensing of intellectual prop-
erty rights are small in absolute terms in comparison to government funding
sources that have become traditional, with their controversial origins forgotten
by succeeding academic generations.5 Nevertheless, a secular trend can be
projected of an academic system, closely involved with industry as well as govern-
ment. During the 1980s industry funding of academic research rose from 4 percent
to 7 percent and, by the end of the 1990s, to 10 percent. Much of this increase was
concentrated in a few fields with strongly perceived industrial relevance such as
biotechnology and civil engineering. University research centers closely tied to
industry increased nearly 2½ times during the 1980s. The number of patents
awarded to US universities tripled between 1984 and 1994.6 While still small in
scale – if not in scope – a new academic model is emerging from its chrysalis.
As to the question of whether this is significant in terms of the future capi-
talization of knowledge, universities are now taking equity in these firms. If we
look back just 20 years to the firms that came out of Stanford University when
it was not the policy to take equity, several of these firms, such as SUN and
Silicon Graphics, are now multibillion dollar firms. Within ten years, universi-
ties will hold significant equity in similar firms and the universities will be
transformed from eleemosynary institutions based on receiving resources from
others into at least partially self-generating institutions, generating resources
not only for industry but also for themselves, and this will be the way out of the
universities’ funding dilemma.
5
INTRODUCTION
6
INTRODUCTION
7
INTRODUCTION
The resolution of this controversy, through the passage of the Bayh-Dole Act of
1980, an amendment to the Patent and Trademark Law, merged previous
formats for university–industry and university–government links into a common
framework for university–industry government relations: the triple helix.
Chapter 11 returns to the implications of these developments for academic
institutions and academic scientists. An entrepreneurial dynamic that was
introduced in US universities as part of the introduction of research was
extended into firm formation. Entrepreneurship was part of the culture of the
research university even before the commercial implications of research became
apparent.
Chapter 12 discusses the emergence of the entrepreneurial university as part
of a triple helix dynamic. The entrepreneurial university plays an increasingly
important role in society as industry becomes more knowledge-based. As the
university takes a more central place in the institutional firmament as the basis
of economic activity, it may, in the future, become a self-sustaining institution.
8
1
THE SECOND ACADEMIC
REVOLUTION
9
THE SECOND ACADEMIC REVOLUTION
10
THE SECOND ACADEMIC REVOLUTION
The seminar, an innovative advanced teaching method also arose out of the
development of philological research. The cooperative examination of texts
took place though presentations by advanced students and professors, with
discussion of findings among them. This led to both levels of academics
becoming inquirers into new knowledge. The seminar supplemented lectures
and enhanced the educational mission of universities even as it became a basic
format for organizing research in the humanistic disciplines.
As research became a distinctive activity at some universities in Europe, the
experimental sciences were also incorporated into the university. The invention
of the teaching laboratory in chemistry at Giessen University in Germany in
the mid-nineteenth century was accompanied by the development of a precise
methodology in organic chemistry. A senior researcher, utilizing advanced
students to conduct direct supervision, could train dozens of students at a time.
This basic format persists in academic science teaching to this date.
In the United States the first academic revolution originated in the mid-
nineteenth century at some of the older teaching institutions such as Harvard
and Columbia, where professors, often inspired by their German doctoral
mentors, sought to initiate research training programs and advanced degrees.
However, the gap between academic vision and available resources was evident
for virtually all US academic institutions during the mid-nineteenth century,
with the notable exception of those working in agricultural research.
The attempt to establish chemical research laboratories according to the
German model largely failed.5 Harvard’s Eben Horsford, for example, was able
to raise the funds to build a building but not to hire assistants and buy supplies,
let alone heat the laboratory. There were simply not enough funds available to
realize the research ambitions of the increasing number of American scholars
who returned from Europe with their PhDs.
Since research funds did not come with academic positions as was typical in
Germany, individual researchers were responsible for seeking their own sources
of support. The organization of doctoral research was a creative response to
these financial constraints. Research expanded beyond an individual effort
when academics employed as teachers obtained small amounts of money to
purchase research materials and to hire students to help carry out research.
Academic research was greatly advanced later in the century by the founding
of new universities such as Johns Hopkins and Chicago. These institutions
adhered to a model of pure research, outlined by Johns Hopkins physicist Henry
Rowland in the late nineteenth century. Early in his career Rowland had been a
consultant to industry but when he took office and gave his inaugural address as
President of the American Association for the Advancement of Science, he put
this industrial career behind him in raising the banner of pure research.
Until the late nineteenth century, in the USA no clear distinction was made
between basic and applied research. The infusion of funds into academia from
the great industrial fortunes created in the late nineteenth century was accom-
panied by fears that donors would attempt to influence the research agenda.
11
THE SECOND ACADEMIC REVOLUTION
The creation of an ideology of basic research was part of the effort to carve out a
protected, yet financially secure, space for science. The practically oriented
leaders of academic science in the mid-nineteenth century, such as the
Sillimans at Yale and Columbia’s Chandler, well known as consulting chemists,
were pushed aside by a younger generation devoted to pure science who became
the academic exemplars.
The distinction held until World War II when scientists who had grown up
in the basic research culture found themselves immersed in war-related engi-
neering projects, such as radar, which also led to the development of radio
astronomy and the elucidation of theoretical issues in cosmology during the
post-war period. The somewhat surprising emergence of theoretical issues
during their wartime service, ostensibly devoted to practical issues, closed some
of the gap between pure science and engineering for these researchers. Built
with foundation and industry funds early in the century, the US academic
research system was greatly expanded with federal funds during and after World
War II. It has brought with it an increased velocity of scientific activity and
pressures to further increase funding in order to support existing research groups
and form new ones. Emanating from the research base created by the first revo-
lution, economic development is becoming an academic mission, as well.
12
THE SECOND ACADEMIC REVOLUTION
industry and financed faculty research projects with the monies made. These
funds enabled Wisconsin to become a major research center in biology in the
1930s and 1940s.7
13
THE SECOND ACADEMIC REVOLUTION
the industrial lab), conducted tests of materials and products in their laborato-
ries and occasionally carried out small research projects for a company. Based
upon the consulting model, some universities like MIT and Cal Tech estab-
lished liaison programs to link up firms with professors. In its most developed
format, a liaison program staff member would keep up with the technical inter-
ests of a group of companies who paid a fee to a member of the program and
then received suggestions of faculty members to contact.
New forms of university–industry relationships involve the multiplication of
resources through the university’s and faculty members’ participation in capital
formation projects such as real estate development in science parks and formation
of firms in incubator facilities. These also include academic scientists’ involve-
ment in firms, for example through membership of advisory boards or boards of
directors, stockholding in exchange for consultation services, assumption of
managerial responsibilities and direct involvement in the formation of firms.
During the past two decades, a broad range of US universities have taken on
the tasks of economic development, at times because of external pressures
including funding constriction, but also as the result of internal initiatives
arising from the expansionary dynamic of scientific research. Professors’ partici-
pation in the founding of firms based upon their academic research represents a
new stage in the development of academic–industry relations. The objective is
to multiply the value of intellectual property derived from academic research
through the stock market, either directly through the formation of a new firm or
indirectly through a stream of royalty income from an existing firm.
The new focus of relations with industry builds upon the development of
scientific research capabilities and the creation of a series of boundary-spanning
mechanisms, including technology transfer offices and spin-off firms. Incubator
facilities provide a home and support services for new firms while research parks
are designed to link successful firms to academic resources, in a format designed
to be compatible with academic goals. Whether this goal can be achieved is a
matter of considerable academic soul searching and debate.
14
THE SECOND ACADEMIC REVOLUTION
interest are often viewed negatively as potential malfeasance, they also signal
transition to a new academic model. They expose assumptions about the purpose
of higher learning and the legitimacy of an economic role for the university.
One axis of opposing views about the utility and propriety of
academic–industry ties concerns whether it is possible for the university to
contribute significantly to the economy – the practical question. The overall
modest level of this activity, despite a steady increase in income earned from
patents and a number of multi-million-dollar research contracts, has led some
observers to conclude that relations with industry are, and will continue to be,
of minor import in comparison to university ties to government. For example, it
has been argued that universities are ill-advised to commit resources to the
marketing of technology, especially since companies prefer that academic insti-
tutions concentrate on making information freely available.10
The ethical question posed is whether such participation will detract from
the traditional educational and research missions of the university – the value
dimension.11 There is concern that attention to economic issues will cost the
university its independence. Some of these same fears were expressed by
academics opposed to federal research support in the 1930s. Critics of
academic–industry relations believe that the university risks losing its indepen-
dent identity and special purpose by engaging in such activities.
Controversies have erupted such as the one at Harvard in 1980, when the
administration proposed that the university participate financially in a firm
based on the research of one of its faculty members. The ensuing debate rapidly
escalated into a struggle over the goals of the university, the purpose of science
and the professional ethics of scientists. According to one observer, “What has
drawn Harvard into this quagmire is the heady expectations of a genetic
Eldorado.”12 In the face of widespread faculty opposition, Derek Bok, the
President of Harvard University, withdrew the university from the plan to
invest in a joint university/faculty-initiated biotechnology firm.
Instead, he issued a statement eschewing such projects in the name of
protecting the disinterested stance of the university while reserving the right to
capture the economic worth of university research through other means. In
1988, a joint venture involving the Harvard Corporation, an administrative
entity, and the university’s medical school was announced. Although the New
York Times questioned whether traditional academic values were being aban-
doned, there were no reports of on-campus opposition as there had been eight
years before.
Academic–industry relations provide a litmus test of a university’s goals. Just
as a litmus test partially changes color indicating degree of acidity, conflicts over
relations with industry signal the stage of transition that a university is in,
shifting from a feudal to a capitalist mode of production. How much has
changed during the past two decades and how much has not? In the early 1980s,
the New Scientist reported that a London University professor proudly refused to
assert an economic interest in the results of his research.
15
THE SECOND ACADEMIC REVOLUTION
Along with the announcement from Edinburgh that Dolly Parton’s name-
sake was a cloned sheep, was the mention that the academic institution where
the research was conducted had helped found the biotechnology firm that had
part funded the research. Capitalized on the London stock exchange, the
present firm was the result of a merger with a US company, founded by faculty
at Johns Hopkins University and Virginia Polytechnic Institute, with support
from their state science agencies. The New York Times also reported interviews
with scientists at the University of Wisconsin who asserted that the NSF
would never have funded the Edinburgh research, it simply wasn’t basic
enough!13
Universities try to balance their academic and business roles in the increas-
ingly brief interval between discovery and utilization of research findings. Once
academic research is redefined from a free to a marketable good and treated as
intellectual property, the traditional forms of dissemination, such as publication
of articles in academic journals and presentation of papers at conferences,
continue but under a new set of conditions. “Limited secrecy” becomes the
watchword as publication is delayed to allow time for patenting.
If universities take a strong stand for openness and do not want the time span
for delay to be long, companies will usually agree. Nor, once a university has a
technology transfer office ready to act quickly is there any need to take a long
period of time to file an intention to patent. Having a paper published in a major
journal can be advantageous to a company seeking funds to support product
development or an appreciation in the price of its stock. Forces within the
academic technology transfer process militate for and against the freedom of
scientific information as the university creates a business from its research activi-
ties.
16
THE SECOND ACADEMIC REVOLUTION
17
THE SECOND ACADEMIC REVOLUTION
18
THE SECOND ACADEMIC REVOLUTION
fit into the existing categories of academic institutions. Whereas the research
university primarily balances teaching and research, the entrepreneurial univer-
sity adds the task of economic development and maintains these three academic
missions in a creative tension with each other.
MIT also exemplifies a creative synthesis of academic research formats based
upon contrasting models of innovation. The research university exemplifies a
linear model of innovation, going from academic research to practical use,
traditionally through publication of research results that have been adapted for
product development by interested industrial scientists. The land grant univer-
sity, on the other hand, exemplifies a reverse linear model of innovation,
starting from societal needs, such as those represented by farmers’ wishes to
improve their agricultural practices, as the basis for formulating research
projects. MIT combined both of these formats, linear and reverse linear,
following a non-linear interactive model of innovation. The next chapter
discusses the growth of MIT as a distinctive type of science-based university in
sharp contrast to the ivory-tower mode. Founded in the mid-nineteenth
century, MIT was the first entrepreneurial university.
19
2
MIT
The founding of an entrepreneurial university
20
THE FOUNDING OF MIT
21
THE FOUNDING OF MIT
project. Then, even more so than now, Boston held primacy as the USA’s indus-
trial, technological and educational hub. With a substrate of science-related
industry already in place in the region’s textile and metalworking industries, the
Boston area was a fertile ground for implanting the notion of a technological
university. During the middle years of the nineteenth century, Rogers recruited
from among the manufacturers, merchants and intelligentsia of the Boston
region. In time, with their assistance, he gained access to private and state funds
and a share of the federal government’s land grant to the Commonwealth of
Massachusetts.
Rogers found an especially receptive audience among the industrialists of the
region for his new academic concept. Lowell’s textile manufacturers, for
example, appreciated the usefulness of science to industry and had already hired
trained chemists to direct their dyeing and printing works. In a series of
meetings, he outlined a plan for a school of practical science that would offer
training in scientific principles and laws that could be utilized to guide engi-
neering and manufacturing practice. Rogers found support among Bostonian
industrialists because of his insight into the need to create a technical intelli-
gentsia and thereby raise the industrial growth of the region to a new level. He
discussed with them the application of the principles of science to industry by
developing and introducing new machinery and production processes into manu-
facturing enterprises. Rogers also stressed to them the importance of scientific
guidance of production processes. He was contemptuous of “blind experi-
menters” who cluttered up the patent office with useless devices by attempting to
make technical improvements without knowledge of physical laws.
Rogers believed that scientific training was required to produce inventions of
“real and permanent value” and that there was no industrial art that could not
be improved upon though a systematic understanding of natural laws. Rogers’
school would:
Utility was the primary but not the sole legitimating theme of applied science.
Beyond mere utility Rogers provided the applied sciences with a higher purpose
of their own, equal in worth to that of other forms of higher learning, but linked
to the subordinate class level of its practitioners. Such study was morally
uplifting,
leading the thoughts of the practical student into those wide and
elevated regions of reflection to which the study of Nature’s laws never
22
THE FOUNDING OF MIT
fails to conduct the mind … thus linking the daily details of his profes-
sion with the grander physical agencies around him.3
Rogers did not wish to debate the relative value of science and classical culture
but he did wish to establish the dignity and value of the practical professions
and the need for schools to serve them.4 Two types of instruction were required:
(1) the scientific basis of engineering; and (2) particular areas of technical
expertise. He expected that scientists, through their understanding of physical
laws, would provide the theoretical underpinning and unifying framework for
the diverse specialties of the engineers. This “applied science” focus distin-
guished MIT from more practically oriented engineering schools, at least in
intention. Nevertheless, there was always the danger that scientists and engi-
neers would each pursue narrow disciplinary goals at the expense of the broader,
interdisciplinary objective of the scientific basis of engineering.
The Boston area already had an academic institution, the Lowell Institute,
focused on enhancing technological competence and on raising the intellectual
level of the workforce. During the fifteen-year organizing period, MIT’s founders
worked out a division of labor with the Lowell Institute. The Lowell Institute
would continue to educate the general public on scientific and technical
matters through open lectures and extension classes on technical subjects for
workers while the new Massachusetts Institute of Technology would focus upon
degree programs. Sufficient private funds were raised to match a state grant and
a suitable building was constructed in the new Back Bay area of Boston.
MIT was founded with assistance from a 30 percent share of Massachusetts’
land grant. Federal lands were provided to each state under the Morill Act,
which supported the development of institutions of higher education and whose
purpose was to assist the development of agriculture, then the major US
industry. In Massachusetts, where industrial development had already occurred
to a considerable extent, the Act was read in such a way that the legislature
gave significant funds to a non-agriculturally based school. This result can be
credited to Rogers’ ideas and lobbying activities which found fertile soil in a
region that already had a strong technological and industrial base.
23
THE FOUNDING OF MIT
was created as an independent and even opposing format to the land grant
system.
The development of the Massachusetts Institute of Technology can be seen
as an interplay between the academic model produced by the international
polytechnic movement and US collegiate and university formats, including the
“land grant” and research university formats. Teaching colleges based upon the
traditional unitary classical curriculum, such as Harvard and Columbia,
expanded into general purpose universities with graduate schools in the arts and
sciences and separate technical schools. New universities such as Johns Hopkins
and the University of Chicago, founded to further newly defined notions of
“pure” research, typically did not have technical departments. The “land grant”
universities, so-called after the federal law of 1862 that provided federal lands to
each state to sell in support of universities, were designed to further the agricul-
tural and mechanical arts. The US polytechnic movement, of which MIT was a
part, was influenced by the creation of a distinctive, autonomous set of tech-
nical universities in France and Germany, among other European countries.
