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Research Policy in Europe and in the US - a Practitioner's View

bridges vol. 13, April 2007 / Feature Article

by Wilhelm B. Gauster

The Global Imperative

Wilhelm Gauster

Hardly a day goes by without the appearance of one or more news items on the imperative of fostering innovation in an increasingly globalized economy. Picked at random, an article in The New York Times of March 17, 2007, ("These Boots Were Made for 22 M.P.H.") describes the challenges faced by entrepreneurs in Russia, and the lack of a "vibrant mechanism to bring together venture capitalists, inventors and entrepreneurs to develop viable commercial products." That process is what is meant by innovation, and the question is how to structure research and development policy to best support it.

All countries, and their groupings, now see themselves as players or potential players in a global network and are addressing the urgent question of how to optimize their respective roles. The established economies, notably the US, are motivated by the need to maintain leadership positions that appear to be eroding in the face of increased competition. This trend, if not halted and even reversed, would have grave consequences for creating jobs and maintaining a high standard of living; decreased innovative capability would impact energy options and national security. Less established economies are motivated by opportunities not available to them before. They now have options resulting from the leveling brought about by globalization (Clyde V. Prestowitz, Three Billion New Capitalists,The Great Shift of Wealth and Power to the East, New York: Basic Books, 2005; Thomas L. Friedman, The World Is Flat, New York: Farrar, Straus and Giroux, 2006), if only they can position themselves to take advantage of them. While the US is clearly in the first camp, European countries and Europe as a whole appear to represent a mixture of the two sets of motivations. This blending is due to differing historic antecedents (for Europe, fragmentation and the first steps toward consolidation) and the increased heterogeneity in an expanded European Union.

These differences, among others, are reflected in two recent reports discussed in this issue of bridges, and both deal with the need for science and technology policy to respond to a rapidly changing global environment. Both are reports to their countries' respective legislatures: Rising Above the Gathering Storm, Energizing and Employing America for a Brighter Economic Future is the response of the US National Academies to a specific request from the US Congress; Österreichischer Forschungs- und Technologiebericht 2006 was commissioned as a report of the Austrian Federal Government to Parliament on the state of research and technology in the country; it was prepared by a consulting group whose members include government-funded laboratories. It is difficult to assess the level of independence with which advice is given in each case. In the absence of large private universities that exist in the US, European higher education has been more closely linked to government, as has European research through joint public-private organizational models not found in the US. However, because of the massive growth in government support for research and development in the US beginning with World War II, the practical distinctions are less clear. An example of the way this topic is discussed in Europe is the volume Großforschung und Autonomie: Die Geschichte der Helmholtz-Gemeinschaft, Neuherberger Vortäge 1 (2006).

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National Innovation Networks

The Austrian Research and Technology Report refers extensively to the Austrian innovation system. The concept of national innovation networks or systems is useful in formulating policy, because it identifies the institutions that need to be brought together to achieve desired outcomes. In implementing policy, which is notoriously more difficult than its planning, individuals who see their own and their organizations' places can become more effective actors. Understanding these roles in the broader societal and cultural setting is a first step toward making the adaptations and changes that will lead to success. Through this perspective, national and regional distinctions become clearer, and some insight can be gained into which experiences can be transferred from one setting to another.

Porter and Stern developed a National Innovative Capacity Framework which describes how local environments in different regions lead to variations in innovative output (see Michael E. Porter and Scott Stern, "Innovation: Location Matters," MIT Sloan Management Review 42, no. 4 (2001): 28-36 and references therein), taking into account the linkages and interactions among institutions that drive the process. They show that "clusters" of institutions such as universities and industries, working interactively in focused areas, are particularly effective innovators, provided that the right environment exists in terms of human and financial resources and policy support.

A different and complementary argument for the importance of location is made by Richard Florida (Richard Florida, The Rise of the Creative Class and How It's Transforming Work, Leisure and Everyday Life, New York: Basic Books, 2002). In this sometimes controversial work, he coined the term "creative class" and presents evidence that environments, particularly urban ones, attractive to workers in creative professions such as the arts, sciences, and engineering, lead to virtuous cycles of economic development. I mention it here because it is clear that a number European cities, and particularly Vienna, have many of the positive attributes highlighted by Florida. Austria and, again, especially Vienna maintain resources in terms of a physical and intellectual infrastructure that can bring decisive benefits if only they are utilized appropriately.

The most significant difference between the networks for Austria and the US is the element of size or scale. In the US, major universities, laboratories, and industries have long functioned in a large national arena. Of course, recent events indicate that the US sees itself as part of an even broader environment. While Austrian institutions have a high level of international interactions, a truly integrated European research community is only now being developed (see Ernst-Ludwig Winnacker, "In Europa hat Forschung Zukunft," MaxPlanck Forschung 4/2006), as is evident from the ratios of national R&D budgets to the funding of the European programs.

However, budgets alone don't tell the whole story. Numerous initiatives at the local, regional, national, and European levels interact even though they are funded separately. A summary of European activity in an area currently receiving much attention - nanoscience and nanotechnology - shows both similarities and differences with respect to the US (Marie-Isabelle Baraton, Raymond Monk, and Renzo Tomellini, "European Activities in Nanoscience Education and Training," Mater. Res. Soc. Symp. Proc. 931, 2006). Just as in the US, many initiatives exist at several levels; partnering includes government, universities, non-university research centers, and industry. However, the fraction of total support by industry is significantly smaller and that by government is larger than in the US. Possibly as a consequence, there is more emphasis on basic research and a perceived need to catch up with other parts of the world, especially the US, in applications. This drives some of the education efforts, which in Europe are integral parts of the initiatives, reaching down to undergraduate and technical school (junior college) levels and often including public outreach as well. There are numerous studies on regulation and risk, as well as on the societal implications of technology (e.g., by the Institute for Technology Assessment of the Austrian Academy of Sciences); these seem to be better integrated into early public debate in a participatory way rather than by a confrontational approach of legal challenges at later stages.

