Page 1 IUCRC June 2006 Industry/University Cooperative Research Centers Who will join and who will decline? An analysis of factors predicting a firm’s decision to join a university- based industrial consortia Denis O. Gray, Ph.D. Drew Rivers, M.S. Psychology in the Public Interest Program North Carolina State University

Page 2 IUCRC June 2006 Industry/University Cooperative Research Centers Study Purpose Help center directors and others understand which firm characteristics (sub-organizational and personal) and center marketing approaches have the biggest impact on a firm’s decision to join a center, so that the center can:Help center directors and others understand which firm characteristics (sub-organizational and personal) and center marketing approaches have the biggest impact on a firm’s decision to join a center, so that the center can: –More clearly define the target market –Adjust the marketing approach –Structure the research program to optimize industry support Add to the scholarly understanding of the factors that support and/or undermine cooperative researchAdd to the scholarly understanding of the factors that support and/or undermine cooperative research

Page 3 IUCRC June 2006 Industry/University Cooperative Research Centers Study Plan 1.Literature Review 2.Assessment of marketing practices at NSF- supported cooperative research centers 3.Qualitative interviews with industry representatives: joiners & decliners 4.Quantitative survey of industry representatives  Ongoing  Complete  Wrapping up  Design begins this Fall; assessment begins early next year

Page 4 IUCRC June 2006 Industry/University Cooperative Research Centers Membership Factors Model Factors at different levels influence membership decisions Membership decision Economic & Industry-level Firm-level Organization Sub-org Individual Center-level Technical Management Marketing Facilities

Page 5 IUCRC June 2006 Industry/University Cooperative Research Centers Center Marketing Study- Summary of findings Relationship marketing model application Initiate & establish relationships Develop relationships Secure new members KeyFactors Director experienceDirector experience Recruiting budgetRecruiting budget Relationship networking Conference & tradeshow presentationsConference & tradeshow presentations Involving other site stakeholdersInvolving other site stakeholders ? Recruitment strategy? Recruitment strategy Involving other site stakeholders (consultant)Involving other site stakeholders (consultant) Face timeFace time Visiting the organizationVisiting the organization Hosting visits to the centerHosting visits to the center Demonstrating technical relevance Future technology transferFuture technology transfer Justifying benefits relative to costsJustifying benefits relative to costs Neutralizing IP concernsNeutralizing IP concerns Facilitating within firm decision makingFacilitating within firm decision making

Page 6 IUCRC June 2006 Industry/University Cooperative Research Centers Membership Factors Model Factors at different levels influence membership decisions Membership decision Economic & Industry-level Firm-level Organization Sub-org Individual Center-level Technical Management Marketing Facilities

Page 7 IUCRC June 2006 Industry/University Cooperative Research Centers Membership Decision Study Purpose:Purpose: –To identify organizational, suborganizational and individual level factors that predict a firm’s decision to join/not join an IUCRC »Shed some light on industrial factors that might affect decision DesignDesign –Known groups multiple case study: joiners vs. decliners ApproachApproach –Solicit nominations of recent joiners/decliners from local directors »Target N = 10 joiners; 10 decliners –Unstructured  Semi-structured taped telephone interviews –Multiple case study content analysis with pattern matching, etc.

Page 8 IUCRC June 2006 Industry/University Cooperative Research Centers Sample Progress (23 contacts)Progress (23 contacts) –10 completes (6 joined, 4 did not join) –2 outright refusals –7 no response to multiple attempts –4 expressed interest but still unable to schedule Target: 20 interviewsTarget: 20 interviews

Page 9 IUCRC June 2006 Industry/University Cooperative Research Centers Variable Domains Topics covered in the interviewsTopics covered in the interviews –Position and background –Responsibilities regarding external partnerships –Decision making process as relates to IUCRC »Initiation »Milestone events leading to decision »Roles/responsibilities of those involved »Decision criteria –Universities in overall R&D strategy

Page 10 IUCRC June 2006 Industry/University Cooperative Research Centers Today’s Highlight Preliminary thoughts on membership decision making processPreliminary thoughts on membership decision making process Emergent IUCRC Business ModelEmergent IUCRC Business Model