Each of these academic models has its special purpose. For example, the
teaching college trained its students in a common body of classical knowledge,
qualifying its graduates for the learned professions. Harvard College, MIT’s
Cambridge neighbor founded in 1636, exemplifies the classical teaching college
in its origins. The second stream is the so-called “land grant” university, which
trained its students in agricultural science and related mechanical arts, the
nations’ major industry until the late nineteenth century. The land grant
schools typically had experiment stations and conducted research aimed at
improving the productivity of local agriculture. The third stream is the poly-
technic institute, a European import, focused on training students in the
engineering professions that arose in tandem with the industrial revolution.
The fourth stream is the research university, based on an ideal of investigation
as an end in itself, first in the humanities and then in the sciences. These
various academic streams were never entirely separate. Many research universi-
ties were built upon the foundations of classical colleges and some polytechnics
were affiliated with classical colleges or research universities, and are to this day.
Indeed, MIT was once offered such a status as an affiliate of Harvard, but
rejected it.
24
THE FOUNDING OF MIT
the best known of these “scientific farmers” was President Jefferson who main-
tained test plots at his Monticello estate, where visitors today can examine his
experimental records. Scientific farmers very soon realized that they could not
produce good science individually. Research had to be done collectively and it
had to be done by professionals. Therefore, the scientific farmers lobbied
government to establish institutions to conduct agricultural research on their
behalf. And it was done. The Connecticut experiment was eventually repli-
cated in every state.
It was very soon realized that setting up a research institute by itself, an
experiment station, was only a partial solution. It was not very efficient to do
research in an isolated setting when the objective was to put that research into
practice. A further innovation, in order to transmit that research, was to
combine the experiment station with a college to train farmers’ children.
Schooled in scientific agriculture, the next generation completed the forward
loop between experimentation and utilization when they returned to carry on
the farm. Combining a research institute with a teaching college also completed
the reverse loop between problem generation and research as a new generation
of technically knowledgeable farmers was better able to pose problems to
researchers.
The final link in the agricultural innovation system was the the county
agent, who served as an intermediary mechanism for technology and knowledge
transfer between sophisticated users and researchers. Farmers and researchers
interacted directly at times, but were mainly in touch through these agents, who
moved back and forth between the farms and the academic research sites.
County agents also brought their own expertise to the table. They synthesized
the experience of the large numbers of farmers with whom they interacted,
making it available to farmers, researchers and fellow professionals.
Even before scientific research emerged as a general university practice,
special universities were founded to conduct research and training in agricul-
ture, the major US industry in the early nineteenth century. Based upon a vision
of “scientific agriculture,” schools such as the University of Connecticut used
the results of research to improve agricultural practice. In the mid-nineteenth
century this model was extended nationally. The Hatch Act of 1867 and the
Smith Lever Act of 1918 built up on the Morill Act foundation, providing
block research funds and then technology transfer and liason capabilities.
The land grant universities helped make US agriculture the world leader.
The agricultural experiment stations at the universities, jointly funded by the
federal and state governments, assisted farmers with new technology and advice.
The experimental stations also supported fundamental research. For example,
the genetics research of George Beadle and others in the 1930s led to hybrid
corn, vastly increasing agricultural production.5 The land grant movement
invented a university that was committed to the economic and social develop-
ment of its region. It created a university that took local needs and
circumstances into account in developing its research and training programs.
25
THE FOUNDING OF MIT
The land grant academic model inspired a significant element of the develop-
ment of MIT as a school committed to regional development, of the Boston
area in the mid-nineteenth century and New England in the mid-twentieth
century.
26
THE FOUNDING OF MIT
There were deep status differences between classical education and the new
technical subjects. When technical courses were instituted at the universities
which grew out of the old classical colleges they were typically accorded inferior
status and awarded lower prestige degrees. Thus, the Sheffield Scientific School
at Yale and a similar department at Harvard, the Lowell Scientific School, were
ancillary and isolated foundations.7 The difficulty of gaining entrance for tech-
nical subjects into the older colleges and the desire of proponents of technical
education for equality with classical liberal education led to the attempt to
found new institutions. The marginalization of technical education at tradi-
tional colleges provided another impetus for creating an institution of higher
education committed to technology as its main purpose. The tension between
the liberal arts and technology was sufficiently strong that MIT later rejected a
merger with Harvard, even though it was in an extremely difficult financial
position.
27
THE FOUNDING OF MIT
New, more practical topics were gradually and imperceptibly inserted into
the curriculum in the form of a course in geology or chemistry offered by an
individual faculty member. Change also occurred directly through outspoken
leadership of the founder or president of a new university, espousing different
ideas of what should be taught. These academic entrepreneurs often wished to
legitimize new subjects through their new foundations as well as distinguish
their universities from the traditional format. Thus, agricultural coursework was
begun at rural Cornell and urban themes, such as commercial studies, were
introduced at New York University. New England, home to the first agricultural
experiment station in the USA, was also the location of the Massachusetts
Institute of Technology (MIT). The region was also home to teaching colleges
such as Harvard and Yale that soon experienced the first “academic revolution”
through the introduction of research. The academic revolution occurred most
intensively, however, in new institutions founded primarily for this purpose,
such as the University of Chicago, Clark University and Johns Hopkins.
28
THE FOUNDING OF MIT
names, there would likely have been an intense backlash. The concept of
academic autonomy was engrained, not only in the beliefs of faculty members,
but in public opinion, as well.
29
THE FOUNDING OF MIT
Walker was a principal of the Arthur D. Little Inc. consulting firm from 1900 to
1905. During those years, he divided his time between MIT and the company.
He returned to MIT full time, becoming Director of the Laboratory of Applied
Chemistry in 1908. Walker is the prototype of the contemporary
entrepreneurial scientist who moves back and forth between the academic and
business worlds.
The two laboratories represented different visions for the future of the
Institute, either as a science-based university with a graduate school oriented
toward basic research or a school of engineering and technology devoted to
preparing undergraduates for work in industry. In the longer term, the develop-
ment of the Massachusetts Institute of Technology encompassed both
alternatives. However, at the time, the two were in conflict and chemical engi-
neering was attracting majors at the expense of chemistry.12 Walker ensured the
continued predominance of applied work by winning a battle over the future
direction of MIT against Alfred Noyes, who wished to steer the school in the
direction of pure research.
Academic administrators, from the president to the head of the chemistry
department, attempted to reconcile the two approaches but were unsuccessful.
After World War I, Walker, the director of the applied laboratory, using a threat
of resignation, forced the president of the Institute to choose between them.
Noyes, the director of the theoretical laboratory, was placed in an untenable
position and resigned. He went to California where he played a leading role in
reorganizing the Throop Manual Training School into the California Institute
of Technology according to his ideas of emphasizing fundamental research.
With the departure of Noyes, the Massachusetts Institute of Technology
affirmed its founding mission of concentrating on technology and developing
relationships with industry.
The dispute between Walker and Noyes exemplified the conflicts between
proponents of alternative research visions that appeared in state- and federally
sponsored research efforts during the nineteenth century. Typically a scientist
with an inclination toward broad ranging systematic investigation would be
hired by government authorities interested in quick practical results. The
research produced by the agency would be deemed too abstruse and, as in the
case of Josiah Whitney, head of the California State Geological Survey, support
would be reduced and the agency subsequently closed, with the scientist
retreating to an academic position, in Whitney’s case, a Harvard professorship.
At MIT, despite an early commitment, close ties to industry were slow to
develop. In the next chapter, we turn to the emergence of industrial ties in the
late nineteenth century as part of MIT’s strategy to develop its research
strengths by bringing in to its faculty practicing consulting engineers to comple-
ment its primarily teaching faculty.
30
3
CONTROVERSY OVER
CONSULTATION
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C O N T R O V E R S Y O V E R C O N S U LTAT I O N
Controversy thus plays a crucial role in the game of legitimation, the process
of gaining acceptance for new practices. Such a resolution is most likely to
occur when a dispute is brought into an arena where each side can engage the
other and consider its opponents point of view as well as what is essential to
its own position. The creation of a “consensus space” brings opposing views
into clear focus, and opponents into dialogue, even if heated, and then
perhaps negotiation and compromise. This process contrasts sharply to disputa-
tions in which opponents broadcast their views from a distance, reinforcing
their own positions, without the opportunity to take opposing views into
account.
A controversy is an indicator that significant positive social change may be
underway as well as a sign that an old order is breaking down. The life histories
of controversies are also revelatory of institutional dynamics as proponents and
opponents in an agonistic struggle make their best logical and emotional case
for support. Raising an issue to an explicit level through the expression of strong
differences can initiate discussion and negotiation, leading to the establishment
of a new norm. Controversy over the intersection of institutional spheres, such
as university and industry, can also be a signal of a shift in the balance of power
between and relative importance of the two spheres. On the one hand, when no
way can be found to regulate a potentially controversial activity, its future may
be impeded. On the other hand, the achievement of a resolution can provide
the guidelines for a new institutional regime.
The resolution of a controversy may allow an otherwise divisive practice to
become accepted. For example, during the 1970s a controversy arose in
Cambridge, Massachusetts over the potential dangers of allowing biotechnology
firms to locate themselves in the city. The resolution of a debate that played
itself out in the City Council set strict safety standards for biotechnology
research. In succeeding years, the existence of these standards made Cambridge
an attractive place to locate such firms, in addition to its pool of academic
research resources in the field.
Paradoxically, the existence of tough rules made Cambridge a preferred loca-
tion because companies could count on a secure regulatory environment. On
the other hand, when controversy is short circuited, the resulting reaction can
be explosive, placing the entire activity at risk. The Monsanto corporation
learned this lesson when its tactics of suppressing debate over genetically modi-
fied foods inthe USA backfired, creating a larger negative response than would
likely have occurred if it had engaged its opponents directly. The firm has since
changed course and invites discussion.
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C O N T R O V E R S Y O V E R C O N S U LTAT I O N
led to the creation of a new academic format. MIT’s path to the development of
both extensive research capabilities and strong relations with industry emerged
through an unexpected indirect route: implementation of a plan to strengthen
its educational programs. At the turn of the century many of MIT’s faculty were
its own graduates. To avoid becoming ingrown and to build up its engineering
departments MIT hired as faculty several leading engineers from industry to
develop the school’s research capabilities.
The consulting-engineer professors’ previous everyday work activities had
been research-based. When they became professors at MIT it was explicitly
arranged that they be allowed to operate off campus consulting firms. For
example, Dr Louis Duncan, formerly chief of the Third Avenue transit lines in
New York City and organizer of the engineering firm of Sprague, Duncan and
Hutchinson, was brought in to chair the Electrical Engineering department. He
maintained a considerable consulting practice while at MIT and returned to full
time consulting after leaving the Institute in 1904. His successor, Dugald
Jackson, long-time chair of the Electrical Engineering department, also main-
tained an extensive consulting practice.1
These industrially oriented engineers continued to pursue aspects of their
previous careers in tandem with their new task of teaching. This caused a
conflict with the traditional professors who were at MIT exclusively as teachers.
They criticized their new colleagues for going out of the university and
consulting, taking time away from their students. The consulting engineers
argued that through their consulting activities they brought back from the field
to the classroom knowledge that enhanced their teaching. They believed that
their courses would be enlivened by real-life examples. Rather than upholding a
right to interact with industry, the consulting professors attempted to legitimate
their consulting practices on the very principle on which they were being taken
to task, their commitment to teaching.
The controversy brought into broad relief an emerging dimension of
academia: its relationship with industry. Although this theme was a central
part of the foundation of MIT, it had only been realized in a very partial and
traditional manner, through the provision of trained graduates to industry.
Consultation, on the other hand, involves the professor in a more direct rela-
tionship with industry, rather than taking place at one remove through
students. Consultation includes individual advice, research projects or tests in
exchange for payment of a fee to the provider of the service rather than to
the university.
Academic consultation
Consultation is the traditional mechanism for academic–industry relations. It
has been suggested that “the first step in diagnosing the health of a
university–industry interface should always be a survey of consultancy arrange-
ments” since they are
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C O N T R O V E R S Y O V E R C O N S U LTAT I O N
34
C O N T R O V E R S Y O V E R C O N S U LTAT I O N
35
C O N T R O V E R S Y O V E R C O N S U LTAT I O N
their Institute work but who felt the financial need to seek outside work; and,
finally, faculty, “who balance their scientific and teaching interests against their
desire for extra funds for a life on a more generous scale.”6 The latter two groups
engaged in three types of consultation: advice without use of MIT facilities or
absence from the Institute; research at the client’s site; and research at the
Institute involving the use of its equipment, facilities and space. It was not
unusual for a faculty member to hire an assistant in his department’s lab to carry
out work for firms. Although some faculty kept accounts and regularly made
payments for their use of Institute facilities and equipment in their consulting
practices a perception arose that Institute resources were sometimes being
misused.
These critics felt strongly that some regulation of consulting was necessary.
Although they found fault with the practice they did not propose to abolish
consulting. It was believed that many faculty consulted merely out of the neces-
sity to supplement inadequate academic incomes. The report proposed to
reduce, if not eliminate, consultation by lessening the financial need for faculty
to seek outside work. On the one hand, the author believed that if salaries were
raised the practice would decline. On the other hand he proposed to “tax” the
income from consultation in those cases where a professor was either called off
campus or was using Institute facilities. It was also proposed to institute charges
for use of laboratory space, especially when assistants were employed.
36
C O N T R O V E R S Y O V E R C O N S U LTAT I O N
A.D. Little merely for agreeing not to consult for a competing firm. Often, in
reciprocity, they encouraged their most gifted students to consider employment
with the A.D. Little Company after graduation.9
There was a close, even symbiotic but nevertheless ambivalent relationship
between the university and the firm. On the one hand, the Little firm regarded
connections to MIT as an asset, frequently subcontracting to its professors.
Thus, “It might almost seem that instead of the Institute’s being a competitor of
the A.D. Little Company, the proximity of the Institute was one of its greatest
assets.”10 On the other hand, MIT’s consulting faculty members sometimes
provided unwanted competition, offering some of the same services at lower
rates. The special expertise of the faculty made them in demand both by the
consulting firms, for whom they acted as an intermediary between university
and industry, and by industry, for whom they acted directly in contracting for
the advisory services of the professorate.
37
C O N T R O V E R S Y O V E R C O N S U LTAT I O N
38
C O N T R O V E R S Y O V E R C O N S U LTAT I O N
39
C O N T R O V E R S Y O V E R C O N S U LTAT I O N
University–industry relations
In the early twentieth century, controversies over the introduction of research,
consultation and patenting would define MIT as a special type of academic
institution, the entrepreneurial university. An entrepreneur, whether individual
or organizational, takes new roles and develops new relationships, often trans-
forming traditional practices during the process. Consultation became
transmuted into the first step toward firm formation when it was introduced
into the academic system.
Controversies over the appropriate role of the university in relation to
industry, and the compromises negotiated to resolve these disputes, defined
practices that could be accepted by both proponents and opponents of tech-
nology transfer. The resolution of a series of such conflicts at MIT, in the early
twentieth century, first over consulting and then over the patenting of research
and firm formation, created a regulatory framework for university–industry rela-
tions. Although the limits of academic involvement in technology transfer are
still an issue and new conflicts periodically reappear, the issue of whether or not
academia should interact with industry was resolved in these early disputes.
This premise is widely accepted even by critics who typically question the
manner and extent of academic involvement with industry but not the legiti-
macy of the practice itself.
Two distinct modes of university–industry relations can be identified:
informal and formal. The informal typically occurs through contacts between
professors and their former students and may lead to consulting and joint
40
C O N T R O V E R S Y O V E R C O N S U LTAT I O N
research projects with a company, typically one with a well established R&D
laboratory. These informal relations are more prevalent in Europe and Japan
where formal mechanisms have only recently been established. Informal rela-
tions may be viewed as an underground economy that takes place “submersso,”
in Italian parlance, and they are not counted or identified typically as part of
the official academic work process.
In contrast to the tunnels are the bridges, the formal structures (liaison and
technology transfer offices) through which formal introductions are made in
seminars for potential industrial partners, disclosure statements of inventions
are collected, patents licensed and contracts negotiated. These outcomes are
enumerated, with perhaps the most important difference being that the finan-
cial results are typically shared with the university. Either mode, formal or
informal, can precede the other; there is no necessary order. Nevertheless, the
fullest regime of academic–industry relations is one in which both modes are
present, the bridges (the formal organizations) and the tunnels (the informal
ties through which social and intellectual capital moves from graduating
students into firms and back again into the university).
