Strategic Summary Computing and Communications Technology • Classification of research CS 294, EE 290X, IS 290, BA 296 • The changing industrial research Spring 98 • Market failure mechanisms in research Research support • Case for government support of research by David G. Messerschmitt 2 References Vannevar Bush • Funding a Revolution: Government Support • Organized the research science community for Computing Research (NRC/CSTB, to contribute to WW II 1999) • Defined the post-war scientific policy in his • Donald E. Stokes, Pasteur’s Quadrant: report Science, the Endless Frontier Basic Science and Technological • To this day, his influence persists, but the Innovation , Brookings Institution Press, compact based on the Cold War is 1997 collapsing 3 4 Dynamic linear model for 1-D model of research technology transfer Production Basic Applied Product Applied and Basic development research research operations • Basic research: embarks on the unknown, enlarging the • Research that is more basic is less applied and vice realm of the possible versa • Applied research (or exploratory development): elaboration •Dates to the Greeks, and to Francis Bacon and application of the known •Vannevar Bush: “applied research invariably drives out • Development: adaptation of research findings into products pure” and therefore basic research must be completely isolated from considerations of use • Each stage depends on the preceding 5 6
Changes in industrial research Example: IBM research • With increasing competitiveness, research • “Industry Solutions Laboratories” bring a has changed radically stream of customers to interact with researchers • Two interpretations: • “E-Commerce Institute” seeks to – Basic research has largely been abandoned – The linear model has been junked in favor of a – seek interdisciplinary research between business, social sciences and technology superior model (in terms of corporate performance measures) – expand and leverage outside research activities 7 8 Relationship to intellectual Pasteur’s Quadrant property Considerations of use? Outcome a patent? No No Yes Yes Bohr’s Pasteur’s Bohr’s Pasteur’s Yes Yes Quest for quadrant quadrant quadrant quadrant Outcome a fundamental scholarly understanding? publication? Edison’s Edison’s No No quadrant quadrant 9 10 Revised dynamic model Examples to discuss Improved Improved • Transistor and integrated circuit understanding technology • Packet switching and Internet • Graphical user interface Pure applied Pure basic Use-inspired research and • Object-oriented programming research basic research development • Internet auction Existing Existing technology understanding 11 12
ROI criterion for research Some problems with ROI • Discounts profits far in future Licensing and royalties – Patents run out in 17-20 years anyway Investment in • Discounts high risk or uncertain payoffs research Products • Ignores return to others and services – Public good Return on investment – Future generations (present value of expected future profits) 13 14 Market failure mechanisms Pure public good • Market-supported research under invests in • Easy appropriation research – Difficult to put to use without revealing ideas or at least possibilities – with a long-delayed payoff • Nonrival in use – with uncertain outcome – Using an idea doesn’t preclude others from using it – seeking fundamental understanding • Value of a pure public good is much greater to • First two shortcomings can be addressed by society as a whole than party that created it sharing costs and risks of “pre-competitive” – Free riders benefit from lower costs research in consortia – Patents are public and allow others to seek other means to the same end 15 16 Tire tracks Government sponsored research • Seek understanding • Take long time horizon in expected outcomes • Take high risk – Portfolio of projects with hope of some payoffs • Maximizes benefit of free exploitation and future generations • University research contributes to education 17 18
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