University trustees as channels between academe and industry: Toward an understanding of the executive science network

Article (PDF Available)inResearch Policy 42(6-7):1286-1300 · July 2013with 27 Reads
DOI: 10.1016/j.respol.2013.03.003 · Source: PubMed
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Abstract
Policy makers in the United States (US) and the European Union (EU) see “autonomous” research universities as increasingly central to “world class” status, technology development and economic innovation. Trustees or regents (US) and external board members (EU) are seen as a marker of university autonomy. Examining university trustees may shed some light on the role of trustees/external board members play in research strategy, innovation and economic development. Given that a number of trustees of US research universities sit on the boards of directors of large corporations with research interests, we hypothesized that trustees may be an important channel connecting universities to innovation and economic development. To date, university trustees have not been studied as a channel between academe and industry that enables scientific discovery, technology development and economic innovation.
UNIVERSITY TRUSTEES AS CHANNELS BETWEEN ACADEME
AND INDUSTRY: TOWARD AN UNDERSTANDING OF THE
EXECUTIVE SCIENCE NETWORK
Charles Mathies and
Senior Expert – Strategic Planning & Development, University of Jyväskylä, P.O. Box 35, 40014
Jyväskylä, Finland
Sheila Slaughter
Louise McBee Professor of Higher Education, University of Georgia, Institute of Higher
Education, Meigs Hall, Athens, GA 30602 USA
Charles Mathies: charles.f.mathies@jyu.fi; Sheila Slaughter: slaughter@uga.edu
1. Introduction
Policy makers see “autonomous” research universities as increasingly central to “world
class” status, technology development and economic innovation (Altbach, 2007; European
Commission, 2010; Orszag and Holdren, 2009). World class status, technology development
and economic innovation are related in that indicators for rankings depend on publications
(Dehon et al., 2011), which, in the Science, Technology, Engineering and Math (STEM)
fields, are assumed to underpin technology development and economic innovation (Council
of Economic Advisors and Office of Science and Technology Policy, 2011; European
Commission, 2010; National Economic Council, 2011; World Bank Institute, 2007).
Academic patents are generally seen as complementing publications, and as playing a strong
part in technology development resulting in economic innovation (Stephan, 2012). Although
losing its edge, United States (US) research universities still lead the world in academic
patents (National Science Board, 2010 & 2012). In the 2012 Shanghai rankings, 19 of the
top 25 were US research universities, four were in Great Britain (GB), and two were located
elsewhere (Academic Rankings of World Universities, 2012). The majority of the
universities in the US top ten academic patent rankings were in the Shanghai top 25
(D’Amato et al., 2010). Both the US (whether private or public) and GB have a tradition of
autonomous universities, in that they are not directly managed by the state, rather, they have
external boards of trustees that hold fiduciary, moral and legal responsibility. In this paper,
we explore the part that trustees play in contributing to research, technology development
and economic innovation at the highly ranked world-class universities.
There is not a great deal of empirical research on why autonomous universities are the
vehicles for cutting edge research with economic development potential. Rankings are based
© 2013 Elsevier B.V. All rights reserved.
Correspondence to: Charles Mathies, charles.f.mathies@jyu.fi.
Earlier versions of this work have been presented at the ASHE annual Conference (2007, Louisville, KY USA) and the Research
Conference on Research Integrity (2009, Niagara Fall, NY, USA).
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on rather limited indicators and do not speak to what management processes contribute to
the success of these universities (Saisana et al., 2011). Managerially, the defining
characteristic of private US research universities is self-perpetuating boards of trustees that
have legal, moral and fiduciary responsibility for these institutions. US public research
universities also have trustees with similar authority, although they are usually appointed by
state governors. There has been little examination of the part trustees play with respect to
shaping how research strategies of these universities intersect with technology development
and innovation. This is despite the fact that many of the trustees of leading private US
research universities are heads of Fortune 500 and/or research intensive companies and often
sit on the Board of Directors of other Fortune 500 and/or research intensive corporations
(Pusser et al., 2006).
The study of US university trustees may shed some light on the role of trustees/external
board members play in research strategy, innovation and economic development. Given that
a number of trustees of US research universities sit on the boards of directors of large
corporations with research interests, we hypothesized that trustees may be an important
channel connecting universities to innovation and economic development. To see if this
were the case, we constructed a data set composed of the trustees of 26 private US
Association of American Universities (AAU) universities at two points in time, 1997 and
2005, and the corporations that they directed as well as the corporations on which they sat as
members of boards of directors. For reasons that will become clear below, we did not
include public universities in the analysis. The North American Industry Classification
System (NAICS) code was used to categorize each corporation, and a crosswalk was
developed between those codes and National Science Foundation (NSF) categorization of
the broad fields of science at research universities, allowing us to identify the corporations’
academic science fields. Using the same NSF categories, universities top research fields
were identified by total R&D dollars expended. We then developed a set of models to
explore the relationship between trustees’ corporations’ science fields, universities’ top
research fields and R&D funding over time. Given our results, we conclude by theorizing
the rise of an executive science network that plays an instrumental role in relations among
universities and industry.
2. Background
There is not a great deal of research on US university boards of trustees. Both public and
private US universities have boards of trustees, so there are more than 3,000 such boards
representing colleges and universities ranging from community colleges and small private
colleges to elite research universities. The bulk of the trustee literature is descriptive and
proscriptive, aimed at teaching trustees the rules of good stewardship. Although these boards
are charged with broad governance of universities and have legal, fiduciary and moral
responsibility, most scholars assume that presidents run universities, and that the function of
the board is to act as a buffer between the university and the state (Association of Governing
Boards, 2007; Chait et al., 1991; Hill et al., 2001; Kerr and Gade, 1989; Madsen, 1997; for
exceptions treating public university trustees see Nicholson-Crotty and Meier, 2003; Pusser,
2004).
With regard to research universities, the literature shows that the governors’ of the states
where they are located generally appoint public research university trustees. Although the
trustees are supposed to be above politics, managing universities in the public rather than the
private interest, traditionally, trusteeships are given to persons who contribute heavily to the
governor’s campaign funds and are members of the governor’s political party. Therefore
public university trustees are often selected for their contributions and loyalty to the
governor and his or her political party rather than for their business acumen. In contrast,
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private research universities trustees are thought to be selected because they are loyal alumni
likely to donate to the endowment (Pusser, 2004).
However, trustees of private AAU universities may be different than most other university
trustees. The AAU is the oldest and arguably the most elite association of research
universities in North America and having membership has shown to be a decidedly positive
predictor of an institutions’ research capacity (Cantwell and Mathies, 2012). It develops
national policy positions on issues related to academic research and graduate and
professional education and provides a forum for discussing a broad range of other
institutional issues. The AAU was founded in 1900 by the original fourteen universities that
offered the Ph.D. Degree, and is a “principals only” organization in that only the presidents
are at the table for meetings; substitutes are not acceptable. AAU membership is highly
sought after, but granted by invitation only. There were 60 US AAU universities when data
were gathered (see Table 1). The AAU institutions consistently score among the highest on
all indicators of research: grant and contract funds, citations in research literature, patents,
citations in patent literature, revenue generated by licensing, start-up companies, and quality
ratings by peers in specialized fields (National Science Board, 2012).
Historically, and presently, the trustees of AAU universities are drawn from the boards of
directors of large corporations (Veblen, 1918; Sinclair, 1923; Beck 1947). Our data revealed
that within AAU, there was a marked difference between public and private universities.
Private universities trustees were closely interlocked through their corporate directorships.
Any one trustee was no more than a half a step away from any other. The trustees met
regularly on a face-to-face basis on their corporate and university boards. Public universities
trustees were by and large not connected to this network and, when they are connected to
corporations, are less tied to patenting firms (see Figure 1, and Slaughter et al.,
forthcoming). In 2001, for instance, public universities were tied to 113 (13 percent) of the
866 corporations in the network created by trustee interlocks. Private universities, by
contrast, were tied to 789 (91%) of the network.
Despite the dense network of private university trustees, little is known about the trustee
selection process. About 70 percent of the private AAU sample were alumni. Given that
these universities routinely graduate men and women who disproportionately head the
central institutions in the US, ranging from corporations to government, sitting trustees had
an ample alumni base from which to select distinguished new trustees (Domhoff and Dye,
1987; Dye, 1989, 1994, & 2002). However, there is no data that suggests why these
particular corporate leaders were selected. Nor do we know why the thirty percent who were
not alumni were chosen, although we do know that they had 1.5 times as many corporate
ties as alumni, suggesting that board members may be chosen for strategic reasons,
including their research interests. Many of the trustees sat on one or more boards of directors
of corporations, creating the dense network.
