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Companies Supporting the ERCs

For internal reporting and analysis of ERC activities, NSF typically groups the Centers in terms of their research focus into five broad "technological areas". While this categorization of the ERCs' research does not necessarily reflect the primary product or research area of the companies supporting the ERCs, it does give some indication of the types of university-based research in which the companies are interested, and as such, provides a useful point of departure for our profile of ERC industry sponsors.

Table 3 shows the NSF categorization of ERCs by technological area, and the breakdown of respondents'[7] company units supporting ERC research in each area. Close to a third of ERC industry sponsors who participated in the survey (30.4%) are associated with Centers conducting research in the design and manufacturing area. Another 20.0% are associated with ERCs conducting biotechnology and bioengineering research, 17.7% with ERCs in materials/processing engineering, 16.1% in electronics/telecommunications, and 11.8% in energy and resource recovery.

In terms of their own company unit's primary product or research area as categorized by three-digit SIC code, ERC industrial members and sponsors who responded to the survey represent a wide range of industrial sectors. As shown in Table 4, the most heavily represented branch of industry is electrical, electronic, and communications equipment, which is the primary research or product area of more than a fifth (21.6%) of ERC member/sponsor companies. This is followed by chemicals and allied products (including pharmaceuticals) at 15.8%. Together, these two areas represent the primary research/product line of more than a third (37.4%) of total ERC industry sponsors. Surgical and medical instruments or supplies represents another 9.1%, petroleum refining and extraction 6.7%, and aircraft and missiles 4.4%. From 2-4% of ERC member/sponsor companies are in machinery (3.5%), building construction (3.5%), motor vehicles and motor vehicle equipment (3.2%), primary metals (2.9%), and professional and scientific instruments (2.6%). The 9.4% in the "other non-manufacturing" area primarily consists of engineering design/service and computer software companies. R&D intensity, often measured as the ratio of R&D funds to net sales, provides an indicator of the importance of R&D across different industrial sectors. As is evident from the table, most of the sectors in which ERC industrial sponsors are concentrated have a relatively high R&D to net sales ratio. The one exception is petroleum refining and extraction, which has an R&D intensity ratio of only 0.8 but represents 6.7% of ERC companies. Two of the 18 ERCs, however, conduct research in the energy and recovery area, of special relevance to firms within this industrial sector. The two industries which together comprise more than a third of total ERC company sponsors -- electrical, electronic and communications equipment and chemicals and allied products -- both have relatively high R&D intensity ratios of 5.1 and 5.8, respectively.

In terms of size of the companies supporting the ERCs, a fundamental problem arose in that the unit of analysis was the company unit that is the primary direct beneficiary of the company's participation in the ERC, not the firm or even the division (except, of course, for small firms where these happened to be one and the same). Based on our preliminary interviews, firms found it difficult to define the size of the unit. Size is usually a proxy for something else of interest anyway, such as R&D intensity or some measure of technical or financial resources. What we really sought is an indicator of the unit's access to internal company (or unit) technical and financial resources, since that largely determines what their needs are regarding access to universities. Size of the overall firm as a crude indicator is flawed in many cases, depending, for example, on how decentralized the firm is, ambiguity as to whether the parent or subsidiary is the most appropriate proxy, and whether subsidiaries have access to the technical resources of the parent. The NSF-ERC database indicates that of the firms participating in ERCs at the time of the survey, roughly 50% were "large", 20% "medium-sized", and 30% "small"; size, however, was at that time undefined in terms of how ERCs were required to submit this information to NSF.

Table 5 shows the number of years the company units had been members or sponsors of individual ERCs. On average, one out of ten (10.7%) respondents' companies had been associated with an ERC for eight-to-ten years, reflecting continuous membership/sponsorship since close to the time of inception of the ERC program. Another 31.5% had been associated with the ERC for five-to-seven years and an additional 44.9% for two-to-four years. Only 10.1% of the companies had been associated with the ERC one year or less. 

On average, respondents' companies had been associated with an ERC for about four-and-one-half years. For certain Centers, however, the average was more than five-and-one-half years (MIT and Brigham Young), while for others it was less than three-and-one-half (Wisconsin, Montana State, and Carnegie-Mellon Data Storage). The differences are in part, but not wholly, explained by differences in the length of time since inception of the Center. Of the Centers with the highest average years of participation by member/sponsor companies, the ERC at MIT was initially awarded by NSF in 1985, the year of inception of the program, and at Brigham Young the following year. Of Centers with the lowest average years of participation, the ERC at Wisconsin was awarded in 1988, at Montana State in 1989, and at Carnegie-Mellon (Data Storage) in 1990.