Government–university relations and university–industry relations are
modeled on each other. University–government relations inthe USA were built
on the base of the formal mode of university–industry relations. It was MIT’s
office, established in the 1920s to formalize its faculty members’ informal ties to
industry and channel them through an administrative structure that could
collect negotiated payments, that was called upon to deal with government
contracts during World War II, and it became the model for other university
offices for grants and contracts during the post-war era. This mechanism was
then turned back into dealing with university–industry relations when that
topic became salient again. This story, beginning with the establishment of
MIT’s office in the 1920s, is the topic of the next chapter.
41
4
THE TRAFFIC AMONG MIT,
INDUSTRY AND THE MILITARY
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T R A F F I C A M O N G M I T, I N D U S T R Y A N D T H E M I L I TA R Y
43
T R A F F I C A M O N G M I T, I N D U S T R Y A N D T H E M I L I TA R Y
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T R A F F I C A M O N G M I T, I N D U S T R Y A N D T H E M I L I TA R Y
1923–4 and 1924–5. When the initial five year commitment made in
1919–1920 came up for renewal many companies dropped out. Thus, the
depression of the 1930s cannot be viewed as the primary cause of MIT’s loss of
financial support from industry.7 Support had already declined in part due to
overselling of the plan. Apparently some companies had viewed their member-
ship in the plan as a special contribution to MIT to meet the matching funds
requirement of George Eastman’s large gift.
Others were dissatisfied with the research services provided and thought they
were being double-charged in being asked to pay for research over and above
the retainer fee they had contributed upon joining the plan. The greatest satis-
faction expressed with the Plan was for the assistance received in recruiting
MIT graduates for corporate employment. By 1939, it was accepted that the
Technology Plan was a failure.
Although the “plan” soon fell into disuse, one of its consequences was the
office that had been established to negotiate contracts between the institute
and private firms for the conduct of research. Although industrial firms did not
use this office very much, it did make enough contracts during the 1930s to
justify its existence. At the outset of World War II, it served to arrange the
contracts which the Massachusetts Institute of Technology made for research to
be performed for the federal government.
The volume of the activity undertaken on behalf of the government far
exceeded the scale of the contracts it had previously made with private firms.
What had begun at MIT as a way to deal with contracts with industry, was
turned into an arrangement to deal with government. Other universities that
were also doing research for the federal government soon formed similar offices
to deal with the government. The closeness of these arrangements was in
striking contrast to the relative distance between the universities and the mili-
tary during World War I.
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T R A F F I C A M O N G M I T, I N D U S T R Y A N D T H E M I L I TA R Y
46
T R A F F I C A M O N G M I T, I N D U S T R Y A N D T H E M I L I TA R Y
Their goal was not to establish a government research institute but to use
federal resources to support research at universities. Universities were not the
obvious choice for locating such research. At the time, industrial research
groups at major corporations had greater R&D capabilities. Academics had to
be drawn together from campuses across the country to establish large-scale
research centers at a relatively few universities: MIT, Johns Hopkins, Berkeley,
Chicago and Columbia. This resulted in a research build-up at these universities
in electronics, nuclear physics and other scientific and engineering areas rele-
vant to solving military problems.
Although the armed forces were satisfied that they could meet their own
requirements for technological innovation, the government intervened to
improve the technical base of military research by connecting it to the univer-
sities. The Office of Scientific Research and Development (OSRD) was placed
under the direction of academics rather than government officials or industri-
alists.
Large-scale laboratories that could be turned most quickly to military use
were mostly within industry. But industrial scientists and engineers had not
taken the lead in approaching the government. Industrial scientists such as
Frank Jewett, the head of Bell Labs, took part, but in a secondary role
supporting the lead taken by academics such as Bush and Conant. Since the
research leaders who took the lead in this initiative were from the universities,
they were placed in control of the agency established to carry out their plan and
thus had the responsibility to dispense the funds allocated for the task. At that
time, with very few exceptions, no university had large research centers with
the ability to carry on research and development of weapon systems.
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T R A F F I C A M O N G M I T, I N D U S T R Y A N D T H E M I L I TA R Y
positions in the government, as agency heads and leading officials. Given their
background and current positions of leadership; it is not surprising that major
wartime research contracts were given to universities, even though these
academics excused themselves from decisions affecting their present and former
institutions. Laboratories that prior to the war were the extensions of a single
professor were enormously expanded by drawing together academic scientists
and engineers from around the country to research sites at a few selected
schools.
Several major universities, including MIT, Johns Hopkins, the University of
Chicago and the University of California, received contracts to administer
government laboratories during the war. Such undertakings permanently altered
the scale of these universities. During the post-war era, the Argonne budget, for
example, was approximately equal to that of the rest of the operations of the
University of Chicago.
The proximity of universities to wartime projects which employed many
academic scientists habituated university administrators to collaborative
research, and to the joint work on scientific projects which were to be used in
technology in the shortest possible time. The academic leaders of OSRD had to
draw together researchers from universities across the country to a few sites to
establish these capabilities.
MIT became one of the main centers of wartime research due to its technical
capacity, initiative and administrative experience. The Institute’s technical
capabilites made it a likely candidate for high priority projects as it was the
“only institution at which the work could be done with the speed which the
armed forces desired.”9 The so-called Rad Lab at MIT and a few other laborato-
ries were established at half a dozen universities. This resulted in a
concentration of research in a few institutions, against the ideologies of both
government and universities. The American academic system is highly decen-
tralized with a multiplicity of institutions competing for funds of all kinds.
Under conditions of military necessity, a few academic leaders were able to
persuade their fellow academics to accept a concentrated system. Academics
also agreed to accept federal research funds which they had refused during the
1930s even though the universities were starved of funds. During the depression
efforts to persuade academics to ask the federal government for funds were
defeated. It was against the ideologies of both government and the academy.
Again it was an overriding purpose, the exigencies of war, that changed their
actions.
In formulating their plan for OSRD they used MIT’s industrial relations
policy as the basis for their government–university relations arrangements. For
example, MIT’s patent policy in which the Institute assumed control of patent
rights became the model for OSRD’s policy. “From this precedent it was only a
small step to the concept that the Chairman of NDRC (and later the Director
of OSRD) convert to the government all patent rights of the private research
he sponsored.”10 Bush also drew upon his consulting experience in deciding to
48
T R A F F I C A M O N G M I T, I N D U S T R Y A N D T H E M I L I TA R Y
49
T R A F F I C A M O N G M I T, I N D U S T R Y A N D T H E M I L I TA R Y
decision on overhead rates, setting them at 50 percent of salaries and wages for
education institutions. The contract format that was worked out (providing for
overheads to the university and a simple voucher procedure for accounting for
expenses) satisfied both sides.
This financial instrument became the primary channel for the flow of funds
from government to academia. It “set the pattern for the subsequent major
contracts of the OSRD and had a very profound influence on all subsequent
governmental contracts with private institutions, extending even now into
peacetime.”18 The research grant and the contemporary university contracts
and grants office, acting as an intermediary between government and academia,
evolved from this wartime experience.
The pre-war feelings of many academics and scientists about the illegitimacy
of government funding of research dissipated during this period. The wartime
experience legitimated government funding of academic research and the
research capacities of US universities that had been built up during the war
were maintained thereafter largely with federal funds.
50
T R A F F I C A M O N G M I T, I N D U S T R Y A N D T H E M I L I TA R Y
pari passu to be plowed back into the work at a later date.”20 Improvements
were made and the apparatus was tested again.
A highly decentralized and flexible organization speeded the conduct of
research. For example, parts and components were left in bins that personnel
could draw from at will without paperwork and the bins were refilled as neces-
sary. Even as the laboratory grew, “procurement and production was so
completely decentralized that … many of the Groups were, in effect, well nigh
independent business concerns whose activities were coordinated through the
steering committee.”21
Its historian concluded that “At its maturity the RadLab resembled a big
business concern, but it was without the visible concomitants of a big
business.”22 In its internal organization the Rad Lab “reversed the established
industrial order, for … the scientists were in control and the business office was
subordinate.”23 Scientists and engineers set the policy direction and adminis-
tratators were available as their subordinates to help implement decisions.
Originally, the Rad Lab was to turn a working model of a piece of equipment
over to a company for manufacture. Instead the Lab soon became a manufac-
turer, producing $25 million of equipment by the end of the war. The Research
Corporation of New York was brought in to administer a “model shop,” the
Research Construction Corporation (RCC), building upon the relationship
established in the mid-1930s when the Corporation took on the task of
patenting, building prototypes and marketing the inventions of MIT professors.
RCC at first produced small numbers of developmental devices, and then
larger numbers on a crash basis until production lines could be set up by
industry. Working closely together with the Labs development engineers RCC
was able to predict what systems would be requested by the armed forces and
provide units months before production equipment was available. The Lab also
sent representatives to work with companies to translate prototypes into
production line products.
The role of Rad Lab in development and production as well as research came
under attack from some industrial organizations who believed that “the Lab was
encroaching upon the legitimate sphere of industrial enterprise and was not
moreover properly constituted to be an engineering organization.”24 They wished
to limit the size of the Lab and keep it confined to “fundamental research.”
However, the Microwave policy committee of OSRD decided that the combina-
tion of research, development and manufacturing functions within a single
university-based organization was conducive to innovation and recommended
further expansion, leaving only quantity production to industry. The model for a
university-originated spin-off firm had met the test of wartime exigency.
51
T R A F F I C A M O N G M I T, I N D U S T R Y A N D T H E M I L I TA R Y
organizational structure and educational policy of MIT during the post-war era.
This traffic among university, industry and the military reshaped the role and
function of the university and as a consequence academic institutions became a
major institutional sector of American society.
The wartime experience of teachers and administrators led to a fundamental
change in organizational structure and educational philosophy at MIT.
Interdisciplinary research centers, some of them continuations of war time labs,
became as important to the life of the Institute as traditional academic depart-
ments, and interdisciplinary cross-fertilization was institutionalized as a
fundamental value.
Wartime research greatly expanded the Institute and the technical base of
the Boston region. The number of researchers on campus grew significantly and
some who had been drawn from universities around the country stayed at MIT
after the war. The Rad Lab, which was expected to consist of 50 persons at its
inception in 1940 ended the war with 3,897 personnel, 1,189 of whom were
scientists and engineers.
Although the Rad Lab as an operating entity was rapidly disbanded at the
close of the war, its theoretical division became The Research Laboratory for
Electronics (RLE). RLE included faculty and students with a departmental base
as well as researchers solely associated with the research center.
52
T R A F F I C A M O N G M I T, I N D U S T R Y A N D T H E M I L I TA R Y
The growth of government funds for research in the post-war era, and their
spread from the physical to the health-related sciences and then to the social
sciences, provided the opportunity for an increasing number of professors to
expand their research. This took place first by supporting graduate students and
then by adding post-doctorates, technicians, secretaries and research associates
to their staffs.
Some faculty were dissatisfied with the conditions set by their universities for
administering research projects, such as the amount of “overhead” retained by
the institution. They could complain to each other at the faculty club or
attempt to overcome such restraints by establishing an independent institute
adjacent to the university, using the university’s library and faculty club as ancil-
lary resources.
The institute or research unit, whether formally inside or nominally outside
of the university, provided employment for graduate students and underem-
ployed academics. A generation of academics learned salesmanship and
grantsmanship skills, bringing in the steady stream of contracts and grants
necessary to maintain their research operations.
Government–university relations
The onset of World War II led to the creation of a new set of ties between the
federal government and MIT, and universities more generally. The impact of a
negative experience in World War I military research, under the aegis of the
military, shaped the course of this emerging relationship. Past experience led
MIT academics to formulate an independent status with respect to the military,
sanctioned by the federal government and modeled upon some of MIT’s mecha-
nisms for relating to industry that had been developed just after World War I.
Although MIT’s charter as a “land grant” school was based on the presump-
tion of a close relationship to government and industry, ironically it was the
revocation of this status that led MIT to consider establishing a closer, more
formal set of relationships with industry.
As MIT became involved in military research, it did so from a standpoint of
having shaped the development of a contractual relationship with government
in which universities retained their independent status even as huge amounts of
funds flowed into campus to support research projects.
Actual contracts for research, negotiated and signed by representatives of the
federal government and the university, became the model for a symbolic
contract between government and academia that took form during the post-war
era. MIT’s industry and government connections might only have been of
parochial interest were it not for the fact that other universities later followed
the Institute in establishing their own external relations offices.
Their World War II experience fundamentally altered the scale and scope of
many scientists’ expectations for collaborative research projects. The experience
of running large organizations, acting as advisors at the highest levels, and
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54
5
KNOWLEDGE AS PROPERTY
The debate over patenting academic science
55
K N O W L E D G E A S P R O P E RT Y
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K N O W L E D G E A S P R O P E RT Y
Academic patenting
How do universities factor into the debate over patenting’s effect on the flow of
knowledge? In some respects they provide a microcosm illustrating the issue in
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K N O W L E D G E A S P R O P E RT Y
sharp relief; recent trends in academia, however, add new dimensions to the
question of private intellectual property protection versus free public access.
Most universities patent their intellectual property only when they can be
reasonably sure of finding a market for it. However, every technology transfer
officer is on the lookout for a “big fish” and is keenly aware of the transient and
inherently obsolescent nature of invention. Indeed, the impetus to establishing
an intellectual property regime has often been the cautionary story of “the one
that got away,” either because the inventor was unaware of its potential or
because the university had not yet established a technology transfer office.
But is the task worth the effort? Some observers predict an impending
“shake-out” of university patent offices, left unable to meet their costs.3 This
prediction is partly based on a misplaced analogy with the rise and relative
decline of the Research Corporation as a major actor on the university intellec-
tual property scene. The shift of the Research Corporation from a focus on
patenting to a focus on venture capital was spurred by the decentralization of
patent offices across the academic research system.4
There is a shift in focus underway, from an emphasis on licensing to one on
incubation, venture capital and firm-formation, reflected in the development of
university accelerators. Sometimes, the only asset a start-up has to support its
ability to raise capital is its protected intellectual property. Without an exclu-
sive license, the start-up process as an engine of innovation and economic
growth will be inhibited.
Some large corporations increasingly view the rise of academic patenting and
licensing to start-ups rather than to major companies as a threat. Likewise,
many such firms currently oppose exclusive licenses, joining with the “ivory
tower” critics of university patenting. Unlike those critics, however, these
companies’ real concern is that if a university grants an exclusive license to a
start-up, then they might have to pay more for innovative university-originated
technology.
Since a patent is the prerequisite force behind the exclusive license as an
incentive to economic growth, we come full circle back to issue of private
versus public knowledge, hopefully exposed above as an inherently false
dichotomy. With academic patenting, however, public and private interests are
even more intensely intertwined, and, given the academic–industry conflicts
over exclusive licenses, one might even say inverted, since the “private” interest
here protecting its intellectual property is the university, pre-eminent among
institutions serving the public interest, whether land grant or Ivy League, while
the entities clamoring for freer access are corporations, the very paradigm of
private interest.
Until quite recently relatively few universities maintained offices for taking
out and licensing patents. A 1940 survey of sixteen universities reported 380
patents taken out of which 114 were in active use. The study also found that:
“Only five educational institutions report income from patents.”5 In 1999 a
survey of 190 US universities and related institutions reported that 3,661 US
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K N O W L E D G E A S P R O P E RT Y
patents were taken out and over 3,900 license and option agreements were
made from these and earlier patents.6 It has been estimated that in 1992 the
volume of industrial sales based upon academic patents totaled $7.4 billion.7 In
1999 it was reported that $40.9 billion of economic activity was attributable to
academic licensing.8 What is the basis for this remarkable transformation of
academic knowledge and technology into commercial profit and economic
development?
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K N O W L E D G E A S P R O P E RT Y
resided by law with the university since 1980. One of the conditions of the law
is that the inventor must also receive a significant share of the proceeds. The
relatively autonomous position of the professor in the university, in comparison
to the scientist as an employee of a corporation, is the fundamental basis for this
shared intellectual property regime. Whether accelerated by law, or developed
more slowly through precedent, the outcome is basically the same; so are the
issues that must be resolved.
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K N O W L E D G E A S P R O P E RT Y
scientific circles for its patent policy due to its method in handling the subject
rather than to the mere fact that income is derived.”10 MIT attempted to recon-
cile its 1861 charter, which gave it a special responsibility to assist private
industry, with traditional academic goals of education, research and dissemina-
tion of knowledge.
