Center for Science, Technology, and Economic Development (CSTED) > Selected Reports

The original goals of the Engineering Research Centers program were to improve engineering research and better prepare U.S. engineers to contribute to industrial practice and strengthen U.S. industrial competitiveness. These goals were to be accomplished by bringing new approaches to academic engineering research and education and by forging vital, long-term links between universities and industry. The objective of this study has been to examine one aspect of the ERC program: the patterns of interaction that have emerged between academic engineering and industry as a consequence of the program and the overall impact of these interactions on industry. More specifically, the study has attempted to:

1) identify the types of results or outcomes of interactions between ERCs and their industrial sponsors;

2) determine the frequency of occurrence of the results in different settings; and

3) estimate the relative value or benefit of those results to the companies participating in the ERCs.

In concluding this report, it is useful at this stage of the analysis to step back from a simple comparison of "scores" across specific outcomes and impacts and instead look for appropriate means of aggregating those outcomes and impacts into broader patterns. Nineteen categories were used in the survey to assess frequency and degree of benefit derived by industrial sponsors from their ERC participation. They range across a spectrum of activities that might be characterized as follows.

At one end of the spectrum of ERC-industry interactions are what are best described as "knowledge exchange": those aspects of a firm's participation in an ERC that involve access and exposure to information, ideas, know-how, technologies, and people resident in the ERC. Outcomes of this type primarily emerge from personal modes of exchange, such as participation in workshops or seminars, technical consultation with ERC faculty, or simply review of ERC research results or publications. Little action or investment other than that directly associated with its ERC participation is required on the part of the firm in the realization of these benefits. Within this category fall specific questionnaire items such as "access to new ideas, know-how, or technologies", "direct technical assistance from the ERC", "increased interaction with other firms", "improved technical information for customers or suppliers", "opportunity to interact with other firms". The overall benefits from this type of outcome or interaction, which most firms do not attempt to value in monetary terms, are generally viewed as long-term.

At the other end of the spectrum fall "concrete, product or process-oriented exchange": those aspects of ERC-industry interaction that involve the transfer of specific research results more or less directly translatable into new products or processes introduced or commercialized by the firm. While the source of the benefit in these cases originates with the knowledge or information based in the ERC, it is the subsequent application of that knowledge or information through action or investment within the firm that yields the perceived benefit. This category includes the more specific questionnaire items such as "improved a product or process", "commercialized a product/process obtained from the ERC", "increased sales/profits or reduced costs", "licensed technology or software developed by the ERC", "maintained/increased company employment in a product line". Outcomes of this sort, such as the contribution to corporate earnings of a profitable new product or process that results from the licensing of an ERC patent or adoption of ERC research results, can often be assigned a monetary value and the impact is generally ascertained over a shorter term.

There are two types of interactions that fall somewhere in the middle of the spectrum. One is the hiring of ERC students or graduates. On the one hand, ERC students represent the embodiment of the information exchange aspect of technology transfer, reflecting skills and capabilities derived from the Centers in which they were trained as well as providing enhanced links between these Centers and the firms in which they are employed. On the other hand, the employment of ERC graduates within a firm represents a direct and concrete manifestation of ERC output within the participating firm. As such, the hiring of ERC students or graduates can more readily be assigned a monetary value, such as saved time on in-house training, than can outcomes identifiable as "knowledge transfer". The estimation procedure, however, is generally less certain than for outcomes of a more observable, product or process oriented nature.

Because it can be viewed as a facilitator of ERC-industry outcomes at either end of the spectrum, access to ERC equipment or facilities, like the hiring of ERC students or graduates, can also be considered as falling in the middle. Access to ERC equipment or facilities reflects neither a knowledge exchange nor concrete product/process outcome of ERC-industry interaction per se, but rather a means of facilitating the exchange, be it at either end of the spectrum. It can lead to process or product outcomes at the firm through use of the facilities or equipment or by providing companies with a testing ground prior to their purchase of the same or related equipment that then is used to produce a tangible outcome.

Within the range of the survey data, it is of particular interest that the initial decision by firms to participate in an ERC is dominated by factors that fall at the "knowledge exchange" end of the spectrum. Access to new ideas, a match between the technological or research focus at the ERC and the company's interests, access to ERC expertise, opportunity to keep abreast of university-based research in the field, and access to specific ERC faculty were the factors rated most important by companies among their motivations for participating. The desire for more concrete product or process related outcomes through the ability to license inventions and/or software developed by the ERC was generally discounted by most industry participants at the time of their initial decision to participate.

Moreover, across the nineteen categories addressed by the survey, the "knowledge exchange" end of the spectrum also dominates the results or outcomes of industry-ERC interactions. The most frequently reported result of a firm's participation in an ERC was access to new ideas, know-how, or technologies. Other most frequently reported outcomes include direct technical assistance, influence on the company's R&D agenda, and increased interaction with other firms (see Table 14, reproduced on the next page from Chapter IV for the reader's convenience).