Given that the US has become a knowledge economy seeking to innovate to maintain its
place among other global economies, we reasoned that trustees of private universities
increasingly may be selected because they represent corporations with interests in research
that are similar to those of universities. In other words, university trustees may select new
trustees because they represent businesses active in the science fields in which the university
is heavily engaged. Trustees may agree to serve at least in part because of these shared
interests. University presidents, often represented as voting members on the board of
trustees, may also prefer trustees who share the universities’ research interest and are likely
to support investment in these areas. If this is the case, boards of AAU universities may
represent an important channel for innovation, linking universities and corporations.
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3. Related literature and theory
Much of the literature that looks at how university research contributes to innovation and
economic development focuses on the scientist entrepreneur interface and/or technology
transfer structures and faculty (Bercovitz and Feldman, 2011; Colyvas, 2007; Lam, 2007;
Shinn and Lamy, 2006; Welsh et al., 2008). Others look somewhat more broadly at
channels, paths and chains that link universities and firms, usually focusing on firms
(Mueller, 2006). For example, D’Este and Patel (2007) found that the most frequent
channels linking academe and industry were consultancy and contract research, and joint
research or training. Patenting and spinouts are not used as frequently. There was a wide
range of channels (e.g., creation of physical facilities with industry funding, training of
company employees through courses or temporary personnel exchange, post graduate
training in company, joint supervision of PhDs, secondments to industry, short or long term,
attendance at conferences with industry and university participation, attendance in industry
sponsored meetings, creation of electronic networks). The researchers noted that specific
fields of study had discrete channels, and that certain industries approached universities in
specific ways, depending on their knowledge needs and strategy (see also Bruneel et al.,
2010).
Bekkers and Freitas (2008) found 23 channels that linked universities and firms. They noted
that firms appeared to define strategies of interaction with universities depending on their
present and future knowledge needs, and pursue either collaboration and contract research or
intellectual property or various forms of organized activity such as partner programs.
Fontana et al. (2006) found that firms that actively screened their environment and
voluntarily disclosed internal competencies had a higher propensity to collaborate with
academic partners and to cooperate using multiple paths (see also Laursen and Salter, 2004).
Stuart et al. (2007) found that many young bio tech firms acted as intermediaries in tripartite
alliance chains, entering upstream partnerships with public sector research institutions, and
later forming commercialization alliances with established, downstream firms. They
examined the alliance activity in a large sample of biotech firms and found that firms with
multiple in-licensing agreements were more likely to attract revenue-generating alliances
with downstream partners, but that the positive relationship between in-licenses and
downstream alliances attenuated as firms matured. The diversity and the quality of the
academic connections of firms’ principles influenced their chances of successfully acquiring
commercialization rights to scientific discoveries in universities.
The studies above identified channels between industry and universities by examining how
upper level management of firms connected with academe, rather than focusing on
university managements’ efforts to connect with firms. None of the studies looked at
trustees as a channel, nor did they contrast private with public universities. However, they
do suggest that firm managers are aware of knowledge needs, that they screen their
environment for opportunities that universities may provide, and that firms’ managers’
academic connections may be important. As we noted earlier, many trustees of AAU private
universities are firm managers and/or sit on boards of directors of firms, and likely are aware
of their firms knowledge needs and, by virtue of their trusteeships, of the research in which
their universities are engaged.
There is a rich literature in economics (Alchian and Demsetz, 1972; Fama, 1980; Ghoshal
and Norhria, 1993) and sociology (DiMaggio and Powell, 1983; Granovetter, 1973;
Haunschild and Beckman, 1998; Mizruchi, 1996; Selznick, 1957; Zajac, 1988) that models
“interlocks,” or networks of corporate boards of directors. Generally, scholars that model
interlocks argue that corporate boards of trustees exercise leadership and influence the shape
of organizational structure and behavior. Attention is often focused on the director interlock,
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the case where individuals serve simultaneously as directors on more than one governing
board. Studies of interlocks are often based in resource dependence models (Pfeffer and
Salancik, 1978) that suggest governing boards are a significant mechanism for pursuing and
stabilizing key resources and sources of legitimacy for the organization, and that board
interlocks are essential to the board’s performance in those roles. Director interlocks have
been found to generate substantial effects, including increased organizational control over
resources and greater inter-firm cooperation (Burt, 1983); isomorphic adoption of strategic
tactics across firms (Useem, 1984); greater access to information and a reduction of
information and monitoring costs; enhanced organizational learning (Mizruchi, 1996);
greater access to capital (Stearns and Mizruchi, 1993); and the maintenance of relationships
with key resource providers. Given that many AAU university trustees are corporate
directors densely networked with other corporate directors, some of whom are also
university trustees, they are uniquely placed to develop strategic tactics to move information
and resources to build channels between academe and industry.
Interlocks are often conceptualized as information portals. One of the most widely invoked
new paradigms for corporate performance relies upon the juxtaposition of strategic
competition, intellectual capital, and knowledge management (Choo and Bontis, 2002).
Given the increasingly high cost of obtaining information and the comparative advantages
that accrue to those organizations that capitalize on knowledge, the ability to use networks to
trade information, best practices, and innovative strategies is increasingly instrumental to
organizational success. Building on earlier work in the sociology of organizations on the
structural embeddedness of social capital (Granovetter, 1973), Davis (1991) argues that
interlock ties constitute a form of organizational social capital that provides access to
essential information, innovation, and strategy, while serving as a key component in the
creation of intellectual capital within organizations. Nahapiet and Ghoshal (1998) argue that
the structural dimension of social capital “refers to the overall pattern of connections among
actors—that is, who you reach and how you reach them. Among the most important facets
of this dimension are the presence or absence of network ties among actors” (p. 244). Other
research suggests another powerful outcome of board interlocks is an increase of trust
between board members and across boards. Huizing and Bouman argue that trust “positively
affects the allocative and adaptive efficiency of knowledge markets, which should therefore
be cultivated” (2002, p. 201). Consequently, university trustees’ familiarity and experience
with one another in multiple settings may increase trust and the flow of information both
among trustees and between the corporations and universities they govern.
Generally, the literature on corporate board interlocks suggests that board interlocks among
research universities may serve many functions, ranging from information portals to creation
of trust within networks. However, we are interested in strategic competition and knowledge
management (Choo and Bontis, 2002), with appropriate modifications for universities,
located in the non-profit sector but governed by boards of directors drawn from for-profit
corporations that often share overlapping research interests. Bercovitz and Feldman (2007)
note that the research on search, absorptive capacity, and organizational learning implies
that firms emphasizing exploratory research will pursue university interactions. In their
study of Canadian firms, they found a strong relationship between firm innovation strategy
and firm-university research interactions. Firms that pursued internal exploratory R&D were
more likely to have relationships with universities that were exploratory. These firms saw
universities as strategic partners “because of their mission, limited market presence and lack
of complementary assets, offer [ed] an advantage to firms in appropriating joint research
projects results, particularly for projects involving exploratory research” (p.937). Although
Bercovitz and Feldman focus on specific research partnerships between firms and
universities, it is likely that firm CEOs and board of director members who sit on university
boards of trustees may also see broad strategic advantages to investing in research areas
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shared by firm and university, irrespective of any specific research endeavor. One of the
main policy functions of boards of trustees and members of corporate boards of directors is
overseeing strategy, specifically the allocation of resources to key functional activities
(Westphal et al., 2001). So too, university board of trustees members may emphasize
university research that aligns with their corporate science fields with future strategic
innovations in mind.
With regard to universities, academic capitalism (Slaughter and Rhoades, 2004; Slaughter
and Cantwell, 2012) theorizes how segments of universities move toward the market. The
theory teases out the ways in which new institutional and organizational structures that link
corporations, universities and state agencies, take advantage of the openings provided by the
neoliberal state to build knowledge economies. The emerging organizational field
(DiMaggio and Powell, 1983) embodied by networked trustees who share research interests
may be an intermediating entity that shifts research universities in an entrepreneurial
direction. Indeed, we theorize that trustees and senior managers of private AAU universities
may constitute an executive science network that is increasingly important to the
management of university-industry science. As directors of both universities and science
based corporations, these board members are in a unique position to influence the resourcing
of discovery and innovation from the highest level or formal organizational authority.