The MIT administration wanted to gain money from licensing the rights to
industrial firms to use the significant inventions of its academic staff. MIT
concluded that the problems of the University of Wisconsin did not result from
its interest in making money from patents but rather from its attempt to exer-
cise power over industry that the control of patents had made possible. By
narrowly construing its interest in patent management, the Institute believed
that it could avoid the pitfalls that Wisconsin had fallen into by using its
patents to further the interests of a local industry at the expense of a
competitor. MIT also wished to find a formula to engage in patenting that
would satisfy both proponents and opponents of the commercialization of
research.
For this purpose, President Compton appointed a sub-committee in late 1931
to formulate a patent policy for MIT. The committee included both proponents
and opponents of academic patenting. Compton charged the committee:
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THE REGULATION OF
ACADEMIC PATENTING
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could claim ownership of all intellectual property or it could claim none, except
when it was necessary to patent medical discoveries in order to exercise quality
control over their production. The committee on patents made its decisions
bearing in mind the concerns of the interested parties and constituencies
including teachers who supported the taking of patents and those who opposed
it, companies that wished to deal directly with the individual academic who
made discoveries, and the general public, who, it was believed, might consider
the taking of patents to be a departure from the tradition of a higher educa-
tional institution. The committee decided that while it intended to proceed
with the taking of patents, they would only be undertaken in instances where it
seemed likely that there was a discovery or invention of substantial promise to
be pursued. For inventions judged to be minor, it would be left up to the
inventor to decide whether or not to patent. The inventor would receive a 7
percent share of the gross returns from the invention. In setting this figure,
considerations of fairness to the inventor were balanced against anxiety that
inventions might be stressed at the expense of research.
In all of its arrangements for disposition of intellectual property, there would
be an effort made to avoid distracting the staff from research by undue emphasis
on invention:
Thus, while invention was favorably viewed, “such participation [in its
rewards] should be arranged so that staff should not be stimulated to
invention.”5 To prevent the prospect of financial gains becoming a primary
reason for conducting research, it was hoped that invention could be given
equal status with other legitimate academic activities such as as research and
teaching. Special accomplishments would be recognized, in the same manner as
in all properly academic activities, by granting of promotion and rises in salary.
A set of principles and procedures were established to regulate the taking of
patents on the results of academic research. An academic committee was
created to recommend the appropriate division of rights when the respective
rights of individuals and the Institute were unclear. The Institute was deter-
mined to make studious efforts to resolve disputes over conflicting claims to
patent rights without resorting to litigation. Rights to grant licenses on patents
were not to be accumulated by the Insitute as an end in itself; if commercial use
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could not be arranged within two years, the rights to the patents would be
assigned to the inventor. The procedures for seeking patents would be organized
so as “to proceed with such promptitude that no undue restrictions of freedom
of publication will be necessary.”6 This principle demonstrated an early aware-
ness that academic and intellectual property needs could be reconciled through
the development of administrative procedures to speed up the filing of applica-
tions for patents and thereby reduce the urgency of delay in publication.
MIT’s new patent policy was a compromise between the financial interests of
the faculty and the Institute, giving due recognition to the contributions of
each. The committee formulated a policy whereby the Institute laid claim to
patent rights when it had supported the research financially. Where the
Institute contributed nothing substantial, any patent that was obtained became
the property of the individual. Students were treated differently; they were
allowed to retain all rights to inventions. When a project was jointly financed
with an external sponsor, rights to benefits from the patent would be split
between the sponsor, the Institute and the academic discoverer or inventor.7
The Institute would not attempt the exploitation of commercial patents on its
own. It would turn over its rights to others to exploit in exchange for reasonable
financial returns.
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Before the war, a majority of our patents arose from normal Institute
research and research contracts were a minor part of the picture.
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The Institute had originally licensed the patents to the General Electric
Company, but when a certain time had passed without any use having being
made of them, MIT resumed the rights. When ARD determined to make one of
its first investments in High Voltage Inc. and wished to license the rights exclu-
sively, the Institute was concerned about becoming too closely tied to a single
firm. The independence of the university and the public interest might be
compromised by too close an association with a private interest.
On the other hand, the responsible officers of the Institute have had
long contact and experience with the problem and realize the require-
ments for protection of venture capital and for the establishment of a
new industrial enterprise. Their sympathy with this particular enter-
prise and their understanding of the requirements of the situation can
be counted on.31
The Institute satisfied ARD and its conscience by offering an exclusive license
limited to ten years.
In addition to exclusive licenses for the existing patent rights, the founders of
High Voltage Inc. also wanted assurances that they would receive the rights to
future advances made by Institute inventors in the firm’s field of technology. MIT
assured ARD that High Voltage could have exclusive licenses for patents on
improvements. The Institute recognized that if academic patents were to be prof-
itably applied the concerns of industrial firms would have to be accommodated.
The statement “the limits on licenses given always being directed toward
protecting the Institute’s responsibilities as an eleemosynary instituition serving
the public, while at the same time recognizing the essential business requirements
for bringing an invention into use by the public”32 was in practice interpreted to
meet the latter requirement. To achieve its goal of regional economic develop-
ment, the Institute broke with academic tradition and accepted the patent
practices of private business firms which required exclusive licenses.
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not in a position to ask for the full value of the patent. … [With
respect to the Research Corporation] … our interests are not the same.
The price for which we would settle is therefore not the same, but we
must get a fair price. … We must establish a record of having done
everything possible to avoid litigation and to have gone ahead in a
serious way to do the right thing insofar as MIT–industry relations are
concerned.33
IBM is indebted to us for a great deal apart from the Forrester patent,
but it is also a fact that IBM as a company has been generous in the
establishment of a computation center, in providing funds for a
building to house that center, and is currently funding our work in this
field at the rate of 1½ million a year. … [Moreover], there has been for
a long time a mutually profitable relationship between our faculty and
their engineers.34
The Research Corporation, on the other hand, took a purely business view of
the matter and was determined to pursue International Business Machines to
the full extent of the law.
For its part, International Business Machines viewed the Institute’s contribu-
tion to magnetic core memory as one among several components in the
invention which included contributions made by the Radio Corporation of
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Usually, the interests of the Institute and the Research Corporation were in
accord. However, “There are cases, such as this one, where interests become
opposed, and the situation may reach the point where the only remedy is the
one provided in the contract, namely, cancellation.”37 As a result of its irrecon-
cilable differences with the Research Corporation, the Institute severed its
relationship and took over the management of its patents itself. The claim
against IBM was settled for a relatively modest sum.
The dispute with IBM was complicated by the fact that the patent rights
claimed by the Institute arose from research paid for by the federal government.
The Institute realized that if the dispute had gone to court the underlying issue
would affect the entire US patent system, especially patent ownership resulting
from government sponsored research. Beyond transferring intellectual property
generated on campus, the role of the university in economic development has
taken a more fundamental step: the creation of new firms. The story of how this
strategy originated is the subject of the next chapter.
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ENTERPRISES F ROM SCIENCE
The origins of science-based regional economic
development
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that had grown up in the region in new industrial towns, such as Lowell,
Massachusetts, established for that purpose, was based on technology imported
from abroad and then developed locally. These developments made New
England the technology center of the United States in the early nineteenth
century.
However, leading industries such as textiles and shoes began to move closer
to sources of raw materials later in the century, creating an economic crisis
that called forth various responses. These responses can be broadly categorized
as efforts to revive existing industries or to develop new ones. The New
England Council, which in the course of several post-war moves lost most of
its archives and old files, and thus the memory of its original purpose, was at
the cusp of this debate from its founding in the mid-1920s. The Council was a
precursor of contemporary regional knowledge-based economic development
organizations, such as Joint Venture Silicon Valley and the Knowledge Circle
of Amsterdam, that bring interested parties together. These organizations
provide a venue for debate and brainstorming of new ideas as well as spon-
soring research on regional issues. They may also provide a forum for
negotiation of alliances among industry, government and universities to
sponsor new projects.
There was a need for a broader, more intensive effort in response to long-
term economic decline from the turn of the century. In 1925, a group of
business and political leaders, including elected officials from the six New
England states and representatives from major local industries and subsidiaries
of national corporations, organized the New England Council to “improve
economic conditions for New England.”5 In addition to pursuing traditional
strategies of improving the “business climate” for existing firms in the region or
persuading firms elsewhere to relocate, the Council supported the formulation
of alternative approaches, such as an emphasis on research.
The Council wanted to emphasize the positive attributes of the region in the
competition with other parts of the country to attract industry, and recognized
that New England’s concentration of academic and industrial research laborato-
ries was a special asset. A research committee formed in 1926 attempted to
persuade New England industrialists of the importance of research by holding
an annual “Research Day” conference, “where new products are displayed and
consulting experts are available.”6 The goal was to encourage small firms to
conduct research and development programs themselves or contract with
consulting firms and universities for assistance. This was the beginning of a
second stage in university–industry relations: the support of smaller regional
firms, following an initial strategy of solidifying ties with large national corpora-
tions. This eventually led to a third stage, implementation of an explicit
strategy of science-based economic development based on new firm formation
in 1946, two decades later.
Large corporations with their own research labs and scientists could easily
relate to their counterparts at MIT. Smaller firms lacking such facilities and
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Compton’s concerns were realistic but the problem with the proposal may have
had little to do with any special cultural features of New England, or the size of
the firm.
Rather, a firm would have to have its own technical capabilities, to be able
to interact with university professors, or even special laboratories designed to
deal with their problems. At the very least, a translation and interface mecha-
nism, such as the county agent system for farmers interacting with
university-based “experiment stations,” would be required to make the project
work. Nevertheless, the Council assured Compton that the proposal would be
supported, “for we are more convinced than ever of the increasing importance
and value of research to New England industries.”10 Although a modicum of
interest was expressed, the proposal was not enacted at the time. A sufficiently
developed analysis to support a regional strategy of science-based economic
development did not yet exist.
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The charge still rested on the assumption of dealing with existing firms but
entered into uncharted territory with the notion of exploiting new resources.
The New Products Committee’s most important contribution was its diag-
nosis of the source of New England’s economic decline and its proposal for a
solution based on the special assets of the region: educational and research insti-
tutions. These human resources were seen as New England’s comparative
advantage over other regions, making up for its deficit in natural resources.
Compton ascribed New England’s industrial decline to unwillingness to put “a
sufficient portion of their earnings back into improvements of plants and of
techniques and into development of new and improved products.”12 Thus, in
New England the “original technologist-promotor gave place to financial
control more interested in receiving the year’s dividends.”13 The rigidification
of industrial enterprise was intensified as “much of New England capital took
the form of trust capital funds not properly available for use as venture
capital.”14 The implicit diagnosis was a decline of entrepreneurship and the
prescription for change was its renewal.
Chaired by Compton, the committee drew its membership from manufac-
turing, finance, public utilities, the research departments of firms and the
industrial cooperation departments of universities. Three of the eight members
from Massachusetts were academics. Richard Cross, an MIT graduate with a
business background, was appointed as secretary of the committee. The
committee’s thinking evolved through three stages, each new one more far-
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reaching than the previous, as flaws in a strategy were detected. The initial idea
was to assist existing firms by improving their access to academic research to
help them generate new products. Next it was planned to use academic experts
to identify raw materials for national corporations to process in new factories in
New England. Finally, a concept was developed to form new technical firms
from university-based research.
Unable to exercise much control over the production process, management may
be reluctant to reveal its difficulties or may not even realize it has any until its
“position has become so desperate that there is little hope of improvement
without first providing additional working capital.”16
Publicity about the committee led the head of one such company to write for
assistance. He outlined the condition and prospects of the firm:
The company was organized in 1878. Until very recently it had been a
family owned concern and even now a large majority of the stock is
family owned. The company originally manufactured articles of Bone,
such as Knife Handles, Buttons, Rings, Crochet Hooks, etc. and the
Bone Scrap went into Fertilizer. I believe that this Company was
offered the right to take on Bakelite by its inventor when it first came
out but like so many other Manufacturers, the management could not
grasp the significance of this new product. The following years bone for
manufacturing purposes became higher in price and soon moulded
products were coming into the market at lower prices than bone prod-
ucts.17
The firm’s old businesses had declined in the face of new technology. Forced
out of the bone business due to competition from plastics, management decided
to specialize in fertilizers, formerly a derivative product of the main business. A
new generation of management of this family firm soon found that the seasonal
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fertilizer business which operated for only six months of the year was inadequate
to support the firm’s overheads, and sought the advice of the New Products
Committee. The letter concluded that “we have a certain amount of capital
available for expansion. What we need is to find something to supplement this
business.”18 Neither the supplicant nor the respondent had a clue as to what
that new product might be at this point.
The inability of existing small business to meet technological change was
believed to be a general phenomenon. The secretary of the New Products
Committee responded that he was:
Since the committee lacked the capability to offer assistance, Cross referred the
inquirer to several industrial consulting firms to aid in a search for “the new
product that may be adapted to your facilities.”20 Although availability of
capital was not an issue in this instance Cross remarked that too often, “by the
time a manufacturer recognizes the necessity for a new product his working
capital has been dissipated in supporting unprofitable operations.”21 From this
and similar instances, the committee concluded that the prospects for revival of
local small industrial firms were discouraging.
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should prepare for peace by devoting 2 percent of their gross income to origi-
nate new products and processes for the time “when the government ceases to
order large quantities of armaments.”34
During World War II, Karl Compton refined his general ideas to build a new
economic base from the potentially commercializable research of academic
scientists and engineers into a plan to create a specific organizational mecha-
nism to solve the problems of economic loss that traditional strategies had failed
to resolve earlier in the century. The next chapter discusses the invention of the
venture capital firm in the early post-war era to make two key elements, money
and business expertise, more available to new technology firms.
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8
THE INVENTION OF THE
VENTURE CAPITAL FIRM
American Research and Development (ARD)
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replace the firm founders that ARD financed. New company presidents were
typically people with a technical, not a business background. MIT provided
people with a technical background who could seek out the technologies on
which new companies would be built. MIT also provided much of the tech-
nology, many of the potential firm founders, and the expertise to evaluate the
technical feasibility of proposals. Harvard Business School contributed organiza-
tional and financial expertise and credibility in the business world.
The project also had the support of Boston’s financial community, concerned
with the future of the region in the post-war era.6 Compton persuaded the
members of an elite New England business, political and educational network to
take on the task of organizing a venture capital firm. The group included Merrill
Griswold, head of the Massachusetts Investment Trust and a leader of the
Boston financial community, Donald David, Dean of the Harvard Business
School, and Ralph Flanders, President of the Jones and Laughlin Machine Tool
Company in Vermont, who had also served as head of the Federal Reserve Bank
in Boston, to form the American Research and Development Corporation
(ARD) to supply risk capital to new technical companies. Dean David had
introduced his friend Ralph Flanders to Griswold, who he said was “worried
about the same thing [lack of risk capital for new enterprises].”7 The issue was
not simply lack of funds but rather lack of funds and expertise that could be
dedicated to founding new enterprises.
The founders had a variety of motives, some genuinely believing in the
practicality of the project while others saw it largely as a public relations
device. Flanders viewed the venture capital firm as a model for future economic
growth, arguing that: “The post-war prosperity of America depends in large
measure on finding financial support for that comparatively small percentage of
new ideas and developments which give promise of expanded production and
employment and an increased standard of living for the American people.”8
Griswold initially viewed the business prospects of ARD skeptically and mainly
saw it as good publicity for the Boston financial community, but later, through
service on its Board, developed a personal interest in the formation of tech-
nical firms.9
The founding of ARD was widely publicized in the business press and noted
in general media such as Time Magazine.
The sponsors of American research got together because they felt that
standard investment companies and individuals were too thoroughly
hobbled by Government restrictions and taxes to put up the risk
capital industry needs. What was needed, they decided, was an organi-
zation that could combine a pool of venture capital with the
know-how to put the money into the right investments.10
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I would suggest that you call a Board Meeting of High Voltage when-
ever Dr. Compton can be there. … You have wasted a good deal of
time. You have trained A.D. Little to be “the world’s greatest experts
on the use of high voltage,” you have given them many of your ideas,
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techniques and secrets so that they can get good fees peddling your
information. I think we should quit.23
The General keeps popping in and out throughout the company’s early
history. He let Robinson run the company, but he is there one day
telling Robinson that his sales organization is inadequate. He is there a
few years later urging Robinson to take advantage of the Common
Market and put up a manufacturing plant in Europe.24
It was thrashing around. Nobody had ever done that kind of work they
were doing. [They were] seeking a sense of direction, trying to decide
what kind of things to do and how to do them. In the post war hustle
and bustle, there were so many men and women who had felt bottled
up for the past 5–6–7 years. We had been in militarily oriented jobs
and been given duties and responsibilities that in truth were beyond
our normal capacities, our normal talents, just because somebody had
to do it and you did the best you could. There was a great pent-up
demand to … get going. “Let’s reshape the world; let’s change its ills
and shortcomings”. So American Research and Development had a
very high tone and intent and integrity over and beyond making
money.25
Interaction between ARD staff and advisors was mainly through informal
discussions rather than formal meetings of the advisory board. However, the
advisors occasionally participated in the quarterly board of directors meetings
where funding decisions were made. A variety of approaches were used to build
up a network of contacts and to learn about emerging technical areas. To obtain
leads to people with ideas that could be turned into companies, staff members
attended electronics trade shows, scanned trade journals and kept in touch with
ARD’s advisors at MIT. To emphasize the importance of visiting universities
General Doriot once ceremoniously handed out Massachusetts Transit
Authority tokens at the close of a staff meeting.