Furthermore, a graphic representation of the outcomes reported by ERC industrial sponsors by years of company involvement, shown in Figure 16, indicates very little change in the types of outcomes most frequently reported by firms as a result of their longer involvement in an ERC. Knowledge exchange categories are consistently most highly ranked by both newly recruited ERC industrial partners and long-term sponsors. 

The top seven outcomes reported by first-year participating firms are the same top ranking outcomes reported by the old guard, although the percentage of firms reporting such outcomes increases considerably over time. This suggests that there is something about these kinds of outcomes that increased length of interaction tends to strengthen. The top three among them -- access to new ideas, know-how, or technology; direct technical assistance; and increased interaction with other firms -- are all firmly part of the knowledge exchange end of the spectrum. Two -- hired ERC students/graduates and used ERC equipment/facilities -- fall in the middle of the spectrum. The remaining two -- improved a product or process and influenced the firm's R&D agenda -- are both of the more product or process-oriented type, yet are considerably less concrete than most of the other outcomes at that end of the spectrum. 

By contrast, with the exception of increased sales/profits, the bottom six outcomes do not increase their relative frequency as a result of increased time or exposure to an ERC. This implies that there is something different about this second set, all of which include more process or product oriented outcomes -- maintained/increased employment in a product line, patented a company-developed technology or software based on ERC interaction, commercialized a product or process developed by the ERC, established a new company or joint venture, and terminated a planned process or product line. What is different here is that to achieve the benefits, proactive commitment -- action or investment -- within the firm is required in a way that is not required in experiencing the kinds of results at the knowledge end of the spectrum.

The results most commonly experienced by companies as a direct result of their ERC participation were not necessarily the results from which firms reported the greatest value or benefit (see Table 14 on the previous page once again). The most highly valued result of ERC participation, far outranking any other single outcome, was the hiring of ERC students or graduates. While not generally viewed as a particularly important reason for joining an ERC (and somewhat less than half of participating companies had experienced this outcome), those who had hired ERC students perceived the benefits as extremely high. ERC students were considered better prepared than their non-ERC-educated counterparts in a wide range of areas, including the depth and breadth of their technical knowledge, their contribution to the company's technical work, and their overall preparedness to work in industry.

Other than the hiring of ERC students, a type of interaction in the middle of the knowledge/product spectrum, most of the other outcomes from which companies reported benefiting "a great deal" involve concrete, process/product-oriented transfer: commercialization of a product or process, patent or copyright of a technology or software, use of ERC facilities or equipment, and license of a technology or software developed by the ERC. It is important to emphasize, however, that, with the exception of access to facilities, relatively few -- in some cases, extremely few -- companies actually derived these concrete, process or product-oriented outcomes. And, on balance, when companies reporting a moderate amount of benefit are added to those reporting a great deal of benefit, the far more frequent results of the knowledge exchange type are valued by companies every bit as highly as the more product/process-oriented outcomes (though still not as highly as the hiring of ERC students). If, for example, all participants are included in calculating the mean rather than only those that report obtaining the result, the top and bottom ranked benefits in terms of value differ very little from top and bottom ranked outcomes in terms of frequency by which participants report receiving them -- that is, the knowledge exchange end of the spectrum again dominates.[15] Moreover, recall that very few firms enter an ERC relationship actively seeking outcomes directly translatable into tangible, new processes or products.

Outcomes of ERC-industry interaction at the knowledge exchange end of the spectrum are also strongly associated with the likelihood that a firm will continue to participate in an ERC. Figure 17 (compare with Figure 16, shown earlier) presents a graphical correlation of respondents' views on continued participation in an ERC with types of results or outcomes they have experienced from their participation. At the top of the list for those firms whose continued ERC participation is viewed as probable or definite are access to new ideas, know-how, or technologies; direct technical assistance; increased interaction with other firms; and influence on the firm's R&D agenda. Note that neither of the latter two outcomes was among those most frequently experienced by firms reporting that they definitely will not continue to participate. 

The above findings show that "knowledge exchange" -- access to new ideas, access to technical know-how, exposure to new technologies, opportunity to keep abreast of university-based research in the field, access to ERC expertise, etc. -- represents the heart of the ERC-industry partnership. It is the desire for this type of knowledge exchange that primarily motivates firms to participate. It is outcomes of this sort that most frequently occur as a result of their participation. It is outcomes of this sort that are relatively highly valued when they occur. And it is consistent with the finding that the hiring of ERC students, in one sense an embodiment of information exchange and know-how and an important objective of the ERC program, is the single most highly valued outcome.

Beyond the generic knowledge exchange perspective, the study showed several important perceptions of firms about the value of ERC participation. When asked to view their ERC participation as an investment in a portfolio of outcomes or benefits over time, almost nine out of ten survey respondents thought that their company had derived at least some benefit from its participation. One out of five thought that the overall level of benefits to date had been "a great deal". When asked the effect of ERC participation on the overall competitiveness of their company, two-thirds of respondents thought that there had been at least some effect. One out of ten thought that the effect of participation on company competitiveness had been "a great deal".