Page 11 IUCRC June 2006 Industry/University Cooperative Research Centers Initial SampleCompanyStatus Contact title Construction, small, private Join Product group director Semiconductors, small, international Join R&D Director Paper, Large, public Join Manager of sponsored research Aerospace, large, public Not join Director of Engineering Communications Not join Director-level, Systems engineering Chemicals, large, public Not join Senior research fellow Textiles, start-up, private Not join, but engaged with Center Owner and VP of R&D Semiconductors, large, international Joined, dropped out, did not return Director-level, technical support function Specialty chemicals, large, international Joined, dropped out, did not return Project leader, Performance Materials Semiconductor, mid-size, public Joined, dropped out, joined IP Manager

Page 12 IUCRC June 2006 Industry/University Cooperative Research Centers Network undercurrents Dynamic interplay between universities and industry Emergence of informal linkagesEmergence of informal linkages Ongoing exchangeOngoing exchange Opportunities emergeOpportunities emerge EvaluationEvaluation Acceptance or rejection of formal linkageAcceptance or rejection of formal linkage Engage in formal partnershipEngage in formal partnership Ongoing evaluationOngoing evaluation TerminationTermination Return to informal linkagesReturn to informal linkages Industry Gate- keeper University/ researcher Collaboration

Page 13 IUCRC June 2006 Industry/University Cooperative Research Centers Decision process: Initiation Contact (Director of Eng.) was familiar with Center through prior relationships at the University; Center Director approached contact and offered marketing materials (CD)Contact (Director of Eng.) was familiar with Center through prior relationships at the University; Center Director approached contact and offered marketing materials (CD) Contact (Owner, VP R&D) had a long standing relationship with the primary university; maintains working relationships will several universities.Contact (Owner, VP R&D) had a long standing relationship with the primary university; maintains working relationships will several universities. US sales manager discovered the Center, informed contact (R&D Director). Contact did Internet research on Center, then invited Center to speak at their US office staff meeting.US sales manager discovered the Center, informed contact (R&D Director). Contact did Internet research on Center, then invited Center to speak at their US office staff meeting. Contact (Director of Tech Support) had existing relationships with Center universities and researchers. Contact perceived excellent opportunity.Contact (Director of Tech Support) had existing relationships with Center universities and researchers. Contact perceived excellent opportunity. Contact (Mgr of Sponsored Research) had existing relationships at the primary university, who recommended he investigate the Center.Contact (Mgr of Sponsored Research) had existing relationships at the primary university, who recommended he investigate the Center. Organization had R&D center near university. R&D manager had been networking with local university researchers, who extended invitation to join the Center.Organization had R&D center near university. R&D manager had been networking with local university researchers, who extended invitation to join the Center. Contact (Senior Researcher) and Center Director had met a scientific conferences; contact invited Director to speak at organization; Director later sent marketing materials to organization members.Contact (Senior Researcher) and Center Director had met a scientific conferences; contact invited Director to speak at organization; Director later sent marketing materials to organization members.

Page 14 IUCRC June 2006 Industry/University Cooperative Research Centers Decision Process Overview Gatekeeper establishes and maintains relationships with universities and researchersGatekeeper establishes and maintains relationships with universities and researchers Potential projects or collaborations are identified and proposed to immediate managerPotential projects or collaborations are identified and proposed to immediate manager If accepted, then additional approvals may be required:If accepted, then additional approvals may be required: –Financial –Legal Return on investment is a key criteria for most firmsReturn on investment is a key criteria for most firms For smaller firms;For smaller firms; –No formal role –No formal process Gate- keeper Next level Manager Upper level Manager N N N N Corp- orate/ legal Financial approval -Partnership review, may assemble team -Financial approval -Contract/ Agreement review -University alliance Environment scan, networking -Opportunity identification Small firm Large firm