ARD “very aggressively worked MIT.”26 A staff member typically dropped by
the office of a faculty member who was an ARD advisor and in the course of a
conversation, “These gentlemen would alert us, tip us off, help us. ‘There is a
young graduate student down the hall working on something. We think it is
interesting; you have to decide if it has commercial possibilities.’ ”27 Since
MIT’s role in the founding of ARD was largely an administrative initiative that
did not create controversy, most faculty and graduate students were not aware of
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the existence of ARD or of the Institute’s role in the founding of the firm.
Therefore ARD staff members often introduced themselves to professors and
students by mentioning such connections and President Compton’s founding
and continuing advisory role.
ARD’s role in the formation of new firms based on research at MIT is exem-
plified by the High Voltage Corporation and Digital Equipment Corporation.
High Voltage shows the gradual progression of an academic research project
toward commercialization while the formation of Digital Equipment illustrates
the creation of networks between the university and the emerging venture
capital world.
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already been reimbursed for the cost of research equipment moved to MIT. The
agreement also protected scholarly access to aspects of the research involving
fundamental science and attempted to balance concerns for broad utilization of
the medical treatment and power transmission applications of the research with
the attainment of reasonable profits.
During World War II several high voltage generators were built at MIT with
support from the Office of Scientific Research and Development (OSRD). At
the suggestion of OSRD, the Westinghouse Corporation was licensed to
produce generators but had “apparently done nothing” with the patents by
1946. In March 1946 Van de Graaff and his associate Professor Trump went to
see John Bunker, the Acting Chairman of MIT’s Patent Management
Committee and proposed that Westinghouse’s license be cancelled and that a
new company “would perhaps be in order.”29 Compton recommended that
ARD back the formation of a firm and in December 1946 the High Voltage
Engineering Corporation was formed to manufacture and sell electrostatic
generators for use in cancer treatment, industrial metal inspection and nuclear
physics research. The high voltage generators built at MIT during World War II
served as prototypes for the company’s product line. Dr Dennis Robinson, a
dielectric and radar expert with administrative experience as coordinator of the
Anglo-American program at the Radiation Laboratory, became president of the
company. ARD staff provided High Voltage with financial and business advice
and by 1955 it was a reasonably successful company.
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Philadelphia were visited but no deals were made. After a discussion of this
foray at an American Research and Development board meeting, Horace Ford
(treasurer of American Research and Development and former treasurer of
MIT) took staff member William Congleton aside and told him that at a recent
meeting of the board of MIT’s Lincoln Laboratory, of which he was a member,
he had heard about some interesting work on computers. He was a “number
plumber” himself and didn’t know anything about computers but suggested that
Congleton contact Professor Jay Forrester, an assistant director of the project.
Forrester suggested that Congleton talk to two graduate students, Kenneth
Olsen and Harlan Anderson, who were working at Lincoln Laboratory. As
members of a team that had lost a competition to design an airborne military
computer to another group at the lab they still believed that they had come up
with the best design. There had been desultory lunch conversations about going
into business but no concrete steps had been taken.
After a series of conversations with ARD staff members in which “They
would tell us about computers and we would tell them about the problems of
starting a business … it began to shape up into a little program to see if we
could commercialize this computer concept.”31 However, since a market
survey suggested that commercialization of computers was premature a
cautious approach was taken. Digital Equipment Corporation would begin by
making circuit boards and sell them to research labs and industrial organiza-
tions that weren’t yet ready for a computer but wanted to take a first step
and experiment. ARD committed $300,000: $100,000 as equity capital and
$200,000 to be available as loans if the company was proceeding satisfacto-
rily. Within a relatively few years Digital Equipment had become so successful
as a maker of mini-computers, and American Research and Development’s
modest investment worth so much ($400 million), that a moderate success or
failure on any other project had virtually no impact on ARD’s financial
status.
ARD’s investment in Digital Equipment was distributed to the venture capital
firm’s shareholders so that American Research could function again in a mean-
ingful way. The huge value of the Digital Equipment stock in ARD’s portfolio
meant that the relatively modest profits and losses on most new ventures would
have virtually no effect on the venture capital firm’s worth. Thus the payout to
early investors. Ironically, MIT was not among those who gained financially from
the success of Digital Equipment or ARD, having sold its stock in the early years
of the firm before any increase in value had accrued. The administration’s
interest in the venture firm did not postdate the Compton era, despite the signif-
icance of this intiative which resulted in the foundation of the contemporary
venture capital industry. MIT returned for a time to a laissez-faire institutional
posture with respect to industry, with increasing numbers of its faculty individu-
ally participating in the formation of new firms assisted by ARD and other firms
descended from it in the emerging venture capital industry but MIT did not take
a new administrative initiative in technology transfer until the 1970s.
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firms in the industry concentrate on financing the middle and later stages of
new company development. It has been estimated that fewer than twenty firms
are in the business of funding the early stages of development of new technical
companies.38
The shift from corporate ownership and the increase in size of venture
capital funds both had significant effects in changing the structure of the
venture capital industry from the early days of ARD and its immediate
offspring, who focused upon what would now be called “seed” capital invest-
ment in high-tech firms, with considerable involvement in the management of
these firms, to the present era in which most venture capital investment is made
at the later stages of firm formation and often to non-technically oriented firms.
Indeed, it is sometimes seen as a misrepresentation to refer to venture capital
as relevant to the initial stages of firm formation, so strongly has the approach
of the industry changed; so has its very definition. The larger blocks of funds
involved drive investments downstream since it takes virtually the same due
diligence and investment of effort to seek out an early stage candidate as a later
stage one. Moreover, since the employees are making their bets with income
tied closely to the firm’s returns, this may have a conservatizing influence on
selection of investment in contrast to the early situation when investment deci-
sions were virtually de-coupled from personal economic interest, short of failure
of the firm.
In the course of the late 1990s e-commerce bubble, intense competition for
investments led venture capital firms to search at the earliest stages of firm
formation again. Some formed incubator facilities to create firms themselves
rather than waiting for business plans to be presented to them. Many of these
firms, however, were e-commerce ventures that duplicated similar business
models. Many were also variations on existing firms in what was soon realized to
be an already crowded market. Nor were most of these firms based on techno-
logical innovation. As the private venture capital industry engaged in triage,
shutting down some firms and putting more capital into others in a rescue
effort, an alternative venture capital industry emerged in its wake.
Almost as a reprise of the original founding of ARD, universities and other
investors have been establishing “seed” venture capital funds to build new busi-
nesses from technologies developed on campus. A number of schools, including
Northwestern University, New York University, the University of California at
Los Angeles and Columbia University, have established such funds. In addition,
several new venture firms, with names such as StartEmUp, University Angels
and ITU Ventures, have been set up that explicitly target next-generation,
university-originated technologies as the basis for firm-formation.39
It can be expected that universities will increasingly use a small part of their
endowments to capitalize such funds, much as MIT and Rice funded ARD in
the 1940s. This time the investment vehicles will likely be maintained as part
of a continuing effort to capitalize intellectual property and move to realize the
vision of a self-generating academic enterprise. It can also be predicted that this
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Enhancement of the MIT model
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Technology push
A technology push model was meanwhile developed in Boston and Northern
California in contrast to New York’s market pull approach. Despite some differ-
ences, Silicon Valley and Route 128 share a common origin that can be
discerned in the work of MIT’s Vannevar Bush and Stanford’s Frederick
Terman, who had been, respectively, teacher and student at MIT. In their
conception, innovations can reach the market through university research
assisted by venture capital. Moreover, Vannevar Bush’s participation in the
founding of the Raytheon Corporation in the 1920s had become an inspiration
to his fellow MIT administrators who envisioned a “research row” along
Memorial Drive during the 1930s.
The model of science-based economic development from academia through
the mechanism of the venture capital firm was transplanted from MIT to
Stanford in the early post-war period as a result of Terman having been around
MIT during the war. As director of the Radar Counter-Measures Lab at
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however, was cemented during the 1930s with President Compton’s recruitment
of basic researchers, particularly a subset of physicists who had an interest not
only in scientific research but also in the utilization of results, and concrete
applications. Thus, when Van de Graaff, the inventor of the electrostatic gener-
ator, was recruited from Princeton, MIT also arranged to have his patent rights
transferred MIT. His research became the basis of one of the early firms, High
Voltage, funded by ARD in the early post-war period.
A divergent model?
Annalee Saxenian has emphasized discontinuities of organizational style
between the two leading high-tech regions.13 She has noted significant differ-
ences between highly networked technical persons in Silicon Valley firms and
more isolated individuals in Route 128 companies. Saxenian has also suggested
differences between the two coasts in the level of formality or informality in
clothing styles – suits and ties in New York but open-necked shirts in California
– and in interpersonal relations, structured in the east, more gregarious in the
west. But even that is changing. In the multimedia industry in New York today,
the so-called Silicon Alley, located in the East Village and elsewhere in lower
Manhattan, there is a fairly informal scene in which many people look like they
just came off the casting call of Rent.
Of broader significance is the issue of whether the two regions represent
unique historical instances or essentially replicable phenomena. The issue is
structure versus network, vertical organization versus lack of hierarchy, and
openness versus secretive operation. Tracy Kidder’s volume about Data General
is a story of a freewheeling alternative development group in an old-line mini-
computer firm.14 Saxenian’s depiction of Route 128 fits the later years of
ossification at Digital Equipment Corporation and the recent past at Hewlett
Packard in Palo Alto, a hierarchical “buttoned-down” operation before its
recent renascence. As another observer noted, “Resource allocation (a focus on
traditional bureaucratic procedures rather than unconventional ways of
unleashing new ideas) is just as likely to hobble creativity in large and vibrant
Silicon Valley companies as it is in boring old industrial age companies.”15
Moreover, high-tech firm concentration in connection with physical artifacts
such as the Science Park at Stanford or the ring road around Boston are after-
the-fact superficial characteristics, rather than an underlying cause of high-tech
economic development.
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10
TECHNOLOGY TRANSFER
UNIVERSALIZED
The Bayh-Dole Regime1
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had developed between academic and industrial R&D were contributing to the
problem. In turn, Purdue found support for a change in the current system from
other leading universities such as Wisconsin, whose discovery of vitamin D and
warfarin had put them at the forefront of developing the academic technology
transfer paradigm, starting in the early 1930s, Stanford and MIT.
Bayh, a Democrat, found a bipartisan co-sponsor in Republican Robert Dole,
and in 1979 serious consideration started of the Bayh-Dole Bill. The bill came
under the jurisdiction of the Senate Judiciary Committee, chaired at the time
by Senator Edward (Ted) Kennedy of Massachusetts. The enormous importance
of higher education to the economy of Massachusetts ensured a sympathetic
hearing for the bill. The Senate Judiciary Committee found that in 1978, the
government owned title to over 28,000 patents, and had licensed fewer than 4
percent of them, glaring evidence of the lack of success of the then current
approach.
Making a law
A coalition emerged between the universities and small business, with
Washington representation groups of both interests consulted on provisions of
the draft act. For example, the language of the bill and the administrative regu-
lations worked out after its passage had to be adjusted to allow sufficient time to
report inventions without interfering with professors’ publication plans.
Similarly, small business was concerned with keeping access open to so-called
“background inventions,” exemplified soon after the act’s passage by the Cohn-
Boyer genetic engineering patent, licensed non-exclusively by Stanford
University.
Lasken, who informally drafted the bill, said that “It is probably the most
important thing I have done in my thirty years in government.”7 Universities
strongly supported its passage by lobbying their Congresspersons and Senators.
The University of Wisconsin, for example, turned initial opposition from
Senator Nelson of their state into support and even co-sponsorship. One reason
for the success of the bill was that it covered universities and small business but
left big business out, allaying concerns, such as those held by Senator Nelson,
that patents could contribute to monopolization. Neils Reimers, then Director
of Technology Transfer at Stanford, recalls a celebration over coffee, with some
of his colleagues who were lobbying Congress, when the law passed.8
Although the bill became a law relatively quickly, within one and a half
years of its inception, support was not unanimous. In the Judiciary committee,
where responsibility for patenting rested in the Senate, MIT’s representatives
failed to persuade Senator Ted Kennedy to sponsor the bill. The next person on
the committee was Senator Birch Bayh of Indiana, whom Purdue University
was successful in recruiting. Bayh had special concerns about the effects of the
proposed bill on labor, so a special section was drafted with language favoring
development in the USA. An intern on Robert Dole’s staff, Barry Leshowitz, an
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academic on leave from the University of Arizona, interested the Senator from
Kansas, a minority member of Judiciary, in becoming the co-sponsor, thus
making it a bi-partisan bill.
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Another of the issues that was intensively debated at the time was whether
the government should receive a share of the results of licensing the technology
it had funded. The Senate Judiciary Committee decided that the government’s
return would come not directly from a share in the proceeds, but rather from
the increased taxation that would result from the increased economic activity
that would be a consequence of the act’s successful implementation.
The purpose of the new federal legislation was to speed the transfer of tech-
nology from university to private industrial firms by eliminating governmental
restrictions on the private use of the results of government-supported research.
According to NSF Counsel Jesse Lasken, the Bayh-Dole act:
eliminated the problem of who owns what. The university would then
have a right if there was an issue coming out of university work that
they are going to be able to give assurances that they could work out
some reasonable arrangement. It was a useful law that actually accom-
plished something. It made it simple. A university could tell a
company that was interested in working with them that just because
we made this invention on our NSF work doesn’t mean we won’t have
the right to give you a license, because we do have the right.9
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• the ability to license established technologies for which patents have been
applied; and
• the ability to collaborate with the inventor of the technology to further
develop it.
While the first of these two steps in fact constitutes the actual transfer of the
technology, because of the very early stage of academic technology, it is not
worthwhile unless the second option is also available and the cooperation of the
inventor also achieved. Academic scientists in the USA are entrepreneurs.
Under the peer review system, they must raise the funding for their research
activities themselves. A large research division at a university or teaching
hospital can therefore be regarded as a quasi-business with $1–10 million in
annual revenues.
Some universities extended their efforts from the taking out and licensing of
patents to put income for the university into a portfolio of measures designed to
establish new firms and thereby promote regional economic development. All
of these efforts depended upon research staff and students bringing their
commercializable ideas to the attention of a university technology transfer
office. In part because the taking out of patents was expensive, patents were
often only sought when a prospective licensee could be identified. Universities
had the reputation of being conservative patent-takers. There was either an
immediate sale or a long-term prospect of significant gain, with little middle
ground. Niels Reimers at Stanford originated the shift from a legal to a
marketing approach. Occasionally, a faculty member at a university new to
technology transfer manages to go around the office and deal directly with the
university’s patent attorneys, running up a legal bill for an invention without an
assessment of its potential having been made first.
Issues
The Bayh-Dole Act provided a stable ground for university technology transfer
and a framework for resolving some issues; other issues remained, however. The
potentially contentious issue of division of proceeds appears to have been
settled within the context of the Bayh-Dole Act, which guarantees the inventor
a share through a more-or-less equal three-way division of proceeds among the
university administration on behalf of the institution as a whole, the faculty
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Effects on universities
The university’s own economic base also begins to be transformed as it gener-
ates some of its income from the sale of inventions. In 1992, Columbia
University earned $24 million from its intellectual property rights, the equiva-
lent of the income on almost half a billion dollars of endowment. This
income rose to $100 million by the end of the decade, most of it derived from
a single patent on the transgenic mouse that would soon expire. In recogni-
tion of this eventuality, the university is expanding its efforts into additional
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areas such as software. Academic institutions have also begun to use funds
earned from technology transfer to support the operation of the university.
Columbia University recently announced a $2 million program to support
new research initiatives drawing upon monies earned from patents licensed to
companies.