Trustees and senior managers may play a part in shaping national research policy to promote
technology innovation and economic development, make investment decisions at
universities that prioritize common areas of interest, explore new areas for future
investment, and put industry funds into research areas likely to provide relatively short-term
payoff. The network may create trust that allows directors of science-based firms to pursue
broad strategic goals that call for knowledge sharing and work on common problems such as
shifting national policy toward technology innovation and economic development. At the
same time, trustees and senior managers at specific universities may pursue competitive
advantages by treating the university as a firm that can maximize profits for both academe
and industry.
However, university trustees who sit on corporate board(s) of directors have various
obligations and constraints that may create challenges to developing research strategies that
bring firms’ fields of corporate science and universities’ research fields together. Chief
among these are conflicts of interest. The closer the research interests of firms represented
by trustees come to universities research portfolios, the greater the possibility of institutional
conflict of interest (ICOI) [Slaughter et al., 2009]. Conflict of interest (COI) has been
studied primarily at the level of individual researchers (Bekelman et al., 2003; Boyd et al.,
2004; Cho et al., 2000; Van McCrary et al., 2000), but ICOI is a growing concern for
research universities (Association of American Medical Colleges and AAU, 2008). Yet to
date there is very little empirical work on ICOI and what there is has not included trustees
(Bartlett, 2008; Campbell et al., 2006; Campbell et al., 2007; Reeser et al., 2008; Weissman
et al., 2008; Wolf et al., 2008). We address the knotty issue of institutional conflict of
interest in the conclusion.
In sum, an executive science network presents a paradox. When trustees simultaneously sit
on boards of directors of businesses with corporate science fields that match those of their
university, they may generate synergy that stimulates research, discovery, and technology
development in those fields that may lead to economic innovation. At the same time, the
network may increase similarity between the research interests of trustees and universities,
creating new challenges with regard to ICOI.
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4. Research questions
We reasoned that trustees who sat as boards of directors of science corporations likely
wanted their corporations’ fields of science to prosper. Indeed, some trustees may have
chosen to serve on university boards because the science fields of their corporations matched
the research fields of the university. As corporations have diminished their commitment to
research laboratories, e.g., Bell Labs, that explore basic technology research in favor of
research concentrated on product development, they have to some degree turned to
universities for innovative, entrepreneurial research (Salter and Martin, 2001; Sampat and
Lichtenberg, 2011; Toole, 2011; Varma and Worthington, 1995). The years 1997 to 2005
likely capture this transition. By the mid 1990s, the contribution universities could make to
American competitiveness and economic innovation was well understood, and, given the
staggered appointment of trustees to university boards, it may have taken until 2005 for
science corporation trustees to appear and have an impact on board policy. Shared interests
in science and research may contribute to close connections between trustees’ corporations
and university research, e.g., licensing of university intellectual property, corporate support
of university research through R&D funding, exchanges of personnel. In their governing
capacity, trustees could also steer universities to strengthen university research fields
matching with corporate science fields though investment in star faculty and/or research
facilities, ranging from medical schools and hospitals to laboratories, centers and institutes.
In other words, we thought that over time science corporations represented by trustees might
become an important channel between the world of industry and academe, with implications
for technology development and economic innovation.
Conversely, university presidents, often voting members of the board of trustees and also
often members of corporate boards of directors (Goldschmidt and Finklestein, 2001;
Slaughter, 1990), may work with sitting trustees to select new trustees whose corporate
science fields match university research fields in order to further strength top university
research fields. AAU university presidents and senior management have long committed to
maximizing prestige (Bowen, 1980). As the rankings game became more important and
research universities began to aggressively seek “world class” status, R&D funds became an
ever more important indicator of rank and prestige (Marginson, 2007; Teichler, 2011). At
the same time, the cost of research, as measured by article production, increased, making
external revenues captured by R&D success more important (National Science Board,
2010). The years 1997–2005 likely bracket this shift to university concern with rankings in
the global arena. If senior university managers put a premium on the pursuit of additional
research funding, they would be likely to work with their boards to select trustees who might
help them capture additional funding, i.e., have knowledge of and ties to areas similar to a
university’s research interest(s) and that, as a result of those ties, universities might be more
successful in securing research funding in those areas. Thus, we developed the following
hypotheses:
1. Over time, more trustees will be connected to science corporations.
2. Over time, university research fields, as represented by various types of research
funding, align with universities corporate science fields, as represented by the
scientific fields in which trustees’ corporations are active.
3. Over time, universities’ corporate science fields positively influence the amount of
research and development (R&D) funding universities receive.
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5. Methods
5.1 Sample
The sample included only voting members of boards of trustees of the 26 private US AAU
universities and the publicly traded business corporations to which the trustees’ were linked
by concurrently sitting on the corporate board of directors. Public AAU universities were
not included because, as noted above, they are not part of the dense network of trustees that
simultaneously sit as boards of directors of corporations. Although a number of the private
university trustees were also CEOs of corporations, these corporations were not part of the
sample because we wanted parallel authority structures—corporate boards of directors and
university trustees. Because the trustees “day jobs” as CEOs were not part of the sample,
trustees’ corporate representation is underestimated. The voting trustees linked universities
and corporations at the highest level of governance of each type of organization.
Trustee and corporate data were collected at two points in time, 1997 and 2005. The data on
university trustees and the corporations that they represented were drawn from the Research
University Trustee database (for details see Slaughter et al., forthcoming). The data include
university, trustee name, the name of the publicly traded corporations on which the trustee
sits as a member of the board or boards of directors, and the NAICS code. NAICS is the
standard classification system for businesses developed by national statistical agencies
(United States Census Bureau, 2010). When a university trustee sat on multiple corporate
boards each trustee-corporate connection was considered as a single case.
5.2 Matching trustees corporations with universities’ academic fields of science
Trustees sat on boards of directors of non-science and science corporations. Given our
concern with trustees as channels between industry and university research, we were
primarily concerned with the science corporations trustees represented. We wanted to be
able to characterize these science corporations in terms of their fields of science. We
reasoned that many successful corporations operate in a knowledge economy and
manufacture products that embody science and have areas of scientific expertise. Therefore,
we wanted to identify trustees’ corporations’ scientific areas of expertise, or corporate
science fields, so they could be related to university research and then to universities success
in obtaining research funding.
We assigned each corporation represented by a trustee to an NSF broad field of science,
creating its corporate science field. Development of a crosswalk was required because there
is no publicly available direct database crosswalk between corporations’ NAICS codes and
fields of science.1 This required multiple steps. In the first step, we matched corporate
NAICS codes to a corresponding Classification of Instructional Programs (CIP) code. The
US Department of Education’s National Center for Educational Statistic’s (NCES) provides
a national (US) taxonomy that allows the tracking, assessment, and reporting of fields of
study and program completion activity at colleges and universities through CIP codes
(National Center for Educational Statistics 2010). The 6 digit CIP codes are broken into 3
sections (2-digits per section). We used the first 2-digit section, which identifies academic
programs by large discipline areas (ex: 14 = engineering, 40 = physical sciences, etc.), of the
third revision (2000; National Center for Educational Statistics, 2010). We matched all 2007
1A crosswalk between CIP, SOC (Standard Occupational Class), and NAICS is maintained by the National Crosswalk Service Center
(NCSC -www.xwalkcenter.org). NCSC is a federally (U.S.) funded clearinghouse of classification information on occupations,
training programs, and industry. The NCSC crosswalk however had multiple cases of CIP codes for each NAICS classifications (most
likely due to the inclusion of the SOC in the crosswalk). For this paper, we needed a single 1-1 crosswalk and thus required building
our own using the NCSC crosswalk as a guide.
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NAICS (N=2328) classifications to a CIP code on the basis of a corporation’s area of
activity and scientific specialization.
The idea was to make a 1-1 crosswalk between corporate fields (NAICS) and academic
fields (CIP). For example, Pfizer is a large, multi-national corporation that has an assigned
NAICS code of 325412, pharmaceutical preparation and manufacturing. Pfizer was assigned
a CIP code of 26, biological and biomedical sciences because its area of research activity
and scientific specialization is in pharmaceuticals. Another example is Baker Hughes Inc.
that has an assigned NAICS code of 333132, Oil and Gas Field Machinery and Equipment
Manufacturing and was assigned to the CIP code 40, Physical Sciences.2 Appendix A
contains an example of an entire institution’s trustee corporations NAICS codes matched to
CIP fields. This method may have created some questionable instances of corporate CIP
classification. However, no other method was available to match a corporation’s
classification (NAICS) to a single academic field (CIP), so we went forward, and hope that
this article will prompt discussion and improvement of these classification schemes.