Page 15 IUCRC June 2006 Industry/University Cooperative Research Centers Decision process: Milestones Contact reviews marketing material  Contact attends Center meeting  contact discusses Center with his manager  Contact convinces University Alliances Director to visit the Center  Legal Team evaluated membership agreement  Legal rejects agreement  contact pursues alternatives (Large aerospace firm)Contact reviews marketing material  Contact attends Center meeting  contact discusses Center with his manager  Contact convinces University Alliances Director to visit the Center  Legal Team evaluated membership agreement  Legal rejects agreement  contact pursues alternatives (Large aerospace firm) R&D group meet to discuss potential projects for the company  Project lead assigned based on expertise  Leader identifies/decides on potential collaborators  R&D group meets again to reach consensus. (small textiles firm)R&D group meet to discuss potential projects for the company  Project lead assigned based on expertise  Leader identifies/decides on potential collaborators  R&D group meets again to reach consensus. (small textiles firm) Center PI’s make presentation to firm  Contact & US sales manager attend Center meeting  Contact meets with CEO, who agrees to associate membership  VP of Sales attends Center meeting and suggests full membership (international semiconductor firm)Center PI’s make presentation to firm  Contact & US sales manager attend Center meeting  Contact meets with CEO, who agrees to associate membership  VP of Sales attends Center meeting and suggests full membership (international semiconductor firm) Contact and CTO visit university campus  Contact attends Center meeting  Contact writes brief letter to CTO about joining  CTO approves (large paper firm)Contact and CTO visit university campus  Contact attends Center meeting  Contact writes brief letter to CTO about joining  CTO approves (large paper firm) Center approaches R&D manager  R&D manager proposes to his manager  Small team of researchers review review Center offering  upper management grants approval of fundsCenter approaches R&D manager  R&D manager proposes to his manager  Small team of researchers review review Center offering  upper management grants approval of funds Center Director does seminar at firm  Director sends marketing materials  Contact proposes Center to his manager  Team of researchers at firm reviews Center for ROI  membership could not be justifiedCenter Director does seminar at firm  Director sends marketing materials  Contact proposes Center to his manager  Team of researchers at firm reviews Center for ROI  membership could not be justified

Page 16 IUCRC June 2006 Industry/University Cooperative Research Centers IUCRC Business Model Want to understand what factors influence the decision to join/not joinWant to understand what factors influence the decision to join/not join In parallel with this study have been working on an “IUCRC Business Model”In parallel with this study have been working on an “IUCRC Business Model” –IAB member said he needed a “business model” to convey the center value proposition; challenged me to develop one –Model explains what the member gets or might get from participation – Emergent model Proposed business model draws from our current study and earlier studiesProposed business model draws from our current study and earlier studies

Page 17 IUCRC June 2006 Industry/University Cooperative Research Centers Assumption IUCRC provides an opportunity to access a portfolio of benefitsIUCRC provides an opportunity to access a portfolio of benefits –Individual member companies tend to weight the significance of specific benefits differently »Firm A might want something very different than Firm B Value obtained by a member depends in large part on the investment they make in the center to obtain their desired benefitValue obtained by a member depends in large part on the investment they make in the center to obtain their desired benefit

Page 18 IUCRC June 2006 Industry/University Cooperative Research Centers Financial Support -Memb. Fee - Follow on $ Time Guidance Research Internal Center Network & Facilities External Center Network IUCRC Input Business Objective

Page 19 IUCRC June 2006 Industry/University Cooperative Research Centers Financial Support (Memb. Fee +) Time Guidance Research Internal Center Network & Facilities External Center Network Faculty, Students and Extended Networks; Facilities Highly Leveraged (~20-1) Multidisciplinary Research Program Other members (competitors, supply chain, customers, suppliers) regulatory agencies IUCRC Input

Page 20 IUCRC June 2006 Industry/University Cooperative Research Centers Research Internal Center Network & Facilities External Center Network IUCRC Exceptional Graduate Students Informal Consulting Entrée to Other Scientists One-of-a kind Facilities Consensus on Industry Problems/Issues Identify/Influence Partners & Supply Chain $??? Strategic reconnaissance and alliances Ideas & Feedback Enhanced recruitment of new employees Broadened scientific network Access to unique Facilities $???

Page 21 IUCRC June 2006 Industry/University Cooperative Research Centers Internal Center Network External Center Network Very relevant, would do yourself within 1-2 years Highly relevant, would like to do if you had more time or money Outside core competence but might be helpful or destructive Research Amplification Near core compet- ence Emerg- ing/ Competitive Tech. Not relevant to this firm

Page 22 IUCRC June 2006 Industry/University Cooperative Research Centers Very relevant, would do yourself within 1-2 years Highly relevant, would like to do if you had more time or money Outside core competence but might be helpful or destructive Cost avoidance ~$200K Center IP Anticipate and respond to transformational or destructive Technologies $??????? Dead ends to avoid Shortened/accelerated progress on current projects Promising new areas or paths to pursue IP inside firm $???? Internal Center Network External Center Network Research Amplification Near/ core compet- ence Emerg- ing/ Competitive Tech.

