Increasingly, R&D and innovation are pursued in a collaborative and interactive environment, often embedded in global supply, production, and distribution networks (Dahlander and Gann 2007; Howells 2008; OECD 2008a). This section presents indicators on two types of innovation linkages: (1) business-to-business interactions in the form of contracted-out R&D, international transactions in R&D services, and global technology alliances, and (2) public-private collaborations. Overall, these indicators illustrate a variety of intra- and cross-organizational arrangements intended to absorb, manage, and exploit external and/or jointly developed knowledge (Chesbrough, Birkinshaw, and Teubal 2006; Ozman 2009). For ongoing development activities related to innovation indicators, see the sidebar "Recent Developments in Innovation-Related Metrics."
Technology and innovation linkages vary by type of partner or knowledge source and level of interaction (OECD/Eurostat 2005). Knowledge sources range from academic papers, conference proceedings, and reports from government laboratories to information from commercial sources, such as marketing and management consultants, patent licensors, R&D contractors, and technology vendors. This section examines indicators related to business transactions and organizational arrangements to acquire or jointly develop new knowledge.
Contract R&D Expenses Within the United States
Increasingly, companies that perform R&D in the United States contract out these activities. These companies reported an estimated $19 billion in R&D performed by external organizations located in the United States in 2007, compared with $12.4 billion in 2006 (appendix table
Across R&D-intensive industries, pharmaceuticals had the highest ratio of contracted-out R&D (21%) in 2007. The ratio for automotive manufacturers was 7.3%, and for navigational, measuring, electromedical, and control instruments (a subsector of the computer and electronic products industry) was 3.8%. Within services, the contracted-out R&D ratio was 13.8% for scientific R&D services and 8.3% for telecommunications in 2007.
Exports and Imports of R&D Services
Across OECD countries, international trade in services, especially those involving intangibles and knowledge-based assets, presents unique measurement challenges for both business accounting and official statistics (OECD 2008b; Reinsdorf and Slaughter 2009; Yorgason 2007). An indicator in this area is international trade in research, development, and testing (RDT) services, including transactions among unaffiliated or independent companies (unaffiliated trade) and trade within MNCs (affiliated trade). These data are part of balance-of-payment statistics and complement other fee-based transactions (such as royalties and licensing), as well as performance and funding information from R&D surveys (Moris 2009). U.S. data for total RDT trade have been available since 2001 from BEA's international transaction surveys.
In 2007, total U.S. exports (affiliated and unaffiliated) of
RDT services reached a record $14.7 billion, compared with
record imports of $11.4 billion, resulting in a trade surplus of
$3.3 billion. Affiliated trade dominates these U.S. RDT statistics
Newly available country detail shows that 62.8% of U.S.
RDT exports in 2007 were purchased by European businesses
and another 12.2% by Japanese businesses (appendix table
International Technology Alliances
Interfirm R&D alliances, partnerships, and networks add an element of R&D co-production compared with R&D contracts or technology licensing. R&D alliances may be defined as domestic or international cooperative arrangements that combine resources aimed at shared R&D objectives (Hagedoorn, Link, and Vonortas 2003). U.S. restrictions on multifirm cooperative research were loosened by the 1984 National Cooperative Research Act (Public Law 98-462), followed by the 1993 National Cooperative Research and Production Act (NCPRA) (Public Law 103-42), as a way of addressing concerns about the technological leadership and international competitiveness of American firms in the early 1980s (Scott 2008).
This section features data from the Cooperative Agreements and Technology Indicators (CATI) database, which collects data on worldwide business technology partnerships.  It is based on public announcements and includes business alliances with an R&D or technology component, such as joint research or development agreements, R&D contracts, and equity joint ventures. The database contains counts dating back to 1980.
According to CATI, in 2006 (the latest available year),
about 900 new worldwide business technology alliances
were formed, approximately two-thirds of which involved at
least one U.S.-owned company regardless of location. Close
to 60% of the worldwide total focused on biotechnology,
and 23% focused on information technology (appendix table
Since 1999, the proportion of U.S.-foreign alliances annually
has surpassed U.S.-only alliances, driven by rapid
growth in U.S. alliances with European-owned companies
This section reviews two sets of indicators on public-private collaboration supporting technology transfer and innovation (for academic patents and related knowledge diffusion indicators, see chapter 5). The first set includes federal programs for technology transfer from R&D funded and performed by government agencies and laboratories. The second set includes federal programs that support new or small U.S. companies in R&D or technology deployment activities with R&D funds or technical assistance.