Next we collapsed the CIP codes into broad academic fields (science and non-science) using
the crosswalk between NSF’s fields of science and engineering and (NCES) CIP codes from
the latest available survey of Research and Development Expenditures at Universities and
Colleges (2009 academic R&D expenditures survey; National Science Foundation, 2010).
Separating science from non-science corporations (e.g., finance, insurance, real estate)
allowed us to focus on the science corporations.
For trustees’ science corporations, we used 10 broad fields of science (NSF-CIP crosswalk
contains 9 fields, but we separated Agricultural out from Life Sciences field, creating a tenth
field). We separated Agricultural from Life Sciences mainly because we wanted
differentiate agricultural from biomedical research, which receives more funding than other
broad fields. Additionally, a number of land grant universities (e.g., University of Arizona,
Cornell University, Texas A&M), with agricultural schools are funded by the US
Department of Agriculture (USDA) through processes that are often less competitive than
other federal research funding and these funds may be less closely tied to trustees’
corporations than others. The broad fields of science in order of total research funding for
2005 (last year of data in sample) are: Life Sciences, Engineering, Physical Sciences,
Agricultural Sciences, Environmental Sciences, Social Sciences, Computer Sciences,
Psychology, Other, and Mathematical Sciences. Profiles were then developed for each
university of the corporate science fields represented by trustees.
Preliminary analysis revealed that the top three corporate science fields represented the vast
majority of universities trustees’ corporate science connections (90 to 95%). To streamline
our models, we only used each university’s top three corporate science fields. For example,
if University X had 8 trustees who represented 12 science corporations in 4 broad science
fields, we only used the top 3 fields in the analysis: 4 of the corporations in 1 field, 4 in
another, and 3 in yet another; the remaining corporation was in a field that differed from all
others and thus was not included.
5.3. Analytic strategy
First, we wanted to see if universities’ trustees were more likely to represent science
corporations over time. For the years 1997 and 2005, basic descriptive statistics and a
number of paired sample T tests were completed to see if the variables in this analysis were
2 A second method was used to match CIP codes to NAICS codes on the basis of a corporation’s area of operations. For the two
examples listed, both Pfizer and Baker Hughes were assigned CIP code 14, Engineering, due to both corporations manufactured a
product. To streamline the analysis the choice was to go with the first method only.
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significant, e.g., number of trustees per university, number of trustee connections to all
corporations per university; number of science corporations per university. We then
compared all trustees’ corporate connections and trustees’ science corporation connections
for 1997 and 2005.
Second, we wanted to know if universities’ corporate science fields and research fields were
congruent or became congruent over time. Unless the there were some similarities between
the corporate science fields and university research fields, there was little probability that
corporate science fields would influence success in winning grants and contracts. We
identified universities’ corporate science fields by the cross walk described above, and were
then able to see how they mapped onto university research expenditures. Two profiles for
each university were developed based on corporate science fields and research fields
represented. A university’s research expenditures were the marker of alignment, on the
grounds that funding was a proxy for research activity, and increased activity in broad fields
of research that mapped onto corporate science fields indicated congruence.
Third, we developed a series of control variables so that we could understand the degree to
which universities’ corporate science fields independently influenced university success
with regard to grants and contracts. First, we controlled for the growth of research funding
from 1997 to 2005. Then we drew on the literature that identifies the most powerful
predictive university characteristics with regard to research success to identify the following
control variables: faculty salaries, number of faculty members, presence of a medical school,
and presence of a hospital (Feller, 1996; Geiger, 1996 & 2004; Mathies, 2010; Savage,
1999; Teich and Gramp, 1996). Data for the control variables was collected from the
Integrated Postsecondary Education Data System (IPEDS) maintained by the National
Center for Educational Statistics (NCES, 2009) from the U.S Department of Education.
Lastly, we utilized a set of dependent variables—total R&D, federal R&D and industry
R&D, that captured research funds for which universities can compete. Federal and
industrial R&D speak for themselves; total R&D includes funds that institutions contribute
to their faculty’s research, foundation, state, federal, industrial and other funds—in other
words, all sources of funding that universities receive. Data on research expenditures was
obtained from the Research and Development Expenditures at College and University
survey operated and maintained by NSF (National Science Foundation, 2007). The three
dependent variables and the control variables were used to develop six ordinary least squares
(OLS) regression models analyzing the degree to which universities’ corporate science fields
predict grant and contract success with regard to various research revenue streams at two
points in time, 1997 and 2005. Yearly research expenditures in a given year were used as the
measure of research conducted by a university.
OLS models are well suited for exploring linear relationships as they yield easy to interpret
marginal effects. This approach was fit well with our data because the relatively small
number of observations makes time series modeling difficult.3 However, the OLS models,
like other cross-sectional data, are limited in that they do not explore time interactions. Thus,
discussions of change over time are guided by interpretations of sequential cross-sectional
(one point in time) findings, rather than through a statistical analysis of change over time. It
is important to note these OLS model do not permit strong causal inferences. Hence this
3 The main questions revolve around two issues, the number of observations and time between observations. Modeling time series
with a few number of observations, as this study has, is fraught with difficulty. A general rule of thumb is to have 50 observations and
in our models we had 49 (25 in 1997 and 24 in 2005 due to effects of Hurricane Katrina [Tulane] and a statistical outlier [Johns
Hopkins]). As for timing, ideally for time series or panel data models data are measured at regular intervals. Our data have two time
periods eight years apart. However, planned future data collection in 2012 of same data in this study would provide data for analysis in
regular intervals over a 15-year period (start [1997], middle [2005], and end [2012])
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study examines the associations between research funding and science corporation
representation on university boards.
6. Findings
6.1 Description of university trustees connections to all corporations, 1997 and 2005
The average size of a university board was just under 46 voting members in both years of
the sample (45.9 1997, 45.7 2005, see Table 2). The difference in the number of trustees at
the two points in time was not significant (t=0.179, p>.860) indicating that the number of
university trustees was similar for 1997 and 2005. University trustees sat on the boards of
non-science (e.g. banks, media companies) as well as science corporations (e.g.
pharmaceutical manufactures, natural gas distributers, software publishers). The mean
number of university-corporate connections (i.e. university trustees sitting on corporate
boards) significantly dropped over the years (50.8 in 1997 to 32.6 in 2005; t=5.375, p<.001).
The mean number of trustees with any type (science or non-science) of corporate
connections for a university board dropped significantly from 20.5 in 1997 to 17.3 in 2005
(t=3.047, p<.005). A number of trustees (39.8% 1997, 52.1% 2005) sat on only one board,
while the remaining (60.2% 1997, 47.9% 2005) were on more than one board. For example,
a university might have 21 trustees sitting on the boards of 50 corporations. These 21
trustees would account for 50 university-corporate connections.
The proportion of university trustees sitting on a corporate board also significantly declined
between years 1997 and 2005 (46.6% in 1997, 37.7% in 2005; t=3.351, p<.003). At 22
(85%) of the 26 universities the number of all corporations to which trustees were connected
declined. The mean decline was 36%; the largest decline 61%. At the four universities that
had increased trustee connections to corporations, the greatest increase was by 4 connections
or an 11% increase. In short, while the number of trustees did not significantly change, there
was a significant decrease in the number of trustees connected to corporations between 1997
and 2005. The majority of the university’s boards were less connected to corporations and
these decreases were, for the most part, quite substantial. The few universities that did
increase their corporate connections had relatively small increases.
6.2 Description of trustees’ connection to science corporations from 1997–2005
As noted above, university trustees’ could sit on the board of directors of non-science or
science corporations. Because we wanted to understand how trustees’ corporations’ might
affect university research funding, we were primarily concerned with trustees’ science
corporations. To characterize trustees’ science corporations, we ranked each corporation’s
fields of science based on the percentage of corporations in the various fields of science (see
list in 5.2). Between 1997 and 2005, there was a 1% non-significant decrease of the
proportion of trustees’ corporations’ science fields (t=.527, p>.603). Streamlining the
analysis and examining only the top three science fields, the results were similar. There was
a 1% non-significant decrease of the proportion of trustees’ corporations in the various
science fields (t=.451, p>.656). Thus, our first hypothesis—that the number of trustees
connected to science corporations will increase—was not confirmed. Rather, the number of
connections to science corporations remained approximately the same. This held true as well
when only examining trustees’ science corporations top three sciences fields. However, that
the percentage of corporate connections to science fields remained the same when the
overall number of trustees connections to non-science corporations dropped significantly
between 1997–2005 indicates that trustees who sat on the boards of science corporations had
a stable interest in research universities.