Page 23 IUCRC June 2006 Industry/University Cooperative Research Centers Near Core Competence Research Research Amplification Emerging/Competitive Technologies Internal Center Network External Center Network IUCRC Early access to … New knowledge New analytical tools and methods Tacit knowledge about techniques IP within Center R&D Dead ends to avoid Shortened/accelerat ed progress on current projects Promising new areas or paths to pursue Emerging threats and opportunities ProximateNear Later Commercialization IP/Trade Secrets inside firm Improved/New Products Processes Services Ideas & Feedback Enhanced recruitment of new employees Broadened scientific Network Equipment use Strategic reconnaissance and alliances

Page 24 IUCRC June 2006 Industry/University Cooperative Research Centers Preliminary themes Industry maintains networks with university researchersIndustry maintains networks with university researchers –Supported by marketing study findings –Industry is proactive in seeking out potential projects/ partnerships (via conferences, publications, web searches, referrals, direct relationships) –Dynamic relationships: ongoing evaluation of the partnership The consortium model has benefits (and shortcomings) beyond what could be achieved through working independently with faculty IUCRC Business ModelThe consortium model has benefits (and shortcomings) beyond what could be achieved through working independently with faculty IUCRC Business Model Some themes in decision criteriaSome themes in decision criteria –At least one prominent benefit –Relevance of research to organization: core or non-core –Reputation of universities and researchers –Generating or improving business through IAB network –IP agreement is barrier "Most of our R&D into base, core technology is actually taking place in Europe, and part of the reason for that is that government, university, industry relationships in Europe are much easier to manage (than in the US). …The real problem we have with funding research directly at universities in the US is, to be honest, the intellectual property ownership.“ --IP Manager, mid-size semi-conductor firm

Page 25 IUCRC June 2006 Industry/University Cooperative Research Centers Preliminary themes Industry developments/ changes impact R&D strategyIndustry developments/ changes impact R&D strategy Larger firms tend to have formal positions for managing relationships (University Alliances, Sponsored Research)Larger firms tend to have formal positions for managing relationships (University Alliances, Sponsored Research) Decision processes ranges from informal to formal, with varying degrees of resource intensiveness (e.g., review process, people involved)Decision processes ranges from informal to formal, with varying degrees of resource intensiveness (e.g., review process, people involved) –More formal processes appear to be more fragile to manage Return on Investment is either taken for granted, considered impossible to measure, or assessed with a structured methodReturn on Investment is either taken for granted, considered impossible to measure, or assessed with a structured method Dynamic relationships: ongoing evaluation of the partnershipDynamic relationships: ongoing evaluation of the partnership "It was more the question whether a) do we have the money that we can put in there, because it has to come from a project and b) is there added value for us. We'd been in the center for three years so we knew what was going on, and at that time we felt that we'd seen everything we needed to see. … We learned ourselves, we were able to set up our own research.“ -Project leader, international specialty chemical company "To be frank, [the organization] typically does not regularly weed out monies externally. We're very cost conscious and budgetary conscious. …so there was a review... but when it came down to trying to evaluate the value in terms of how it may add to [organization] earnings in the future, then it was kind of fuzzy, because we were fairly early on [in the research]." -Senior researcher, large chemical company

Page 26 IUCRC June 2006 Industry/University Cooperative Research Centers Remaining work Continue with industry interviewsContinue with industry interviews –Recent joiners –Recent decliners –Undecided »More formal qualitative analyses Conduct quantitative study (12-18 mos. timeframe)Conduct quantitative study (12-18 mos. timeframe) –Instrument design –Data collection –Analysis

Page 27 IUCRC June 2006 Industry/University Cooperative Research Centers Study Implications Help center directors and others understand which firm characteristics (sub-organizational and personal) and center marketing approaches have the biggest impact on a firm’s decision to join a center, so that the center can:Help center directors and others understand which firm characteristics (sub-organizational and personal) and center marketing approaches have the biggest impact on a firm’s decision to join a center, so that the center can: –More clearly define the target market –Adjust the marketing approach –Structure the research program to optimize industry support Add to the scholarly understanding of the factors that support and/or undermine cooperative researchAdd to the scholarly understanding of the factors that support and/or undermine cooperative research