Even at a less intensive level, academic technology transfer efforts have been
found to be economically successful. Many observers were quite skeptical a
decade ago, and some still are, that universities could even make enough money
from their technology transfer efforts to cover costs. In the early 1980s most
universities merely hoped to earn enough to pay for the running of a technology
transfer office, so that they could satisfy the new government requirements of
playing a role in support of industry in exchange for receiving government
research funds. That level of income was achieved relatively quickly at many
universities, almost to their own surprise. US universities earned a total of $1
billion, mostly in royalty income, in 2000. However, a few large returns came
from infringement proceedings, in which a company was found to be utilizing
patented research without authorization, and from sale of equity in a firm
founded with university intellectual property.
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The drafters of the Bayh-Dole Act also realized their legislative intent to attain
public benefit from university technology transfer through contribution to tax
revenues. The economic activity arising from technology transfer shows a return
to federal and state governments of approximately $3.9 billion in 1993. It is also
worth noting that these estimates are undoubtedly low, for two reasons:
Table 4 Estimated economic impact of university and government lab technologies (US$ million)
1 Once patents expire, royalties cease, but the products remain in the
market. For instance, in the mid-1960s, MIT had licensed two very
important technologies – synthetic penicillin and computer core memory.
Both patents have now expired, but were the foundation of major
markets.
2 This methodology doesn’t capture the induced investment effect, when
technologies are in development and are employing people but not yet
generating revenues. Thus, the above figures are conservative estimates of
the economic impact of indirect industrial policy.
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11
THE MAKING OF
ENTREPRENEURIAL SCIENTISTS
Faculty members and graduate students are learning to assess the commercial as
well as the intellectual potential of their research. An increasing number of
academic scientists are turning their discoveries into marketable products,
broadening their interests from a single-minded concern with publication and
peer recognition. Some are going beyond traditional modes of technology
transfer, in which the tasks of commercialization were left to others, by partici-
pating directly in the creation of entrepreneurial ventures. Academic scientists
who are leaders in their field have formed some of these firms. Nobel Prize
winner Arthur Kornberg, for example, became intrigued by and increasingly
involved in entrepreneurial ventures in biotechnology, much to his bemused
surprise.1 As they seek intellectual property from their findings as well as
publishable articles and an enhanced scientific reputation, academic scientists
become inventors, developers and entrepreneurs.
Some academic scientists were concerned that entrepreneurial ventures
threatened the integrity of academic science and charged that their colleagues
who were involved in such ventures had conflicts of interest and obligation.
Some of these critics viewed academic scientists’ involvement in firm formation
as a temporary phenomenon and suggested that these firm founders would
return to their traditional tasks. In one sense this prediction has proved true.
Relatively few academic entrepreneurs have left the academy. Most have
pursued their commercial interests in tandem with their academic work, some-
times taking leave of their professorships to temporarily devote full-time effort
to their firm. Use of academic leave provisions has allayed concerns about
conflict of obligation, an inability to fully perform regular academic tasks given
the time-consuming nature of the early stages of firm formation. Nevertheless,
firm formation from academic research has not disappeared, even though
charges of conflicts of obligation have abated.
There are proximate and long-term causes of these developments. The
creation of new firms has become a permanent part of the academic scene, with
support structures such as incubator facilities created to assist the process. In
addition to extending the organizational process forward into the industrial
scene outside of the university, the academic world has long been involved in a
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short step away from being an actual firm when the opportunity to really
become one arises.
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have been exhausted, then a foundation must be solicited. Then, beyond the
foundation and non-profit sector, other donors and new streams of funding must
often be sought. State and local governments, for example, are sometimes
willing to provide research funds to improve the competitiveness of regional
industry. The investigator might also engage in collaborations with colleagues
from other disciplines and universities to seek NSF funds under its new
programs for creating interdisciplinary research centers related to industry.
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example gleaned from afar, through the media and informal conversations in
departmental corridors and at scientific meetings.
Even those scientific colleagues, who have no desire to become
entrepreneurs themselves, rarely look upon their colleagues who do with
disdain. The paucity of “definition of deviance” can be explained by examining
the position in the scientific world of many of the entrepreneurial scientists.
Entrepreneurial activities have been undertaken by leading scientists, who are
looked upon as role models. For example, a molecular biologist interviewed at
Columbia University viewed his colleagues at Harvard, who had formed firms,
with admiration and wished to emulate them. Willingness of a few “low status”
scientists to use findings for pecuniary advantage would likely have been taken
as evidence of “deviance.” If such normative infractions were negatively sanc-
tioned they would even have served to strengthen the old normative pattern.
However, for many scientists, formation of a firm has now come to be positively
defined as a new badge of scientific achievement.
Professors not inclined toward business, such as the founder of the Genetics
Institute, Mark Ptashne, have participated in the formation of firms and, at
times, like his colleague Walter Gilbert, taken a leading organizational role.
Professor Ptashne of the Harvard University Department of Biological Sciences
is a good example of a scientist who is acting on opportunities to commercialize
his research, while also remaining committed to the academic mode of basic
research. Ptashne was originally apprised of the potential commercial value of
his research by a university administrator responsible for securing patent rights
for campus-based research at Harvard. Although initially he expressed a lack of
interest in pursuing such possibilities, Ptashne soon became intrigued with the
notion of establishing a company to recreate his previous academic lab groups
by inviting their members to work in the firm.
Ptashne initially invited the university to take the lead in founding the firm
and share in its ownership. However, when other Harvard faculty objected to
the idea, he took on the entrepreneurial role himself and negotiated successfully
for financing a firm independently of the university. Ptashne’s colleague at
Harvard, Walter Gilbert, took on administrative as well as entrepreneurial
responsibilities in his firm, Biogen, serving as Chief Executive Officer for a
time. He eventually returned to his position at Harvard after he was replaced by
the board of directors. They felt that the firm had to focus more sharply on
commercial goals and brought in professional management, a not unusual
occurrence in the life-cycle of a technical firm originating in academia.
When he was negotiating to form Genetics Institute in the mid-1980s,
Professor Ptashne said that, at this point, “to have no commercial relationship
whatsoever is almost … it’s mind boggling. I’m courted every day. Yesterday,
some guy offered me literally millions of dollars to go direct a research outfit on
the west coast. … He said any price. Any price.”4 Ptashne chose to remain in
Cambridge. He wanted to bring together again, within a company, his
“extended family” from the university lab. Ptashne’s first thought was to form a
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firm in partnership with his university, hoping thus to keep the line of commu-
nication open. He gave up this effort in the face of opposition from university
faculty who opposed, in principle, the direct involvement of the university in
commercial ventures.
Moreover, his colleague Walter Gilbert, who was organizing an independent
firm, did not like the idea of competing against a university-affiliated firm. A
convoluted series of negotiations ensued involving a venture capital firm in
which Harvard University had a financial interest as well as other firms. When
the negotiations stalled, Ptashne took the advice of the late William Paley,
former Chairman of the Board of CBS, and a potential investor, to take charge
himself. Professor Ptashne found himself fascinated with the process of orga-
nizing a company, comparing it to “a puzzle with five thousand loose pieces. It’s
night and day, up and down, this guy’s out, that guy’s in. The money’s in, the
money’s out. The buildings here. … It’s all quite extraordinary.”5 When
Genetics Institute was formed, Ptashne retained his professorship and operated
two research programs simultaneously. He held that he kept the two entirely
separate, applied research at the company and more basic research concerning
genes, and the mechanisms by which they are conditioned, in his university lab.
In 1992, Ptashne celebrated the sale of a portion of his personal share of the
company’s stock at a party in Cambridge. He used some of the proceeds to
expand his activities as an art collector; he had continued his participation in
Harvard’s musical activities during his commercial involvement.
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money,” and they tend to abjure support from any sources other than non-
profits or government agencies such as the National Institutes of Health (NIH).
On the whole, however, there has been a change of attitude among many
faculty members in the sciences toward industrial funding, a shift away from the
old view of industrial money as unacceptable.
A study of a public university that developed technology transfer mecha-
nisms during the past decade found that departmental support for faculty
involvement in technology transfer varies widely, from active encouragement to
active discouragement. In between, some departments view technology transfer
as simply another bureaucratic requirement of academic life, in this case
preparing a disclosure and sending it on to the designated administrator.
On the whole, however, there are indications that the academic atmosphere
has become more pragmatic because of the growing recognition that it is one of
the functions of a public university to help the economy and that technology
transfer is the way to do it.
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You have to be very careful about what you say with regard to details
because that is what business is about: keeping your arms around your
details so that you can sell them to somebody else; otherwise there is
no point. … [T]he details are usually done later. … [I]n science, you
share ideas; there tends to be a very open and very detailed
exchange.6
Consistent with that insight, faculty are learning to calibrate their interaction
to both scientific and business needs, giving out enough information to interest
business persons in their research but not so much that a business transaction
becomes superfluous. Significantly, even among these more business-oriented
researchers, it appears that their primary objective is still scientific; business
objectives are strictly secondary.
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academic research that happens to coincide with a corporate need; they will
help to set the company’s strategic research direction. Such intensified collabo-
rations make the old model of licensing intellectual property just an initial step
in setting the ground rules as to how the relationship should be structured and
any profits divided because once the contract is signed, a much more complex
level of participation by both parties will occur than a simple relationship
between licensee and inventor.
The penumbra of companies surrounding the university has given rise to an
industrial pull that augurs an ongoing relationship beyond current projects.
Such intensive interaction sheds new light on the question of industrial influ-
ence on faculty research direction and whether this is good, bad or irrelevant.
The issue of investigator initiation is moot because the investigator brings the
university-initiated technology to a company-initiated product in a fairly even
intellectual property exchange, effecting a confluence of interest. To the extent
that this partnership contributes measurably to regional economic development,
moreover, “confluence” may replace “conflict” of interest in public perceptions
of university–industry relations.
Previous conflicts attributable to the assumption that a dividing line exists
between the academic and industrial sides of a relationship are superseded as
divisions disappear. A more integrated model of academic–industry partnerships
is emerging along with a diversified network of transfer institutions. Indeed, the
very notion of technology transfer, or at least transfer at a distance, is super-
seded as universities develop their own industrial sector.
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Virtually all of the repertoire of technology transfer mechanisms are laid out
here. Denning continued: “Indeed, had I engaged in such actions I would have
had less time for publication and teaching which would have put my prospects
for academic advancement at risk. My actions were consistent with feeding the
pipeline.”8 But Denning is writing this editorial not to defend the traditional
academic system of which he is a part and whose values he obviously shares.
Rather it is to suggest as a possible role model a different scientist than himself,
namely Lofti Zadeh of the computer science department at the University of
California, Berkeley. He says: “Zadeh’s career was in a different direction.”9
Zadeh was the originator of “fuzzy logic”, which opened up a new area of
computer science and has also led to large numbers of practical uses, most of
those having been found not in the USA but in Japan. From controlling banks
of elevators to improving techniques in artificial intelligence research – both
the practical applications and most of the follow-up research from Zadeh’s orig-
inal ideas have taken place in Japan.
I happen to have interviewed Professor Zadeh, not in the context of a study
of academic–industry relations, but as part of a study of the development of
computer science as an academic discipline.10 Zadeh’s office is the quintessen-
tial academic office. It is logically organized with rows of plastic bins piled in
stacks upon one another, each containing a stack of reprints of an article. So
Zadeh cannot be taken as an example of an academic who becomes intrigued by
industry, leaves an academic career and pursues a different direction. Zadeh has
pursued an academic career at the highest level and received due recognition
from his peers. But at the same time as he was pursuing traditional academic
goals he was also involved in consulting and taking out patents: all of the activ-
ities that Denning listed as not having undertaken himself.
Opportunities for commercial utilization of scientific research were often
available to scientists, whose norms did not permit them to violate the
boundary between science and business. What is new in the present situation is
that many academic scientists no longer believe in the necessity of an isolated
“ivory tower” for the working out of the logic of scientific discovery. Previously,
in the long hiatus between scientific discovery and application, industry was
expected to have its industrial scientists pursue research and development, an
activity presumed to be too mundane for university scientists. Now, academic
scientists are often eager and willing to direct, or participate in, developmental
research programs leading to commercial application.
The conduct of science as an organized activity changes the nature of the
scientific role and the social, if not cognitive, norms of science. The
entrepreneurial scientist seeks financial gain as well as advancement of knowl-
edge and recognition from their peers. Attention to the economic value of
academic research has meant that research results have been defined as “intel-
lectual property” and that property in knowledge is contested not only for its
symbolic but also for its monetary value. The placement of economic
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12
INNOVATION
The endless transition
We are moving from the era of the Endless Frontier, based on an assumption
that research automatically translates into use, to the era of the Endless
Transition. Three fields of transition in science and technology policy can be
identified in innovation, technology and institutions. The first transition is in
the relationship between basic research, applied research and product develop-
ment. The three previously relatively distinct phases are moving together.
There will no longer be such strict boundaries between different types of
research. Instead, they will blend into each other and move back and forth,
without strict separation among them.
The second “endless”, transition is between different technological areas.
They had been thought of as being connected to different disciplines and
different industries but they are now cross-fertilizing each other. Previously there
were strong boundaries between individual disciplines. More recently interdisci-
plinary collaboration has expanded and new disciplines have been created at the
intersections between old ones. Biochemistry is an early example. Moreover, new
interdisciplinary synthetic disciplines have been created such as bio-informatics,
whose components came out of the previous syntheses that created computer
science and molecular biology. Now these two have themselves been brought
together to form a new field in a continuing process of combination and re-
combination that has created other new fields such as behavioral economics.
The third transition is toward the “triple helix” of university, industry and
government relations as the framework for innovation systems at the national,
regional and multi-national levels. As these three institutional sectors (public,
private and academic) interact, a spiral pattern of linkages emerges at various
stages of the innovation process. Start-up firms are a common outgrowth of the
three sectors: arising from academic research groups, national laboratories and
the laboratories of large corporations.
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3. Creation of a new overlay of trilateral networks and organizations from the inter-
action among the three helices Such groups typically form to fill gaps in an
innovation system by “brainstorming” new ideas. Joint Venture Silicon Valley,
established during the economic downturn in the early 1990s, the Knowledge
Circle of Amsterdam, organized during the past decade, and the New England
Council, founded in the 1920s, included participants from small and large
companies, local government and academia. The New England Council played
a key role in inventing the venture capital firm, crucial to the growth of Route
128 and Silicon Valley.
4. A recursive effect of these triple helix networks, both on the spirals from which they
emerged and the larger society One effect is on science itself. The capitalization
of knowledge has displaced disinterestedness, the expectation that scientific
knowledge would be freely distributed, with researchers taking their rewards
solely in recognition from their peers.1 This new norm has arisen from the prac-
tices of industrial science, an internal entrepreneurial dynamic within
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normative model. Some view it as a goal to strive for in bringing about change
to enhance the prospects for innovation. Other observers see the coming of the
triple helix as representing the downfall of the existing system of innovation,
represented by government-owned corporations sponsoring laboratories adja-
cent to university campuses.
Privatization of companies, it is believed, will reduce the resources available
for R&D, including collaborations between the state-owned company labora-
tory and university researchers. On the other hand, many of these
collaborations were not sufficiently market driven and resulted in innovations
that lacked a context to be put to use, having been based upon a negotiation
between two public laboratories, neither of which was closely enough tied to
production and use.3
This gap is not only a peculiarity of Latin American public research but has
been noted in the large corporate laboratories in the USA that had been sepa-
rated from production facilities and were operating as isolated entities until
quite recently. In the latter case the reintegration of the laboratory into the firm
and directing it more closely toward company goals has been occurring at IBM
and GM in recent years. Typically, as corporate R&D facilities are moved closer
to product development, longer-term R&D is conducted in collaboration with
other firms, university research groups and government laboratories.
142
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Innovation in innovation
Academic research now increasingly intersects with industrial progress and
government economic development policy. The growth of industrial “conurba-
tions” around universities, supported by government research funding, has
become the hallmark of the new development model, exemplified by Silicon
Valley; the profile of knowledge-based economic development was further
raised by the founding of Genentech and other biotechnology companies based
on academic research in the 1980s. The triple helix thesis is expressed in seven
propositions:
1. Arrangements and networks among the Triple Helix institutional spheres provide
the source of innovation rather than any single driver New initiatives arising from
these networks become the source of innovation policies at national, sub-
national, and supra-national levels. Government thus becomes a partner in the
policy-making process as policies become an outcome of the interactions among
the triple helix agencies.