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6.3 Alignment of the fields of science: university-corporate connections and research
expenditures
Two profiles of each university’s corporate science fields based on two years of data (1997
and 2005) were developed. The three top corporate science fields from each university’s
profile were compared to its R&D expenditures for 1997 and 2005 to determine whether a
university’s corporate science fields and its research fields were alike. We compared the
fields in a number of ways. First, the university’s top corporate science field and the
universities’ top field of research as represented by the proportion of the total R&D were
compared for each university to see if they were similar. In other words, the single top
corporate science field based on a university’s trustees’ corporate connections was compared
to the university’s top field of research based on R&D funding. There was some alignment
(6 of 26 universities, 23% in 1997; 5 of 26 universities, 19% in 2005) between the top
corporate science fields and the top research field, but overall the alignment between the two
was weak. Our second analysis was expanded to see if the university’s top field of research
matches one of its top three corporate science fields. There was much stronger alignment.
More than three-fourths (20 of 26, 77% in 1997; 21 of 26, 81% in 2005) of the universities’
top field of research matched one its top three corporate science fields. In other words, a
match between a university’s top research field and one of its top three corporate science
fields was likely. We also compared the top corporate science field to the top three research
fields and found similar alignment (17 of 26, 65% in 1997; 19 of 26, 73% in 2005). Finally
we compared the top three corporate science fields to the top three research fields4 and we
found an increasing alignment between the two. In 1997, 16 universities (62%) had 2 or
more matches while in 2005 there were 21 universities (81%) with 2 or more matches
between the groups, thus confirming our second hypothesis, that 0ver time, university
research fields align with universities’ corporate science fields.
6.4. R&D Expenditures
The majority of all R&D expenditures came from a university’s top field of research.
Between 1997 and 2005, the top field increased significantly as a proportion of all R&D
expenditures (59% in 1997, 64% in 2005; t=-5.031, p<.001). In terms of raw dollars, the
R&D expenditures from the universities in sample grew 85% from $5.6 billion in 1997 to
$10.5 billion in 2005. This growth is on par with the overall growth of R&D expenditures of
all universities in the U.S during this time frame (88% increase, $24.3 billion in 1997 to
$45.7 billion in 2005; NSF 20075). In short, between 1997 and 2005 substantially more
R&D funding was flowing into universities, more of this funding was going into
universities’ top field of research and this field was very likely to align with one of their top
three corporate science fields.
6.5 University trustees’ corporations and university R&D expenditures
A series of six OLS regression models were developed to test whether a university’s top
corporate science fields can predict its R&D funding. The six models were broken into three
groups based on the dependent variables (total R&D, federal R&D, and industry R&D) and
two points in time (1997 and 2005)6. Table 3 presents the means of the dependent and
independent variables used in the OLS models. The proportion of the top three corporate
science fields represented within all academic fields, via the corporate-university trustee
4 This was not necessarily a direct #1 corporate science field = #1 field of research and the #2 corporate science field = #2 field of
research. Rather it was the #1 corporate science field being represented within the top three fields of research, and the #2 corporate
science field being represented within the top three fields of research, etc.
5 Dollar values are shown in nominal values
6 For the 1997 and 2005 models, Johns Hopkins University was removed from the analysis due their Total and Federal R&D
expenditures were substantially larger (outlier) than the rest of the universities in the sample. For the 2005 model, Tulane University
was also removed from the analysis due the effects of hurricane Katrina had on its operations.
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connections, were calculated and used as independent variables. The total number of faculty,
average faculty salary, whether the university had a medical school or a hospital were used
as control (independent) variables. The latter two are perhaps particularly important for life
science (NIH) funding, the largest of all federal R&D grant programs. As Table 3 shows, the
mean R&D expenditures for all three categories (total, federal, and industry) increased
between 1997 and 2005 with total and federal R&D expenditures showing the most growth.
The mean number of total faculty and the average faculty salary also increased during this
time period. The mean proportions of science corporations represented by trustees remained
roughly the same between 1997 and 2005. Just over one-fourth of all corporations’
connections, science and non-science, represented by trustees were in a universities’ top
corporate science field. When the second and third fields of corporate science are
considered, the second field accounted for roughly 15% and the third for 11%.
6.5.1 1997 models—In examining the 1997 models, the OLS models for total R&D and
federal R&D expenditures were significant while the industry R&D model was not. None of
the corporate-university connections variables were significant regardless of model
(dependent variable) [see Table 4]. For the total R&D expenditures model, only the average
faculty salary and the presence of a medical school were significant factors. Every $1,000
increase in faculty salary brought on average, $5.28 million in total R&D funding. If a
university had a medical school, it brought on average $94.82 million of total R&D funding.
For the federal R&D expenditures model, the total number of faculty and average faculty
salary was significant. For every additional faculty member added, universities received on
average $60,000 of federal R&D funding. For every $1,000 increase in faculty salary there
was on average an increase of $4.66 million in federal R&D funding.
6.5.2 2005 models—In examining the 2005 models, as in 1997, the OLS models for total
R&D and federal R&D expenditures were significant. In contrast to 1997, the 2005 model
for industry R&D was significant (see Table 5). For the total R&D expenditures model, the
total number of faculty, the average faculty salary and the top corporate science field were
significant variables. For each faculty member added there was on average $180,000 in total
R&D funding. For every $1,000 increase in faculty salary, there was on average a $5.34
million increase in total R&D funding. For every 1% increase in the proportion of trustees’
connected to corporations’ in a universities’ top corporate science field, there was on
average a $5.91 million increase in total R&D funding. To put another way, the more a
university increased the numbers of trustees who represented corporations in their top
corporate science field, the greater its total R&D funding.
For the federal R&D expenditures model, average faculty salary, the total number of faculty
and the second corporate science field were significant variables. Every $1,000 increase in
faculty salary brought on average $3.5 million in federal R&D funding. For every additional
faculty member added, federal R&D funding on average increased $130,000. For every 1%
increase in trustees’ representing science corporations in their university’s second ranked
corporate science field, universities’ federal R&D on average increased $8.65 million. In
essence, this suggests that the more a university increased its connections to trustees tied to
corporations that operate in its second ranked corporate science field, the greater the R&D
funding from federal sources.
For the industry R&D model, the only significant variable was the proportion of trustees (of
the all corporate connections, science and non-science) connected to corporations’ in a
universities’ top corporate science field. Every 1% increase in the proportion brought an
average $1.72 million in industry R&D funding. In short, the more a university increased its
trustees operating in its top corporate science field the more it was rewarded with industry
R&D funding.
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Generally, our third hypothesis--over time, universities’ corporate science fields positively
influence the amount of research and development (R&D) funding universities receive was
confirmed. Although the degree to which the corporate science fields predicted research
expenditures varied by according to model—total R&D, federal R&D, industry R&D—in
2005 all were positive.
6.5.3 1997 and 2005 models—Within the two sets of models (1997 and 2005), the
significance of the corporate science fields, faculty salary, and presence of medical schools
stand out. First, the variables for either universities’ first or the second corporate science
fields were significant in 2005 but were not in 1997 models, suggesting that our third
hypothesis--over time, universities’ corporate science fields positively influence the amount
of R&D funding universities receive--has merit. The lack of significance in the 1997 models
and the significance in the 2005 model suggests university corporate ties have become more
important over time for universities’ success in winning R&D funding. Second, the average
faculty salary was significant in numerous models across R&D funding sources and years.
Using faculty salary as a proxy for prestige (higher the salary, the higher prestige of
university7) suggests that universities that were more prestigious received more R&D
funding than their less prestigious counterparts. Third, the presence of a medical school was
significant in the 1997 total R&D expenditures model; however, this was not the case in the
2005 total R&D model. This is particularly interesting given that the proportion of all R&D
funding for the universities in the sample coming from the life sciences grew from 53.7% in
1997 to 62.1% in 2005.
