Collaborative Research: Models and Analyses of Industrial Laboratories: Returns, Risks, and Structural Efficiency, with Implications for Sustainability and Science Policy

Columbia University, New York NY

Investigators

Abstract

During the past century, industrial laboratories, as exemplified by Bell Labs, DuPont Research, IBM Research and Xerox PARC, have made lasting contributions to scientific knowledge and technological innovations, which have benefited society, our nation's economy and the lives of its citizens. Industrial laboratories are integral to a feedback loop that couples them with engineering and business practices, with the result that researchers in the laboratories benefit from streams of new questions and challenges from the field in one direction, while solutions, prototypes and products flow in the opposite direction. This environment defines use-inspired research that complements ?open science? research performed in academic institutions. While recent experience may justifiably raise doubts on the survivability of industrial research laboratories in the current highly-competitive market environment, there are also encouraging signs: laboratories that experienced major declines are now focusing on revitalizing themselves, while newer players have arrived and are pioneering new models of industrial research. It is therefore timely to take a deep and broad look at how science and innovation policies can foster an environment in which industrial laboratories will continue to produce discoveries and inventions with broad scientific value and transformative technological impact. Intellectual Merit This project will develop our understanding of the operation of industrial laboratories by taking an "engineering-oriented" approach that employs analytical models and quantitative methods to systematically dissect and analyze the essential features of operation, financing, and growth of industrial laboratories and draw conclusions by carrying out logic experiments that vary policy inputs and examine their impact. In particular, the research will concentrate on three areas: 1) develop and solve an optimization problem to determine the theoretical rate of return of the investment in industrial research that can be used to identify principles for optimizing laboratory management and make conditional assessments regarding the viability of the laboratories; 2) analyze the investment risk of financing industrial laboratories, study the interaction between investment and operational decisions, and identify investment strategies that provide much-needed long-term stability for laboratories to engage in fundamental research; and 3) determine how laboratory management structure affects incentive, scale of operations, and research outputs by conducting comparative studies between the traditional integrated sequential structure and newly emerging structures of industrial research management. Broader Impacts The project will provide new insights that will help industrial laboratories to improve and re-invent themselves by creating the tools laboratory managers require to adopt better organizational structures, manage the financial risk of investing in the laboratory, and maximize the rate of return. The project will inform policymakers about the impact of Science policy, and other types of policy, e.g., financial regulation, on laboratory investments and operations. Finally, while the analysis is carried out at the level of laboratories, the insights and results from comparisons between the traditional vertically-integrated structure and newly emerging structures will carry-over from industrial laboratories to the discussion on the national innovation ecosystem, especially in relation to the trade-offs in coordination cost, focus of incentives, ability to conduct fundamental research, and investment mechanisms.