3. New channels for interaction link the various institutional spheres and speed the
pace of innovation The linear model of transfer of knowledge generated in
academia is supplemented with the transfer of technology both as intellectual
property and through the formation of firms by alumni and staff. The reverse
linear model starting from industrial and social problems provides starting
points for new research programs and discipline formation. The interaction
between these two dynamics results in the emergence of an interactive mode of
innovation.
143
I N N O VAT I O N
6. Developing countries and regions have the possibility of making rapid progress
insofar as knowledge sources can be absorbed into the political economy Political
and social arrangements based upon principles of equity and transparency lay
the groundwork for rapid development in a stable environment. “Leapfrogging,”
to skip some stages of development, is thus more likely. Universities and
networked incubators can be utilized both to adapt advanced technologies to
solve local problems as well as to transfer local innovations abroad.
144
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145
I N N O VAT I O N
the number of students. In the then current British system of a small number of
universities, the funds automatically went to an elite. However, if that model
had been applied in the USA, even in the early post-war era, with large land
grant universities, the funding would not have flowed only to an elite but would
have been much more broadly distributed across the academic spectrum.
In the time between the draft and the final report, the mechanism for the
distribution of government funds to academic research was revised and peer
review was put in. One could be sure that the peers, the leading elite scientists
who would most surely be on these committees, would distribute the funds
primarily to their fellow scientists at elite universities. So it was guaranteed
through the peer review system that funds would be distributed to a scientific
elite, reinforcing a status system of US universities that had been in place since
the 1920s.
And in fact this linear model has worked, but not on its own. As we have
seen, the USA established a series of programs and a regulatory environment to
facilitate technology transfer in order to reap the benefits of munificent research
funding. Other countries, such as Sweden, with high rates of R&D spending
and relatively low rates of economic return, are currently undertaking parallel
steps. The two modes have often existed in parallel. Although the “endless
frontier” provided a justification for the establishment of the National Science
Foundation, at the same time much greater amounts of funds were devoted to
science through the military for practical results in computer science and also
for health through the National Institutes of Health.
Nevertheless, why, at this point in time are we seeing the decline of mode 1
and the end of the endless frontier? Why has peer review been disregarded
through the very practical method of distributing funds by direct appropriation,
often labeled pork barrel? Because these funds are also directed toward serious
scientific research and instrumentation projects. In fact, the leading universi-
ties, like Columbia when it needed to renew the infrastructure of its chemistry
and could identify no other route to fund its projects, went to the same lobbying
firm in Washington as universities that wished to break into the funded
research mode. Columbia relabeled the chemistry department “The Center for
Excellence in Chemistry” and, in time, an appropriation was made and the
buildings were renovated. The university did not want to wait to go through the
slower process of peer review, and likely receive smaller amounts of funding.
The fundamental reason why the endless frontier model is at an end and we
are moving now into an endless transition model, not only in the USA and
Western Europe but also in Latin America, the former Soviet Union and the
developing world, is that it is now clear that the development of science is the
basis for future industrial development. These connections, of course, have
always been there. They showed clearly in the mid-nineteenth century in
chemistry. This can be traced back to seventeenth-century pharmaceutical
science and the development of a pharmaceutical industry in Germany. Marx
could find one example, Perkins’ research on dyestuffs in the UK, leading to the
146
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147
I N N O VAT I O N
148
I N N O VAT I O N
into a mode of integration in which the spheres move more closely together and
start to overlap as in a Venn diagram.
It is becoming commonplace to have negotiated arrangements in which
universities own intellectual property and assign it to a firm, often started by a
professor in the university, with the university retaining part-ownership of the
company instead of seeking royalty payments as it typically would from a large
firm. Thus when these two interests (academic and industrial) are joined
together, it is not necessary to construct a “Great Wall of China” between the
firm and the university. Instead data and ideas may go back and forth between
the academic and firm laboratories.
If the disjuncture between theory and invention is accepted, the appearance
of entrepreneurial scientists is an anomaly.12 Their research is typically at the
frontiers of science and leads to theoretical and methodological advances as
well as the invention of devices. These activities involve sectors of the univer-
sity, such as basic science departments, that have previously, in principle,
limited their involvement with industry. Thus, the phenomenon of academic
scientists commercializing their research requires a new explanation. It must be
one that goes beyond the availability of investment funds since earlier genera-
tions of scientists, such as Pasteur and the Curies, seldom took advantage of
commercial opportunities.13 The emergence of this new role calls for the
construction of a framework that can account for a pluralistic universe of
science and a differentiated normative structure among scientists. Such a model
should account for the emergent role of the entrepreneurial scientist in the
university as well as industrial scientists who do not necessarily experience role
strain in their research setting.
Resource dependency theory suggests that entrepreneurial academic
behavior can be explained by the fact that universities follow their interests
and seek funds wherever they become available: from government, as in the
early post-war period, or from industry, as in the present time.14 The premise of
this framework is that the seeker is subordinate to the funding source. A theo-
retical analogue, principal–agent theory, has also been applied to understand
the so-called contract between government and academia in the early post-war
era.15 However, if entrepreneurial scientists and entrepreneurial universities are
now active and equal partners in their relations with industry and government,
able to negotiate on an equal basis and maintain fundamental institutional
interests such as the ability to publish, then the above explanations are partial,
at best.
The first phase of entrepreneurial science is the internal development of
academic research groups into “quasi-firms.” The second phase refers to
academic participation in the externalization and capitalization of knowledge in
tangible products and distance-learning courseware. As universities spin-off for-
profit entities from their research and educational activities, and fund some of
their own research, they shift their institutional focus from eleemosynary to self-
generation. The ability to balance multiple sources of support, including
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150
I N N O VAT I O N
ments and other financial arrangements for the industrial use of new knowledge
discovered at the universities. At present, this possibility is little more than that
but it certainly represents a novel idea in the history of universities.
151
NOTES
INTRODUCTION
1 Geiger, Roger. 1986. To Advance Knowledge: The Growth of American Research
Universities, 1900–1940. New York: Oxford University Press.
2 Bush, Vannevar. 1970. Pieces of the Action. New York: Morrow, p. 159.
3 Ibid., p. 168.
4 Veysey, Laurence. 1965. The Emergence of the American University. Chicago:
University of Chicago Press.
5 Genuth, Joel. 1987. “Groping toward science policy in the United States in the
1930s,” Minerva 25(3): 238–68.
6 Zusman, Ami. 1999. “Issues facing higher education in the twenty-first century,” in
Philip Altbach, Robert Berdahl and Patricia Gumport (eds), American Higher
Education in the Twenty-first Century. Baltimore: Johns Hopkins University Press, pp.
109–50.
152
NOTES
11 See Bok, Derek. 1982. Beyond the Ivory Tower: Social Responsibilities of the Modern
University. Cambridge: Harvard University Press.
12 “Harvard University, in policy reversal, will raise money for investments aimed at
bringing faculty members’ research to marketplace and making profit for school,”
New York Times, 16 September 1988, I, 14: 1.
13 Kolata, Gina. 1997. “Scientist reports first cloning ever of adult mammal,” New York
Times, 13 February, 1: 1.
14 Aitken, Hugh. 1976. Syntony and Spark: The Origins of Radio. New York: Wiley, p.
209.
15 Office of Technology Assessment. 1984. Commercial Biotechnology: An International
Analysis. Washington, DC: Office of Technology Assessment.
16 Aitken, op. cit.
17 See Etzkowitz, Henry. 1983. “Entrepreneurial scientists and entrepreneurial universi-
ties in American academic science,” Minerva 21: 198–233.
18 Aborn, Timothy. 1996. “The Business of Induction: Industry and Genius in the
Language of British Scientific Reform,” History of Science 31(103): 91–121.
19 Schumpeter, J.A. (1951) [1949]. “Economic theory and entrepreneurial history,” in
Change and the Entrepreneur: Postulates and Patterns for Entrepreneurial History.
Cambridge: Harvard University Press, p. 256.
20 Eisinger, Peter. 1988. The Rise of the Entrepreneurial State: State and Local Economic
Development Policy in the United States. Madison: University of Wisconsin Press.
153
NOTES
154
NOTES
155
NOTES
156
NOTES
When the Research Corporation refused to relent, MIT severed its relationship with
the Corporation and assumed direct responsibility for managing its patents.
25 Anonymous, “Statement of Patent Policy,” 15 April 1932, MIT Archives,
Collection AC 64, Box 2, Folder 3.
26 “For the Information of MIT Patent Committees,” 1945, MIT Archives, Collection
AC 64, Box 2, Folder 3.
27 “Minutes of Patent Management Committee,” 11 January 1945, MIT Archives,
Collection AC 64, Box 2, Folder 1.
28 Ibid.
29 “Letter from Karl Compton to Ralph Flanders, President, The American Research
and Development Corporation,” 19 December 1946, MIT Archives, Collection AC
64, Box 2, Folder 3.
30 Anonymous, “Industrial Office,” n.d., MIT Archives, Collection AC 64, Box 2,
Folder 3.
31 “Letter from Karl Compton to Ralph Flanders, President, The American Research
and Development Corporation,” 10 December 1946, MIT Archives, Collection AC
64, Box 2, Folder 3.
32 Ibid.
33 Memo for File Re: Forrester Patent Meeting in MIT President’s Office, 7 September
1962, MIT Archives, Collection AC 35, Box 2.
34 “Letter from President Stratton to J. William Hinkley, President, Research
Corporation,” 28 August 1962, MIT Archives, Collection AC 35, Box 2.
35 “Letter from R.J. Horn, Institute attorney to Julius Stratton, President of
Massachusetts Institute of Technology,” 5 September 1962, MIT Archives,
Collection AC 35, Box 2.
36 “Letter from Institute Counsel R.J. Horn to President Stratton,” 19 November 1962,
MIT Archives, Collection AC 35, Box 2.
37 “Memo for File Re: Forrester Patent Meeting in MIT President’s office,” 7 September
1962, MIT Archives, Collection AC 35, Box 2.
157
NOTES
11 “Letter from C.F. Weed, President, New England Council to Paul Cloke, Director,
Maine Experiment Station, Orono, Maine,” September 1939, MIT Archives,
Collection AC 4, Box 235, Folder 3.
12 Karl Compton. “Industrial Development in New England,” an address prepared for
delivery before the 75th anniversary of the University of New Hampshire in the
Joint meeting of the New England Council and the American Association for the
Advancement of Science at Durham, New Hampshire, 24 June 1941, MIT Archives,
Collection AC 4, Box 235, Folder 11.
13 Ibid.
14 Ibid.
15 “Memorandum to Dr Karl T. Compton from Richard B. Cross, ‘Agenda for
November 3rd Meeting of New Products Committee,’ ” 24 October 1939, MIT
Archives, Collection AC 4, Box 235, Folder 3.
16 Ibid.
17 “Letter from A.F. Kingsbury to Richard B. Cross,” 21 March 1940, MIT Archives,
Collection AC 4, Box 235, Folder 5.
18 Ibid.
19 “Letter from Richard B. Cross to A.F. Kingsbury,” 27 March 1940, MIT Archives,
Collection AC 4, Box 235, Folder 5.
20 Ibid.
21 Ibid.
22 “Memorandum: New Products for New England,” n.d., MIT Archives, Collection
AC 4, Box 235, Folder 2.
23 “Memorandum from Richard Cross to Karl Compton, ‘Appointment of
Subcommittee Members,’ ” 29 November 1939, MIT Archives, Collection AC 4,
Box 235, Folder 4.
24 “Memorandum to Dr Karl T. Compton from Richard B. Cross,” 3 October, 1939,
MIT Archives, Collection AC 4, Box 235, Folder 3.
25 “New England Industries, Inc.,” unpublished manuscript, 29 December 1940; MIT
Archives, Collection AC 4, Box 235, Folder 5.
26 Ibid.
27 Ibid.
28 “Memorandum to Ralph Flanders from Richard Cross,” 16 October 1940, MIT
Archives, Collection AC 4, Box 235, Folder 6.
29 “New England Industrial Research Foundation, Inc.,” MIT Archives, Collection AC
4, Box 235, Folder 11.
30 “Letter from Richard B. Cross to David Prince, Vice President, General Electric
Company,” 12 January 1942, MIT Archives, Collection AC 4, Box 235, Folder 14.
31 Ibid.
32 “Letter from Karl T. Compton to L.C. Bird, President, Phipps Bird Inc.,” 10 March
1943, MIT Archives, Collection AC 4, Box 235, Folder 15.
33 “Letter from Earl Stevenson, President, Arthur D. Little Co. to Karl T. Compton,”
26 September 1942; MIT Archives, Collection AC 4, Box 235, Folder 12.
34 “Letter to Mr Norman Klivens from Karl T. Compton,” 23 April, 1941; MIT
Archives, Collection AC 4, Box 14, Folder 14.
158
NOTES
Joint meeting of the New England Council and the American Association for the
Advancement of Science at Durham, New Hampshire, 24 June 1941, MIT Archives,
Collection AC 4, Box 235, Folder 11.
3 Letter from President Karl T. Compton to Richard B. Cross, 19 October, 1939, MIT
Archives, Collection AC 4, Box 235, Folder 3.
4 Grow, Natalie. 1977. “The ‘Boston Type’ open end fund: development of a national
financial instrument,” PhD Dissertation, Harvard Business School, pp. 284–5.
5 Aguren, W. 1965. “Large nonfinancial corporations as venture capital sources,” SM
thesis, Massachussetts Institute of Technology, Sloan School of Management, p. 10.
6 “The Prudent Boston Gamble,” Fortune November, 1952
7 The Saturday Evening Post, 31 July 1954.
8 “Aims of the the American Research and Development Corporation,” unpublished
manuscript, 1 January 1947.
9 William Congleton, Interview with Henry Etzkowitz, July 1986.
10 “Something ventured,” Time Magazine, 19 August 1946.
11 “A plan for the formation of a company to encourage and facilitate the development
of new inventions , products, processes and industries,” n.d., Dubridge papers 121.8,
California Institute of Technology Archives.
12 Interview with Longstreet Hinton, Retired Director, Morgan Guaranty Trust
Department, April, 1989.
13 Hinton, Longstreet, John Meyer and Thomas Rodd. 1979. Some Comments About the
Morgan Bank. New York: Morgan Guaranty Trust Company. The head of the Trust
department at Morgan had earlier served with Doriot on the board of directors of a
corporation and his personal confidence in Doriot’s abilities carried over to the new
venture.
14 “Letter to Georges Doriot from Robert Lehman, Lehman Bros,” 11 October 1965;
“Letter to Georges Doriot from Joseph Ripley, Harriman, Ripley,” 21 March 1967,
Box 4, Doriot Papers, Manuscript Division, Library of Congress.
15 “Letter from Karl Compton to Horace Ford,” 22 March 1946, MIT Archives,
Collection AC 4, Box 46, Folder 9.
16 Charles Coulter, President of American Research and Development, Interview with
Henry Etzkowitz, June 1986.
17 King, Frank. 1946. “Investment Banking Accepts a Challenge,” Investment Dealers
Digest, 26 August.
18 Georges F. Doriot. 1947. “American Research and Development Corporation,”
founding statement, 1 January.
19 Ibid.
20 William Congleton, American Research and Development Technical Director,
quoted in “Boston and the ‘Science’ Industry,” Investor’s Reader, 6 February 1957,
28(3): 5.
21 “Confidential Memorandum of Conference of certain Members of the Board of
Directors of Tracerlab Inc.,” 8 December 1952, Leahy Business Archives, American
Research and Development File 294.
22 “Letter from Georges Doriot, American Research and Development to Charles
Cotting, Lee Higginson Corporation,” 12 December 1952, Leahy Business Archives,
American Research and Development File 294.
23 “Personal and Confidential Letter from Georges Doriot to Denis Robinson,” 28
April 1950, Leahy Business Archives, American Research and Development File
287.
24 Bylinsky, Gene. 1967. “General Doriot’s dream factory,” Fortune August: 132.
25 William Congleton, retired American Research and Development staff member,
Interview with Henry Etzkowitz, July 1986.
26 Ibid.
159
NOTES
27 Ibid.
28 Robert J. Van de Graaff, MIT Archives, AC 4, Box 274, Folder 1.
29 “Memorandum: Van de Graaff Patent: Non-Development,” n.d., MIT Archives AC
4, Box 241, Folder 18.
30 Redmond, Kent and Thomas Smith. 1980. Project Whirlwind. Maynard, MA: Digital
Equipment Press.
31 William Congleton, Interview with Henry Etzkowitz, July 1986.
32 Aguren, W. 1965. “Large Nonfinancial Corporations as Venture Capital Sources,”
SM thesis, Massachussetts Institute of Technology, Sloan School of Management, p.