7. Discussion
To date, university trustees have not been studied as a channel between academe and
industry that enables scientific discovery, technology development and economic
innovation. Because trustees of the 26 private AAU universities are also frequently members
of boards of directors of corporations with research interests, we thought they might provide
such a channel. Given the growth of science intensive knowledge economies, policy makers
in many nations look to university research to stimulate technological development that will
lead to economic innovation that, in turn, will promote economic prosperity (European
Commission, 2010; National Economic Council, Council of Economic Advisors and Office
of Science and Technology Policy, 2011; Slaughter and Cantwell, 2012; Suresh, 2011;
United Nations Millennium Project, 2005; World Bank Institute, 2007). Policy makers are
increasingly concerned with locating, creating or sustaining channels between industry and
academe. Our findings suggest that trustees of private AAU universities may provide an
important channel.
At first glance, the drop in the number of trustees with corporate connections raises some
questions about their importance as a channel. Although the number of trustees remained
approximately the same between 1997 and 2005, the number of all corporate connections
dropped by about one-third, and the number of trustees with any corporate connection
dropped by about 10 percent. There are a number of possible explanations for this. The most
likely is the increase in privately held corporations, including public corporations that were
taken private, in the period under study (The Economist, 2012). We tracked only trustee
connections with publicly traded corporations, not with privates, largely because of ease of
access to data. The rapid growth of non-profits during this period also may have increased
competition for trustees (Wing et al., 2009). Presumably many non-profits, whether
universities or other types of organizations, seek to secure trustees with corporate
7 This was intended to be a simple, straightforward measure (proxy). As such, it does not account for differences in costs-of-living
between the locations of the universities in the sample, which could contribute to differences in faculty salary.
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connections because they are potential financial advisors and/or donors. Universities may
not offer trustees the same type of compensation or fees as other non-profits, making
trustees more difficult to recruit (Ahn et al., 2003). Another possibility for the decline of
trustees with corporate connections is that the economic climate of the study period (1997–
2005) was marked by the dot.com bubble (1997–2001), followed by an eighteen month
downturn that wiped out $5 trillion of value in technology firms and the difficult financial
climate may have made corporate leaders less willing to serve (Beattie, 2011; Weinstein,
2010).
However, the percentage of trustees representing science corporations did not drop,
suggesting trustees who are directors of these corporations continued to be committed to a
presence at research universities. The persistence of these trustees suggests that they may
see sitting on the boards of research universities as important to their businesses. In other
words, trustees of science corporations see their service as providing a useful conduit
between universities and industry.
The analysis shows that corporate science and university research were more alike in 2005
than 1997, suggesting convergence. However, this may be an artifact of the concentration of
more and more R&D funding in universities’ primary research fields, which are very like
corporate science fields. This concentration suggests that US federal research policy
intermediates between university research and corporate science by establishing or
preferring programs in the various mission agencies that are designed to promote economic
growth as well as accomplish agency goals. The shift in federal policy to use research
funding to stimulate economic development is well documented (Slaughter and Leslie,
1997; Slaughter and Rhoades, 1996, 2004, & 2005). In response to legislative changes and
federal policy initiatives, federal agencies began to structure a greater share of their
subsidies, e.g., research grants, to stimulate entrepreneurial research and economic
innovation the starting in the late 1980s (Slaughter and Rhoades 1996 & 2005). By 2011, the
director of the NSF was unveiling the Innovation Corp (I-Corp):
[I-Corp] will create a new national network of scientists, engineers, innovators,
business leaders, and entrepreneurs. It will help strengthen our national innovation
ecosystem. Innovation Corps awards will help to strategically identify nascent
science and engineering discoveries, and will leverage NSF’s investment in basic
research for technology innovation. Universities and academic institutions will be
key partners in the I-Corps national network (Suresh, 2011).
Even though NSF is the agency of basic science it is nonetheless in the economic innovation
business, and presumably has a strong interest in ensuring that the revenues for which
universities compete are expended on the type of research it seeks to promote. Similarly,
NIH, the largest university federal R&D funder, has played an important role in economic
innovation. Between 1982–2006, one-third of all drugs and nearly 60 percent of promising
new molecular entities approved by FDA cited either an NIH funded publication or a patent
based on NIH funded research (National Institute for Health, 2011). The NIH promoted
“translational research,” aimed at converting basic scientific discoveries financed by the
NIH into drugs and medical devices (Baskin, 2011). In sum, science policy that makes
available research funds for universities’ convergent corporate science and research fields
may underwrite the infrastructure that allows trustees to deepen channels between industry
and academe.
It is possible that university trustees and senior university managers have played a role in
shaping federal science policy to prefer science that thrives on university-industry
relationships. For example, throughout the 1980s and 1990s, agenda setting policy groups
such as the Business-Higher Education Forum, the Carnegie Commission on Science,
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Technology and Government, the Council on Competitiveness brought together corporate
and university leaders to push for legislation that promoted use of science and technology to
enable US economic innovation to keep the US in a dominant global position (Slaughter and
Rhoades, 2005). While we have not analyzed these bodies in detail to ascertain how many
were trustees in our sample participated in them, we do know that a number of trustees
representing science corporations were on these bodies, as were a number of presidents of
AAU universities. This suggests a complex policy making process involving trustees,
university presidents, politicians and federal agencies that may lead to subsidies in areas
where universities research and corporate science fields are similar.
Both trustees and senior management may see it as advantageous to invest in universities’
corporate science fields, trustees because they have an interest in science relevant to their
corporations, senior management because they see that concentrated research investments
may be necessary to win federal dollars, both trustees and senior management because they
wish to increase university research funding, reputation and prestige. Investment may take
many forms, for example infrastructure, new centers and institutes, various offices--
technology transfer, research parks--and enterprises—spinoffs—as well as recruitment of
star faculty (Zucker and Darby, 1996 & 2007). Although we cannot directly address whether
research investment decisions made by trustee and senior management results in success in
winning R&D, our analysis indirectly confirms it in that in 2005, universities’ corporate
science fields predicted increases in all types of R&D (total, federal industrial) and the
amount of the increase outweighed other predictors.
7.1 Total R&D
Total R&D is comprised of funds from the federal government (federal R&D), foundations,
e.g. the Gates Foundation, state governments, e.g. California, Massachusetts, industry, e.g.,
grants from Pfizer, and from the universities’ own funds, e.g., institutional funds. The
breakdown of these funds in 2005 for all American universities was: $29.2 billion from
federal sources (64%), $8.26 billion from institutional funds (18%), $2.94 billion from state
and local government sources (6%), $2.29 billion from industry sources (5%), and $3.09
billion from other sources (7%). The greatest increase in funds since the 1980s was in
institutional funds, which were $835 million in 1980 and $8.26 billion in 2005, followed by
industrial funds. In other words, American universities were spending more internal funds to
leverage various external research revenue streams.
In 2005, for total R&D, every 1% increase in the proportion of trustees’ corporations’
located in a university’s top corporate science field, brought on average a $5.91 million
increase. A university’s top corporate science field is likely the field of greatest cumulative
investment on part of corporations, representing areas of established business and reliable
profit. Trustees representing corporations in the universities’ top fields may seek to leverage
total R&D dollars in areas relevant to what is likely their top science priority. They are
probably interested in maintaining university research in these fields to capture important
new technology developments, e.g., improvements, upstream technology, new members of
patent families. Senior university management likely play an important part with regard to
total R&D as well, since that this category incorporates all research dollars, including the
18% that comes from institutional funds. Given the convergence of university research and
corporate science fields, senior university management may try to recruit trustees in their top
corporate science fields because they are important for steering investments to their top
research fields, and strength in these fields may increase success in winning federal grants
and contracts, building university prestige and reputation, in which trustees are also
interested.
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7.2 Federal R&D
In 2005, with regard to federal R&D, for every 1% increase in a university’s number of
trustees who represent a corporation in the universities second ranked corporate science
field, there was an $8.65 million increase in federal R&D funding. The second ranked
corporate field accounted for the greatest dollar increase across all types of funding —total,
federal, industrial. Trustees representing science corporations may see universities as
laboratories to explore new developments in entrepreneurial science. The second ranked
science field may be where these trustees expect universities to discover new technologies
for future products and new business areas. If trustees are channels between industry and
academe, then they may look to universities to explore research that will be valuable
corporations in six to ten years out (Salter and Martin, 2001; Sampat and Lichtenberg,
2011). The second ranked field may be the site where these trustees stake out broad areas of
future technology investment. Alternatively, the second ranked science field may account
for the greatest dollar increase across all types of research because more federal dollars are
available in these areas due to federal research policy that prioritizes investment in
entrepreneurial research designed to stimulate technology development and economic
innovation. As noted above, processes that lead to federal R&D funding in entrepreneurial
areas are complex, iterative, and ongoing. Corporations and universities may have
contributed to setting policy agendas that concentrated funds in the second ranked corporate
science fields that they seek to develop for the future.