At the core of the ERC Program is the concept of firms having membership in a center, which involves them in strategic planning, joint research projects, mentoring of students, access to the center's facilities and equipment, access to center researchers and students, and a number of other things depending on the center.  Center membership usually involves payment of a fixed annual fee that is pooled with cash from other members and sponsors for support of the center's research and research-related activities.  In some cases, centers have accepted specific in-kind donations of such things as software and equipment in lieu of cash to establish membership.  Centers set their own membership rates and often have associate memberships for small firms that cannot affort the cost of full membership, or for larger firms that are not yet ready to make a commitment for full membership.  Member companies may also sponsor specific research projects and some form consortia around larger projects and testbeds.  Occasionally, centers will introduce potential member firms to the ERC through project-level support.

ERC membership fees, averaging about $20,000 per year per company, are the primary means by which most respondents' companies provide financial support to the Centers (see Table 6). Almost two-thirds (61.1%) of the companies paid membership fees to the ERC in 1994, the latest full year prior to the survey. Although contracts for ERC research in 1994 were reported by only 19.5% of the industry representatives, they were considerably larger on average than membership fees, with the average contract per firm at about $125,000.[8] In-kind donations such as software and equipment were reported by 17.5% of the firms for 1994, at an average level of about $55,000, and unrestricted grants for ERC research were reported by 6.6% of the firms, at an average level of about $45,000. About 10% of respondents also reported providing other unspecified support to the ERCs in 1994, at an average level of about $130,000 per firm for those that provided such support. This average is somewhat distorted, however, by one respondent whose company had provided $2,000,000 in unspecified support to the ERC; without this, the average for other unspecified support drops to about $60,000. 

Respondents to the primary participant survey play a number of different roles in the relationship between their company and the Center with which it is associated. As shown in Table 7, the large majority (81.9%) are the main point of contact between their company unit and the ERC. Slightly more than two-thirds (69.9%) coordinate or help coordinate participation in the ERC by technical staff within their company units, and a similar number (68.8%) are responsible for preparing budgets and/or justifications or recommendations for their companies' membership in the ERC. About a third (34.1%) are voting members of an ERC advisory committee, council or board that makes recommendations regarding ERC management plans or research, and just under a third (30.9%) are responsible for approving the budgets for their companies' membership in the ERC. 

Attendance at ERC workshops or seminars and review of ERC research results and publications, both somewhat passive forms of university-industry interaction, are the most prevalent form of interaction between ERC industry sponsors and the Centers with which they are affiliated. In terms of their personal interaction with the ERC, more than two-thirds of survey respondents (71.9%) had attended or participated in one or more ERC seminars or workshops and almost as many (67.9%) had reviewed ERC research results/publications (see Table 8). In terms of more active forms of interaction, more than half of the respondents (59.0%) had received technical advice/consultation from ERC faculty or researchers. Close to a third (30.4%) had collaborated with ERC researchers working at the company's site and just under a fourth (23.8%) had participated in research conducted at the ERC's site. In terms of interactions with ERC students, 17.5% of the industry representatives had supervised a former or current ERC student working at the company, and 6.9% had served as a member of an ERC student's thesis or dissertation committee. About one out of seven respondents (14.3%) had co-authored a publication and/or developed an invention jointly with ERC researchers. 

The breadth of interaction with ERC researchers and students by employees other than the respondent within the companies supporting the ERCs is shown in Table 11. The most widespread type of contact with the ERCs within participating companies is access to ERC research results or publications, again a rather passive form of university-industry interaction. More than 80 percent of survey respondents reported that at least one employee in their company other than themselves had read ERC reports or publications within the past twelve months; 16.1% reported that 6-to-10 company employees other than themselves had read such publications, and another 10.3% reported that 11 or more employees had had such contact with the ERC's research. A majority of respondents also reported that company employees other than themselves had consulted with ERC faculty or researchers (75.9%) and had participated in ERC seminars and workshops (68.0%). In terms of more active forms of collaboration, about a third of the respondents reported that at least one other company employee had participated in a joint ERC project at the ERC's site (35.2%), participated in a joint project at the company's site (34.2%), and/or used facilities or equipment at the ERC site (30.4%).