In the view of company representatives, one of the most important factors underlying the degree to which a company benefits from its relationship with an ERC is the closeness between the specific technical focus of the ERC and that of the company unit involved. An emphasis on cross-disciplinary research, one of the objectives of the ERC program, was judged as only moderately important by industry representatives who responded to the survey, although telephone interviews with a number of survey respondents, selected because of either the depth of the benefits they reported or the richness of their open-ended responses, tended to place considerably greater importance on the interdisciplinary aspect of ERCs. An engineering systems approach to education, another objective of the ERC program, was judged even less important by survey respondents than was cross-disciplinary research. Pretests of the survey instrument indicated that the term "engineering systems approach" was not readily understandable by the industry representatives on whom this item was tested. As it is among the objectives of the program, NSF desired that the wording be kept. However, it may be that a confusion over terminology is one of the reasons for the engineering systems approach being judged as relatively unimportant.

Chief among what companies perceived as a barrier to their benefiting from their relationship with an ERC was other company matters preempting involvement with the ERC -- an internal company constraint rather than any shortcoming on the part of the ERC. Very few industry sponsors of the ERCs considered either a low commercialization potential of the ERC's research or an insufficiently applied research focus to constitute major barriers to their companies' benefiting from the ERC relationship. On the contrary, firms seem to see their support of the ERCs as a strategic investment in a flexible, multifaceted R&D supplier that allows them to buy into a capability to solve future problems. Some expressed concern that the ERCs not be pushed in too applied a direction by an emphasis on "research of relevance to industry"; firms, probably the large ones in particular, seem to value the longer-term, more fundamental research, especially at times when they must cut back on what they are able to do in-house.

The overall level of benefits from participation in an ERC is almost directly proportional to the number of years over which the company has been involved in the program. Similarly, the longer the company had been involved, the greater the perceived impact on company competitiveness. The overall level of benefits from ERC participation also increases steadily with an increase in the types of collaboration that take place between company employees and ERC researchers and students. These findings are reinforced by one of the common themes that arose in telephone interviews with selected industry representatives: the importance of active involvement and interaction. "What you get depends on what you put in."

Finally, there is a direct correlation between the amount of influence a company has on the ERC's research agenda and overall benefits to the company from participation. One of the main findings of the 1988 GAO survey of industry sponsors of the ERCs was the need to strengthen the amount of influence that participating firms have on the ERCs' research agendas. And a significantly higher percentage -- almost double -- of current ERC sponsors report having little or no influence on the respective ERC's research agenda as reported so in 1988.

With the ERC program now in its twelfth year and many Centers at or rapidly approaching the point at which they are expected to "graduate" from the program and become self-sustaining without the continued financial support of the ERC program (unless they compete successfully for a new ERC award), the question of how current industry sponsors view the likelihood of their continued participation in individual centers is of special interest. While close to two-thirds expected to continue to participate one year from the time of the survey and over half expected to continue to participate two years later, these numbers are substantially down from the better than three-fourths of ERC industry sponsors in 1988 who thought they probably or definitely would continue to participate one and two years later. Not at all surprisingly, companies that have benefited more to date from their ERC participation are more likely to expect to continue to participate in the future. In addition, the longer a company has participated thus far, the more likely it is to expect to participate in the future.

The ERC program represents an innovative effort on the part of NSF to establish and nurture links between universities and industrial firms that specifically derived from concerns about national economic competitiveness. Given NSF's historic role of supporting high quality basic research, as well as the ERC program's requirement that successful proposals represent advanced, cutting edge research areas uniquely suited to performance in a center environment, the finding that industry most frequently benefits from and ultimately highly values the "knowledge transfer" type of interactions and outcomes suggests that the program represents a highly successful blend of NSF's traditional support of knowledge production with the transfer of new knowledge to the industrial environment. However, it is well to remember that knowledge exchange benefits are the most significant for ERC participants, but, at the same time, less amenable to and less likely to be assigned monetary value by firms. More concrete benefits, although more likely to be assigned a monetary value by firms, are experienced by very few ERC participants. With ERC impacts on industry so centered around the "'knowledge exchange" as opposed to the "concrete product-process-oriented exchange" end of the spectrum, the sustainability of the ERC-industry partnership in the absence of NSF institutional support may be sorely tested. Implicitly, the program's emphasis on building ERCs around cutting edge research areas, its limited term of institutional funding, and its insistence that Centers wishing to compete for new funding "reinvent" themselves in significant ways, places the burden on graduating ERCs to be of sufficient continuing value to their industrial membership to attract the needed funding to survive. It is difficult to establish the value of the reciprocal flow of influences resulting from new knowledge or even the hiring of an ERC student, and many industry representatives reported that it is more difficult now to obtain company approval for funds for ERC participation than it was three years ago. It is likely to be much more difficult if the price-tag associated with that participation goes up to accommodate the absence of a baseline of support from ERC program funds.

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