7.3 Industry R&D
In 2005, a university’s top corporate science field also predicts an increase in industrial
R&D of $1.72 million per 1% increase in the percentage of trustees representing a
corporation in the university’s top corporate science field. While the dollar increase is not as
great as federal R&D or total R&D, this finding had the highest level of significance.
Moreover, the percentage of academic R&D funds universities received from industry, while
still relatively small, grew faster than total federal R&D or federal R&D during the period of
the study. It may be that trustees’ science corporations put industry funds into their
universities academic research when top ranked fields of corporate science may yield the
possibility of intellectual property claims or short-term technology development.
7.4 Synopsis
In sum, university trustees that represent science corporations may create channels with
industry that allow them to draw on academic research that enables them to maintain and
expand their knowledge in their top science field (total federal R&D), explore new areas of
expertise for future investment in their second ranked corporate fields (federal R&D) and
invest research in areas likely to provide immediate payoff, claiming and protecting
knowledge pertinent to their top science field (industrial R&D). Senior managers may work
with trustees to create these channels to strengthen university-industry relationships to
recruit trustees, to work with trustees to set research policy agendas that increase the flow of
research funds from various sources, to gain insight from trustees with regard to research
and financial investment, and to encourage trustees as donors. The channels that trustees
create between universities and industry may deepen because trustees and senior
management see them as mutually beneficial.
A surprising finding was the lack of significance of a medical school in 2005, in contrast to
1997 and to the literature generally, especially given the growth of NIH funding. This may
be due to the increasing concentration of biotech and pharmaceuticals in Colleges of
Pharmacy, in biosciences, or in centers or institutes devoted to discovery of technology or
products that are central to health related businesses. These 2005 findings may anticipate
academic based drug discovery centers that are now coming into play at universities in
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which corporations and universities invest jointly in discovery, with complex and varied
funding arrangements (Blumestyk, 2011).
However, in 2005 universities’ corporate science fields, all else equal, were stronger
predictors as measured by R&D dollars than any other variables commonly used to predict
university success with regard to R&D. The change from 1997, when few variables were
significant, to 2005 was swift. A number of factors may have contributed to this change: the
growth of federal and state competitiveness policies in the 1990s and 2000s that sought to
put academic science in the service of technology development and economic innovation;
subsequent rapid increase in federal R&D funds in areas related to corporate science fields;
the growing importance of national and international university rankings, to which success
in research funding was increasingly salient (Marginson, 2007; Teichler, 2011).
Academic capitalism theorizes how segments of universities move toward the market. Our
data suggest that networked trustees may constitute an emerging organizational field in
which trustees who share research interests are an intermediating entity that shifts research
universities in an entrepreneurial direction that is increasingly important to the management
of university-industry science. We see these trustees as belonging to a different register than
the channels thus far described in the literature (see related literature section, above). They
may be engaged in research strategy at multiple levels. As directors of both universities and
science based corporations, these relatively autonomous board members are in a unique
position to influence the resourcing of discovery and innovation from the highest level of
formal organizational authority. Trustees and senior managers may play a part in shaping
national research policy to promote technology innovation and economic development,
make investment decisions at universities that prioritize common areas of interest, explore
new areas for future investment, and put industry funds into research areas likely to provide
short-term payoff. The network may create trust that allows directors of science- based firms
to pursue broad strategic goals that call for knowledge sharing and work on common
problems such as shifting federal policy toward technology innovation and economic
development. At the same time, trustees and senior managers at specific universities may
pursue competitive advantages by treating the university as firms that can maximize profits
for both university and industry.
The AAU private university trustees network is executive in that its members are heads of
corporations, members of boards of directors and trustees of universities: it is a network, not
a club or executive committee, and is likely porous, informal, loosely coupled and one of
many sets of players in the technology development and innovation game. For example, the
boards of directors of foundations of public universities (which are distinct from their
governmentally appointed boards of trustees or regents) seem to have members who have
profiles similar to AAU private university trustees, and may have their own networks that
engage in the same strategic management knowledge as private university trustees.
Moreover, the private AAU trustees hold demanding executive positions that make it
unlikely that they personally manage specific exchanges between their science corporations
and the universities of which they are stewards, although they may bring areas of shared
interest to the attention of corporate staff. Nonetheless, universities’ corporate science fields,
identified by trustee connections, all else equal, were stronger predictors as measured by
R&D dollars than any other variables commonly used to predict university success with
regard to R&D, and this suggests that the network is viable.
What calls for further exploration is how strategies and decisions flow through the network
and this will require more research. For example, data could be expanded temporally, the
importance of positions and paths within the network, as well as sub-networks, could be
explored to see the effect they have on convergence and prediction of research funding or
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initiation of start-ups or other types of university-industry partnerships, patent profiles of
network universities and trustees’ corporations could be analyzed to see if universities and
trustees’ corporations are more likely to patent in the same areas over time (Slaughter et al.,
forthcoming). Data could be gathered on public university foundations to see if trustees of
these organizations play similar roles to private AAU trustees. Perhaps most important for a
full understanding of the strengths and weaknesses of the posited executive science network
will be qualitative research that includes interviews with trustees of science corporations,
other types of corporations and uninvolved trustees as well as with senior university
managers, e.g., university presidents, vice-presidents for research, technology transfer
managers. Only then are we likely to gain penetrating insight into how such a network
functions and whether it has strategic purposes.
8. Conclusion
Whether private or public, American AAU research universities have trustees who operate
with relative autonomy. Private university trustees have greater autonomy than public, in
that they are neither appointed by state governors nor elected and are self-perpetuating, but
public research university trustees or regents often serve as a buffer between institution and
state and have the power to establish arms-length organizations, such as foundations, that
can operate in a manner similar to private research universities, which technically, are also
foundations. The autonomy of the private AAU research university boards may enable the
trustees to constitute an executive science network that is important in securing research
funding for universities. This in turn enables publications and patents. Trustees connections
with industry likely contribute to university patenting, university-industry partnerships,
technology development and economic innovation. Resources, publications and patents are
all important to achieving world-class university status. It is not clear whether other
countries should or could replicate the US trustee system. The European Union has declared
its intent to best the US in terms of world-class university status and has encouraged its
member nations to strengthen higher education (European Union, 2010). In recent years, a
number of universities in the European nations have moved to appoint autonomous boards
(Estermann and Nokkala, 2009; Estermann, Nokkala and Steinel, 2011). Whether they will
constitute executive science networks within their nations, and what such networks do
remains to be seen.
Perhaps the biggest issue an executive science network faces is ICOI. The executive science
network may precipitate new forms of institutional conflict, such as university as firm
conflicts (Slaughter et al., 2009). These are the most recent type of ICOI and arise primarily
when universities are involved in commercialization activity. For example, trustees’
corporations have the potential to sponsor research at their university or to license university
intellectual property or hold equity positions in spin-offs based on faculty research. In these
transactions, trustees are economic actors making decisions simultaneously for their
corporation and their university, treating both as firms by seeking to maximize revenues.
While the economic goals of a trustee as member of a corporate board of directors and
trustee of a university board member may often be the same—working to maximize
discovery, technology development and economic innovation which return profits to the
corporation and revenue to the university—there are occasions when the goals may diverge.
For example, a trustees who also represents a corporate board may want to negotiate a lower
license fee than a university trustee not representing the board would think appropriate. Or,
trustees representing corporations with similar research interests may promote university
investment in areas close to the corporate science fields they represent. Further, economic
goals may conflict with research integrity or human subjects’ protection requirements. For
example, trustees could sit on the boards of directors of corporations that are running clinical
trials at the university (Krimsky, 2003; Washburn, 2005). University as firm conflicts may
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also compromise academic values of openness and sharing of scientific information. Faculty
and/or graduate students could be asked by firms on which trustees sit on the board of
directors to withhold or delay publication while universities acquire patent rights to
intellectual property (Slaughter et al., 2004). Trustees could prefer investment in STEM
fields above all others, constraining growth and development of other fields.
To realize the potential of the executive science network to contribute to technology
development and innovation, ICOI must be monitored and managed so as tap the synergy of
the executive science network, yet not embroil universities in ethical or legal quandaries.