10.
33 Ibid., p. 33.
34 Anonymous, 1969. “In on the ground floor,” Newsweek February.
35 Anonymous, 1970. “There’s lots more fun in venturing,” Financial Times 24
December.
36 National Venture Capital Association. 1980. The Guide To Venture Capital Sources.
Arlington, VA: National Venture Capital Association.
37 Armitage, W. 1979. “The role of the venture capitalist in new ventures,” SM thesis,
Massachussetts Institute of Technology, Sloan School of Management.
38 Charles Coulter, President of American Research and Development, Interview with
Henry Etzkowitz, February 1989.
39 Kloess, Michael. 2001. “Chad Brownstein, Cofounder, Managing Partner, ITU
Ventures,” Technology Access Report 14(2): 15–16.
160
NOTES
161
NOTES
4 When WARF was founded in the 1930s, academic research as the basis of industrial
development was a nascent phenomenon. WARF was established to commercialize
discoveries at arm’s length from the University of Wisconsin’s academic activities.
Proceeds from Vitamin B-12 and other discoveries enabled the University of
Wisconsin to become a research powerhouse in the biological sciences during the
depths of the Depression. See Apple, Rima. 1989. “Patenting university research:
Harry Steenbock and the Wisconsin Alumni Research Foundation,” ISIS 30
(September): 375–94.
5 WARF was central to an earlier controversy over the commercialization of research.
Decades earlier, margarine producers had charged WARF with using its control of
patent rights to protect Wisconsin dairy farmers from competition.
6 Merton, Robert K. 1973 [1942]. “The normative structure of science,” in Norman
Storer (ed.), The Sociology of Science. Chicago: University of Chicago Press.
7 See Mills, C. Wright. 1957. The Power Elite. New York: Oxford; and 1958, The
Causes of World War III. New York: Ballantine.
8 See Storr, Richard J. 1953. The Beginnings of Graduate Education in America. Chicago:
University of Chicago Press; Geiger, Roger. 1986. To Advance Knowledge: The
Growth of American Research Universities, 1900–1940. Oxford: Oxford University
Press; and Altbach, Philip, Robnert Berdahl and Patricia Gumport (eds). 1999.
American Higher Education in the Twenty-first Century. Baltimore: Johns Hopkins
University Press.
9 Kevles, Daniel. 1978. The Physicists: The History of a Scientific Community in Modern
America. New York: Knopf.
10 Gibbons, Michael, Camille Limoges, Helga Nowotny, Simon Schwartzman, Peter
Scott and Martin Trow. 1994. The New Production of Knowledge. Beverly Hills: Sage.
11 Merton, Robert K. 1970 [1938]. Science, Technology and Society in Seventeenth-
Century England. New York: Harper & Row.
12 Storr, Richard J. 1968. Harper’s University. Chicago: University of Chicago Press.
13 US Office of Scientific Research and Development. 1945. Science: The Endless
Frontier, A Report to the President on a Program for Post-war Scientific Research.
Washington, DC: US Government Printing Office.
14 Ben-David, Joseph. 1980. “The ethos of science: the last half-century,” in Silver
Jubilee Symposium, Volume I. Canberra: Australian Academy of Sciences.
15 Aitken, Hugh. 1976. Syntony and Spark: The Origins of Radio. New York: Wiley.
16 Etzkowitz, Henry. 1983. “Entrepreneurial scientists and entrepreneurial Universities
in American academic science,” Minerva 21 (Autumn): 198–233.
17 Slaughter, Sheila and Larry Leslie. 1997. Academic Capitalism. Baltimore: Johns
Hopkins University Press.
18 Guston, David. 1999. Between Politics and Science: Assuring the Productivity and
Integrity of Research. Cambridge: Cambridge University Press.
162
INDEX
163
INDEX
transfer 4–5, 114–15, 118–21, 122, capital: formation and transformation 143
124, 125, 125–6, 140 capitalism: classical model 131
Beadle, George 25 Carnegie, Andrew 43
Ben-David, Joseph 147 Carnegie Institute of Washington 29, 46,
Berkeley University (California) 12, 47, 47
50, 106, 137 Center for Integrated Systems 112
Best, Charles 66 Chandler, George Frederick 11, 27, 34, 35
Bible: quoted at 1904 MIT alumni reunion chemical engineering: MIT 30, 40
43 chemical industry: links with engineering
biochemistry 139 schools 13
bio-informatics 139, 147 chemistry: emergence of research at MIT
biology: molecular 139; Wisconsin as 29, 30; and Liebig’s development of
research center 13 artificial fertilizer 10; organic 11
biotechnology 127, 148; firms 16, 32, 110, Chicago University 11, 24, 28, 47, 48, 52,
143, 148; and patent rights 9, 55; 109
SUNY creation of industry 105 Clark University 28
Bok, Derek 15 classical learning: eighteenth-century
Boston: Bush’s connections 3, 107; teaching colleges 27; and emergence of
business and industry in nineteenth- research 10–11
century 2, 22, 80; and Edison 79; classical teaching colleges: academic
financial community’s involvement in format 18, 20, 21; expansion of into
ARD 4, 90, 91, 93, 101; post-war universities 24, 27–8
technology corridor 78, 103, 110; ring Cohen-Boyer patents 9, 119
road 111; and Rogers’ vision for MIT 2, Cold War 54, 142, 145
21–2, 23; significance of MIT 6, 26, 52, Colorado University 9
72, 103 Columbia University 12, 27, 34, 35, 47,
Britain: post-war funding of academic 132, 146; early initiatives and
science 145–6; scientists’ work with the expansion 11, 24; patents and
military 50–1 intellectual property rights 9, 123–4;
Bunker, John 62–4, 67, 97 “seed” venture capital fund 100
Bush, Vannevar: Compton’s tribute 64–5; communications: Edison’s solution for
consulting and entrepreneurial New York 102, 107
activities 3, 37, 38, 78, 104, 107; companies see corporations; firm
“Endless Frontier” report (1945) 2, 87, formation; firms; small firms
145–6; initiatives for working with the Compton, Karl: early work for New
military 42, 46, 47–8, 48–9, 116; and England revival 2, 4, 79, 80, 82–3, 86,
origination of university-based high- 87, 87–8, 101; and formulation of
tech firm 2–3, 110; position on patents policy 61, 74; MIT and ARD
patenting 62, 64, 71–2, 78; work on 42, 49, 70, 89, 90, 91, 94, 96, 97, 98,
inventions 50, 70 111; tribute to Bush 64–5
computer science 137, 139, 147, 148
Cal Tech 14 computers: ARD’s focus on 97–8; Bush
California: informality of style 111; and Wiener’s research 50; early firms 5;
Institute of Technology 20, 30; and magnetic core memory 76–7, 125;
Stanford’s initiatives 102, 103–4, 108; Silicon Valley 112
technology push model of innovation Conant, James 42, 46, 47
107; University see University of conflict of interest 39, 136; scientists’
California at Los Angeles; see also entrepreneurial ventures 127–8, 133–5
Berkeley University Congleton, William 98
Cambridge (Mass.): biotechnology firms Connecticut: agricultural experiment
32, 110; Ptashne’s entrepreneurship station 24–5; changing of securities
132, 133 laws 90
164
INDEX
consultation 7, 14, 21, 30, 33–5, 34–5, 107–8, 110–11, 143, 147; see also
131; Bush’s approach 3, 37; controversy regional economic development
and resolution at MIT 31, 32–3, 35–7, economy: impact of technology transfer
38, 39, 40, 67 124–5, 134; increasing importance of
Cornell University 28 intellectual property 150; and science
corporations: attracting branch plants in 1, 9, 129–30, 137, 147, 150; see also
New England 85–6; debate about regional economic development
patenting 58; Harvard Business Edgerton, Grier and Germeshausen
School’s links with 92; multi-national (EGG) 70
143–4; research labs 29, 81; sponsoring Edgerton, Harold 69–70
of labs in Latin America 142; and start- Edinburgh: research leading to cloned
up firms 139; see also firms sheep 16
Cottrell, Frederick G. 73 Edison, Thomas Alva 79, 102, 107
Cross, Richard 83, 85 electrical engineering: Edgerton’s research
Curie, Marie and Pierre 149 69–70; MIT teachers from industry 40;
at Stanford 104, 108–9
Data General 111 electrical industry: development in San
David, Donald 91 Francisco 103; and early engineering
defense: MIT research projects 49; schools 13; emergence in New England
Stanford University research 110 79
Delaware: Bush’s idea for patents office electromagnetics: Maxwell’s theory 17
71–2 electronics: early firms 5, 70; research
Denning, Peter: Communications of the build-up during World War II 47, 108;
ACM 136–7 Stanford and emerging industry 103,
depression: academics’ refusal of federal 104, 106, 108, 109, 110; see also
funding 48; effects on university– Raytheon Corporation; Research
industry relationships 13, 36–7; New Laboratory for Electronics (RLE)
England’s economic problems 78, 112; electrostatics: Cottrell’s device 73; Van de
Stanford’s academic–industrial Graaff’s generators 59, 96–7, 111
development 102, 104 Eli Lilly Company 66
developing countries: transfer of Ely, Richard 28
innovations 144 employment: generated by technology
Digital Equipment Corporation 96, 97–8, transfer 124; recruiting of graduates
99, 111 from institutes 45, 53
disciplines: recent trend towards engineering: Rogers’ vision of training 23;
collaboration 139, 147 scientists in war-related projects 12,
DNA 17, 139 54; at Stanford 102, 103–4, 108–9,
Dole, Robert 119 110, see also polytechnic engineering
Doriot, Georges 4, 86, 92, 94–5 schools
Duncan, Louis 33 engineers: consulting practices at MIT 30,
Dupont Corporation 43, 47 33, 36, 38; role according to
polytechnic movement 26; Silicon
Eastern Europe: socialist model of research Valley 103; traditional view of role 60
contracts 125 entrepreneurial science: academic
Eastman, George 43, 45 participation in 127–8, 137; causes
Eckert-Mauchly 97 16–18; dynamics 5–8, 140–1, 149–50;
e-commerce: late 1990s ventures 100 and firm formation 127, 131–3;
economic development: increasing role of impetus to 129–30; MIT as model 2,
universities 1, 8, 12, 15, 18, 19, 39, 77, 21, 113; precursors 10, 17; Silicon
133, 134, 150; and research and Valley 103, 150
education 5–8, 133; role of patents 56, entrepreneurial university 16, 18–19, 149;
59; science-based 17, 79, 82, 89, 101, and firm formation 131–3; importance
165
INDEX
166
INDEX
111; venture capital firms 100 federal funding 59–60, 77, 116–18; and
human resources: New England’s patenting 16, 55, 57, 58, 106, 116,
advantage 83, 86; as tool in venture 123–4; receipts from licensing 5, 58–9,
capital firm 93 60, 123–4; university–industry
Hunsaker, Jerome Clarke 94 collaboration 136, 143, 144, 149; see
Hutchins, Robert 52 also knowledge
Internet 55, 107, 112, 143, 144
IBM (International Business Machines) inventions: Bush’s experience and
74, 76–7, 142 activities 2, 3, 64–5, 70, 71;
incubator facilities 10, 14, 124, 126, 141, intellectual property and patenting 55,
143 56, 57, 59, 60, 66–7, 68, 113, 117, 120,
industrial scientists: role during World 123–4, 127; MIT’s policies and
War II 47 controversies 67, 68, 72; proposals to
industry: and academic research prior to ARD 93; and Research Corporation
Bayh-Dole 114, 117; administration of 72–3; Rogers’ vision of training 22;
technology transfer 10; breaking down Stanford graduates in 1930s 103, 106;
of separation with science 9, 149, 150; and technology transfer 122–3; from
Bush’s experience 3; controversy over universities 6
universities’ relations to 14–16, 133–4, investment: in ARD 92, 93, 93–4, 94; and
136; emergence of closer relationship “seed” venture capital funds 100–1; and
with research 17, 102, 109; emergence venture capital 91, 100–1
of relationship with academia and
universities 2, 6–7, 13–14, 30, 33–5, Jackson, Dugald 33
39, 40–1, 78–9, 102, 103–4, 105–6, Japan 41, 59, 125, 137
112, 125–6, 135–6; MIT’s close links Jefferson, Thomas 25
with 1, 9, 21, 26, 30, 33, 35, 36–7, 40, Jewett, Frank 47
41, 53, 54, 62, 103, 113; New England’s Johns Hopkins University 11, 16, 24, 28,
decline and efforts to revive 79–80, 47, 48, 109
81–2, 83–5, 89; primacy of Boston 22; Joint Venture Silicon Valley 81, 140
recent trend towards collaboration 139, Jones and Lamson Machine Tool
148; traffic with university and the Company 86, 91
military 42, 52; translation from
agriculture to 23; see also corporations; Kerr, Clark 12
firms; small firms; triple helix Keyes, F.G. 35
information: firms’ need for availability of Kidder, Tracy: study of high-tech 111
15, 16; release of required for Klystron tube: invention 106
innovation 57, 123 knowledge: capitalization of 1, 55, 60, 133,
innovation: interactive model 112, 143; 140–1, 149, 150; debates about
“market pull” model 102, 106–7, 112; patenting 56–7, 59; and development
“science or technology push” model of research 10–11; triple helix model
102, 107, 107–8, 112; triple helix for management of 140–1, 143; and
dynamic 140, 141, 142, 143–4, 148; see universities’ new entrepreneurial role
also technical innovations 1, 5, 9, 10, 40; and venture capital firm
institutions: academic elite 1, 146; triple 93; see also intellectual property
helix model 139–40, 143 Knowledge Circle of Amsterdam 81, 140
intellectual property: Bush’s capturing of Kornberg, Arthur 127
78, 116; controversy 7–8; debates and
considerations at MIT 59, 60, 68, 69, laboratories: collaboration with
70–2; differences in different countries production in corporations 142; and
59–60; economic value 14, 137–8, 150; start-up firms 139; see also Radiation
effect of Bayh-Dole Act 4–5, 8, 16, Laboratory (Rad Lab); research
112, 113, 114, 123–4; generated under laboratories
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federal funding for research 42, 48, 50, Research and Development
52–3, 54, 113, 145–6; relations with Corporation (ARD)
government 7, 8, 15, 41, 53, 54, 113; Virginia Polytechnic Institute 16
relations with the military during vitamin D: discovery of 119
World War I 45, 46, 53; second
academic revolution 12–13; “seed” Walker, William H. 29–30
venture capital funds 100–1; warfarin: discovery of 119
similarities with firms 148; and wars see World War I; World War II
technology transfer 41, 114–15, Washington University 9
117–18, 121–2, 124–5, 125–6, 133, West Point engineering school 21
136, 140; Terman’s view of Westchester: medical school 122
administration 109; typical Westinghouse corporation 97
organization of science 128; World War Whewell, William 18
II model for relations with government Whitney, Josiah 30
42, 47–9, 53, 141; see also Whitney, Willis 29
entrepreneurial university; land grant Wiener, Norbert 50
universities; research universities; triple Wilson, Caroll L. 71–2
helix Wisconsin University 16, 55, 60–1, 66–7,
University of California at Los Angeles 71, 116, 119; Alumni Foundation
12–13, 67
48, 100, 122
World War I: academic scientists’ liaison
with the military 42, 46; relationship
Van de Graaff, Robert J.: and research on between universities and the military
high voltage 59, 75, 96–7, 111 45, 46, 53
Varian, brothers 106 World War II: academic scientists in war-
Venetian state: origins of patent law 56 related projects 12, 27, 46–7, 51–2,
venture capital: creating role for 93–6; 53–4, 145; disruption of New England
creation of sources by technological Foundation plan 87–8; effect on
innovation 144; government’s role in Stanford University 108–11; ideology
extending research funding 115; of basic research 145; impact on MIT
pioneering role of Compton and MIT 51–2, 73–4; MIT’s government
colleagues 2, 4, 90, 101; realization of contracts 41, 42, 45, 48, 50, 74, 97;
New England’s need for 86; recent role of government in innovation
focus of Research Corporation 58; 115–16; Stanford’s electronics
Silicon Valley 103; trajectory of inventions 106; university–government
99–101; universities’ role 9, 100–1 links 7, 47–9, 53–4, 141
venture capital firm 2, 4, 74, 86, 88, 112;
e-commerce 100; invention of by Yale teaching college 28
Compton and MIT colleagues 74–5, Yale University 12, 27, 34; Sheffield
89, 91, 98; precursors 90; “seed” funds School of Technology 20, 27
100–1; transplantation of mechanism
to Stanford 107; see also American Zadeh, Lofti 137
173
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