The Role of the Scientist in an Open Innovation Environment
High-level policy documents are useful, even essential, in pointing out to legislators the benefits of investing in research and development and the need to develop requisite innovative capacity. However, they do not help individual scientists or laboratory managers to bring about cultural changes needed for their own institutions to remain or become full participants in a new environment, and thereby prepare for the future.

From my own perspective as a laboratory scientist and manager, I find it helpful to reflect on the origins of the institutions to which we belong, and what has changed in the recent past. Some of the differences between Europe and the US are highlighted if we compare how the large research organizations came about.

Taking Germany as a European example, there is a network of institutions in addition to universities, with constitutionally mandated responsibilities for basic (e.g., Max-Planck Society) and applied (e.g., Fraunhofer Society) research (see Ernst-Joachim Meusel, Außeruniversitäre Forschung im Wissenschaftsrecht, Köln: Carl Heymanns Verlag KG, 1992). In contrast, the US system appears to leave more space for entrepreneurial competition for research funding among universities, mission-oriented laboratories, and industry. The present system of the Department of Energy's national laboratories had its origins in the Manhattan Project during World War II (Peter J. Westwick, The National Labs, Science in an American System, 1947-1974, Cambridge, MA: Harvard University Press, 2003), in a highly coordinated, focused, short-term effort to develop nuclear weapons. The infrastructure created to support the project became institutionalized as a laboratory system that continued to make national facilities available for basic research. The system also diversified over a period of more than 60 years in response to national needs (nuclear power, nuclear science and fusion, renewable energy sources, biomedical research, nuclear medicine, biology, ecology, high-energy physics, power transmission and superconductivity, computational science, genomics, and more). The institutional flexibility and the ability to adapt to change are strengths of the US system in the open innovation environment discussed below.

As an aside, despite the institutional and legal differences, developments on both sides of the Atlantic often paralleled each other. The establishment of the large research laboratories in Germany that later formed the Helmholtz-Gemeinschaft took place largely to explore (peaceful) applications of nuclear technology, and adopted aspects of the US national laboratories as a model. Later, in a period of public disillusionment with nuclear technology, both sets of laboratories diversified and the German ones dropped the word "nuclear" from their names.

Now the challenge is to make whatever further adaptations are needed. What aspects of today's environment for science and technology are really new ones, which we need to recognize and respond to?

First and foremost, in my view, is the transition from a system of closed to one of open innovation (Henry William Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology, Boston, MA: Harvard Business School Press, 2003). The large, integrated research laboratories operated in an earlier era by industries such as Xerox and AT&T typify the "closed innovation" model, in which a single company performs and controls every step in-house, from the generation of ideas through research, development, manufacture, sales, and customer support. The antecedent of the present US national laboratories, the Manhattan Project, is described by Chesbrough as "an ad hoc central research laboratory" created by the US government to conduct a crash project on nuclear fission, following the closed innovation paradigm.

Since the end of the Cold War, the large industrial laboratories have, for the most part, collapsed. Free and rapid flow of information occurs between industries and universities, not limited by national boundaries. The old virtuous cycle that allowed companies to derive exclusive benefit from their own R&D investments has been broken due to many factors that include growth of total R&D efforts worldwide, increased communication and mobility, effects of venture capital, shorter product life cycles, and increased costs of R&D. This has implications for how individual scientists are employed and how they plan their careers.

For the future, this means that institutions will have to reexamine their roles and take the organizational and partnering steps needed to adapt. Preparing scientists and engineers to function in the new environment is a major challenge now facing laboratories and universities, and to compete successfully, laboratories and universities must undergo cultural change. Austria, due to its small size, does not have a laboratory system as extensive as that of the US or Germany. However, its smaller laboratories have already gone through periods of profound change, not always without pain, in order to adapt to changing circumstances. Similarly, the Austrian universities have begun a process of reorganization that has yet to be fully implemented.

A striking example of such an organizational and cultural shift is the recent merger of the University of Karlsruhe and the Karlsruhe Research Center into the "Karlsruhe Institute of Technology". The fusion, building on 50 years of collaboration between the institutions, coincides with the selection of the university as a winner in the German government's "Excellence Initiative," which will provide additional resources. Several points are of interest to the US and to US laboratories: The first three topical areas to be coordinated in Karlsruhe are scientific computing, nano- and microtechnology, and materials for energy applications. The legal structure of the two partners remains unchanged initially, partly to assure that contractual obligations that are the basis for funding can still be met. A motivation for the merger is to counteract the institutional stove-piping in German scientific research. However, various statements made during the process also reflect a concern that mission-based laboratories can not be sustained in their current form indefinitely. Political pressure in Germany favors funding for university research over the large laboratories of the Helmholtz-Gemeinschaft. Interestingly, the partners explicitly identify the Massachusetts Institute of Technology as their model for the new institution, suggesting that the combination of a German university and a German national laboratory is equivalent in scope and resources to a major university in the US!

How such scenarios will play out in other areas of Europe and in the US is not clear. What is clear, however, is that with the accelerating pace of innovation in an open global environment the nature of science and engineering and how they address problems are undergoing radical change. This evolution will continue to challenge practitioners and organizations, as well as those who shape policy.


The author, Wilhelm B. Gauster retired in December 2005 from Sandia National Laboratories in Albuquerque, New Mexico, where he last served as senior manager and deputy director.


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