AAU universities do have ICOI policies, but the degree to which they apply to trustees is
often unclear (Slaughter et al., 2009). Yet potentially trustees may be involved in decisions
about discrete aspects of technology development in research areas shared by their
university and corporation(s). Such decisions are often lengthy, complex, have multiple
decision points, and the nature and likelihood of conflict is often unclear. For example,
university trustees acting as agents of the university as firm may have already patented and
taken equity in a drug discovered by a faculty member before decisions are made about
running clinical trials. Milestones may have to be reached, more university funds may need
to be committed, and decisions about more research funding made before the process is
complete, with each decision point raising the possibility of ICOI, especially if ICOI is
considered as involving not only human subjects but research integrity and university
values.
The theory of academic capitalism (Slaughter and Rhoades, 2004) suggests that trustees are
likely to use their positions to further corporate as well as university interests, developing
strategies that create infrastructure for corporate research interests, largely using public
funds. Should that result in broad public benefit, such as economic recovery and income
equality, policy makers who promote universities as engines of economic development may
be justified; if the reverse is the case, then policy reformulation may be required. Perhaps the
best way to monitor and manage ICOI would be to have a trans-university committee
composed of trustees whose corporations are not actively involved in exchanges with their
universities that have intellectual property potential. Such a committee would likely be
knowledgeable about the network, and perhaps could monitor and provide guidance for
managing these exchanges, and developing guiding policies and practices. This would
address the Association of American Medical Colleges–Association of American
Universities (2008) concern that “[T]he existence (or appearance) of such [ICOI] conflicts
can lead to actual bias, or suspicion about possible bias, in the review or conduct of research
at the institution. If they are not evaluated or managed, they may result in choices or actions
that are incongruent with the missions, obligations, or values of the university” (p. 1).
Acknowledgments
This research was funded by the National Institute of Health grant# 1R01GM080071-01A1, “University trustees
and administrators: Potential for Institutional Conflict of Interest.” We are grateful for contributions of Brendan
Cantwell (Michigan State University), Dave Johnson (University of Georgia), Liang Zhang (Pennsylvania State
University) and Robert Lusch, The James and Pamela Muzzy Chair of Entrepreneurship, Professor of Marketing
and Director of the McGuire Entrepreneurship Center (University of Arizona) whose comments improved the
paper.
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Zucker, L.; Darby, M. Star scientists, innovation, regional and national immigration. Paper prepared
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papers.ssrn.com/sol3/papers.cfm?abstract_id=1001112
APPENDIX A Crosswalk between NAICS-CIP-Field of Science - Syracuse
University 2005
Corporation NAICS CODE NAICS Tittle CIP Code CIP Field NSF Field of
Science
Allstate Corp. 524126 Direct Property and Casualty Insurance
Carriers 52 Business Non-Science
Baker Hughes Inc. 333132 Oil and Gas Field Machinery and
Equipment Manufacturing 40 Physical Sciences Physical Sciences
Belmont Bancorp 522110 Commercial Banking 52 Business Non-Science
Cintas Corp 315225 Men’s and Boys’ Cut and Sew Work
Clothing Manufacturing 19 Family & Consumer Sciences/
Human Sciences Life Sciences
Consol Energy 212112 Bituminous Coal Underground Mining 40 Physical Sciences Physical Sciences
Forest Laboratories Inc. 325412 Pharmaceutical Preparation Manufacturing 26 Biological & Biomedical
Sciences Life Sciences
Gardner Denver Inc. 333912 Air and Gas Compressor Manufacturing 14 Engineering Engineering
Lennox International Inc. 333415 Air-Conditioning & Warm Air Heating
Equipment Manufacturing 14 Engineering Engineering
NBT Bancorp 522110 Commercial Banking 52 Business Non-Science
Nipsource Inc 22111 Electric Power Generation 14 Engineering Engineering
Paetec Holding Co. 517110 Wired Telecommunications Carriers 09 Communication and Journalism Non-Science
Radio One Inc. 515112 Radio Stations 09 Communication and Journalism Non-Science
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Highlights
University trustees are connected to industry at top governance levels
University trustees’ corporate areas and university’s research fields are converging
Convergence brings large increases of university R&D funding
University trustees and senior managers may form an executive science network
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Figure 1.
1997 AAU organizational networks, by institutional type.
Green: universities; Red: patenting firms; Gray: non-patenting firms
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Table 1
Association of American Universities US Members 2005
Brandeis
Brown
Cal Tech
Carnegie Mellon
Case Western
Columbia
Cornell
Duke
Emory
Harvard
Indiana
Iowa State
Johns Hopkins
MIT
Michigan State
New York U
Northwestern
Ohio State U
Penn State
Princeton
Purdue
Rice
Rutgers
Stanford
SUNY Buffalo
SUNY Stoneybrook
Syracuse
Texas A&M
Tulane
U Arizona
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UC Berkeley
UC Davis
UC Irvine
UC Los Angeles
UC San Diego
UC Santa Barbara
U Chicago
U Colorado
U Florida
U Illinois
U Iowa
U Kansas
U Maryland
U Michigan
U Minnesota
U Missouri
U Nebraska
U North Carolina
U Oregon
U Penn
U Pittsburgh
U Rochester
U Southern Cal
U Texas
U Virginia
U Washington
U Wisconsin
Vanderbilt
Washington U
Yale
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Table 2
Number of trustees, all corporate connections, and trustees connected to all corporations
1997 2005
Total Number of Trustees 1194 1189
Mean Number of Trustees 45.9 45.7
Total Number of University-Corporate Connections 1321 848
Mean Number of University-Corporate Connections 50.8 32.6
Total Number of Trustees Connected to Corporations 533 449
Mean Number of Trustees Connected to Corporations 20.5 17.3
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Table 3
Means of dependent and Independent variables
1997 2005
Total R&D expenditures 193.1 369.8
Federal R&D expenditures 140.1 276.2
Industry R&D expenditures 13.0 19.9
Proportion of #1 Corporate Science Field 27.5% 25.5%
Proportion of #2 Corporate Science Field 15.5% 15.8%
Proportion of #3 Corporate Science Field 10.6% 10.8%
Total Number of Faculty 850.1 983.4
Average Faculty Salary 73.0 99.5
Hospital 36% 33%
Medical School 72% 71%
Note: R&D Expenditures in Nominal Millions $
Note: Faculty Salary in Nominal Thousands $
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Table 4
1997 OLS regression models
Total Federal Industry
Model Significance 0.046 0.034 0.611
R 0.724 0.734
R20.525 0.545
Constant −376.27
**
(173.4) −380.42
**
(132.5)
Proportion of #1 Corporate Science Field 107.60 (199.7) 165.81 (152.5)
Proportion of #2 Corporate Science Field 771.40 (481.6) 510.54 (367.8)
Proportion of #3 Corporate Science Field −753.07 (583.6) −338.78 (445.7)
Total # of Faculty 0.06 (0.04) 0.06
*
(0.03)
Average Faculty Salary 5.28
***
(1.8) 4.66
***
(1.3)
Hospital −16.36 (41.5) −5.27 (31.7)
Medical School 94.82
*
(51.3) 62.6 (39.2)
Note: Standard Errors in parentheses
Note:
***
=p<.01,
**
p<.05,
*
p<.10
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Table 5
2005 OLS models
Model Significance 0.012 0.012 0.087
R 0.792 0.794 0.703
R20.627 0.630 0.494
Constant −701.29
**
(305.6) −601.91
**
(227.4) −35.87 (53.5)
Proportion of #1 Corporate Science Field 591.27
*
(322.8) 332.88 (240.2) 172.20
***
(56.5)
Proportion of #2 Corporate Science Field 657.45 (620.7) 865.26
*
(461.9) −83.10 (108.7)
Proportion of #3 Corporate Science Field 188.65 (947.7) −114.37 (705.2) −48.81 (165.9)
Total number of Faculty 0.18
**
(0.08) 0.13
**
(0.06) 0.01 (0.01)
Average Faculty Salary 5.34
**
(2.35) 4.90
**
(1.7) 0.16 (0.4)
Hospital 52.87 (73.7) 27.93 (54.8) 20.02 (12.9)
Medical School 103.77 (79.9) 62.7 (59.5) −9.19 (13.9)
Note: Standard Errors in parentheses
Note:
***
=p<.01,
**
p<.05,
*
p<.10
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