The Myth of the Bayh–Dole Act: Why Universities Dominate R&D

It's sort of an urban myth in innovation circles that before 1980, corporate labs were the source of basic scientific and technology innovation, and after 1980, that role quickly shifted to universities. What happened in 1980 was the passage of the Bayh-Dole Act, which essentially made it much easier for universities to profit from federally-funded research. Unlock access to the market, the story is told, and every public dollar spent on university-based R&D drives dozens more in spin-offs by faster commercialization through IP licensing. A quick perusal of NSF data on R&D spending or the professional society of the people who manage this process tells you quickly that a big portion of our nation's R&D now goes on within the confines of higher ed. The shuttering of many large corporate labs over the last 30 years also adds weight to this story.

But an interesting new article in Research Policy (Volume 37, Issue 1, February 2008, Pages 29-40) by Matthew Rafferty of Quinnipiac University seems to bust this myth pretty effectively. Instead of looking at the results of university research like patents, pre- and post- Bayh-Dole, Rafferty looked instead at the inputs - the level of spending on R&D at universities. His hypothesis? That we should have seen a big surge in university-based R&D spending after Bayh-Dole, since universities would be better able to recapture that investment. Also, he expected to see a shift away from basic science towards applied research that could be commercially developed.

As it turns out, neither of those things turn out to be true. In fact, Rafferty's results suggest that the structural shift towards university-based R&D was probably well underway when Messrs. Bayh and Dole stepped in with their windfall. In essence, they merely removed a few barriers to a structural freight trains that was already barreling down the tracks of the US economy. But I'm sure history will always reflect the fact that they invented the model that has been so successful for the US over the last 25 years. To their credit, at least they didn't make things worse.

Myth busted.

Technorati Tags: academia, economic development, R&D

Comments

[ben spigel]

While most venture capitalists I've talked to are all about Bahy-Dole, one made a very interesting comment. Bahy-Dole doesn't _allow_ patenting, it _requires_ it. Universities that get federal dollars have to make a good faith effort to find useful research, patent it and sell it off. But, most universities (well, all universities that aren't MIT and Stanford) are really bad at this function. This is because the university administration looks at tech transfer offices as a complience cost, not a revenue generator.

I think there's a lot more to Bahy-Dole than exists right now in the lit. Hopefully we'll see a few more critical reviews of it soon.