In the late 1970s, concerns about the strength of U.S. industries and their ability to be competitive in the global economy intensified. Issues included the question of whether inventions from federally funded academic research were adequately exploited for the benefit of the national economy and the need to create or strengthen public-private R&D partnerships. Since the 1980s, several U.S. policies have facilitated cross-sector R&D collaboration and technology transfer. One major policy thrust was to enhance formal mechanisms for transferring knowledge arising from federally funded and performed R&D (Crow and Bozeman 1998; NRC 2003). Other policies addressed federally funded academic R&D, the transition of early-stage technologies into the marketplace, and R&D and innovation by small or minority-owned businesses. For a brief overview of these initiatives, see the sidebar "Major Federal Legislation Related to Technology Transfer and Cooperative R&D."
Federal Technology Transfer
Federal technology transfer refers to processes through which the knowledge and capabilities of federal intramural laboratories and other research facilities can be directed to the R&D needs of outside public or private organizations—and through which the inventions and other intellectual assets arising from federal laboratory R&D can be conveyed to outside parties for development and commercialization (FLC 2006). Since the Stevenson-Wydler Act of 1980, all federal labs have been required to have technology transfer offices (Office of Research and Technology Applications [ORTA]) to assist in identifying transfer opportunities and establishing appropriate arrangements for relationships with external parties. Indicators on these activities illustrate a diverse range of mechanisms used in federal technology transfer.For background information, see the sidebar "Federal Technology Transfer: Activities and Metrics."
Small Business Innovation–Related Programs
This section reviews federal programs that support new or small U.S. companies in R&D or technology deployment activities. These programs include the Small Business Innovation Research (SBIR) program, the Small Business Technology Transfer (STTR) program, the Technology Innovation Program (TIP), and the Hollings Manufacturing Extension Partnership (MEP). The first three programs provide early-stage technology financing, whereas the last one provides technical assistance to small and medium-sized manufacturers.
The SBIR program was created by the Small Business Innovation Development Act of 1982. According to the SBIR statute, federal agencies with extramural R&D obligations exceeding $100 million must set aside a fixed percentage of such obligations for projects involving small business (those with 500 or fewer employees). This set-aside has been 2.5% since FY 1997. The program has multiple objectives, namely stimulating technological innovation, fostering the use of small business to meet federal R&D needs, encouraging participation by minority and disadvantaged persons in technological innovation, and increasing private-sector commercialization of innovation derived from federal R&D. SBIR's sister program, the STTR program, was created in 1992 to stimulate cooperative R&D and technology transfer involving small businesses and nonprofit organizations, including universities and FFRDCs. Both of these programs are coordinated by the Small Business Administration (SBA). In FY 2007, SBIR and STTR combined awarded $2.3 billion (SBA 2009).
In FY 2006, 11 federal agencies awarded a total of
$1.9 billion to about 5,900 SBIR projects (appendix table
The SBIR program is structured in three phases. Phase I
evaluates the scientific and technical merit and feasibility of
ideas. Phase II builds on phase I findings, is subject to further
scientific and technical review, and requires a commercialization
plan (NRC 2008). During phase III, the results
from phase II R&D are further developed and introduced
into private markets or federal procurement using private or
non-SBIR federal funding. Over the life of the program,
the share of phase II funding has increased from about two-thirds
in the mid-1980s to more than three-fourths (figure
The STTR program is also structured in three phases and
involves R&D performed jointly by small businesses and
nonprofit research organizations. Federal agencies with extramural
R&D budgets exceeding $1 billion participate in
the STTR program. Starting in FY 2004, the required set-aside
doubled to 0.3%, compared with the 2.5% set-aside for
SBIR. In FY 2006, DHS participated for the first time, along
with DOD, NSF, DOE, NASA, and HHS. From FY 1994 to
2006, STTR awarded $1.3 billion to about 6,000 projects,
including $226 million to 878 projects in FY 2006 (appendix table
According to SBA, small businesses interested in participating in the STTR program must find a research institution that meets the program's definition and develop a working agreement before competing for an STTR award. Universities are active as STTR partners. For example, in FY 2004, at least 200 universities, many with multiple awardees, partnered with small companies under STTR; 15 FFRDCs also collaborated with awardees (SBA 2005).
Established by the America COMPETES Act of 2007
and administered by NIST, TIP was set up for "the purpose
of assisting U.S. businesses and institutions of higher education
or other organizations, such as national laboratories
and nonprofit research institutions, to support, promote, and
accelerate innovation in the United States through high-risk,
high-reward research in areas of critical national need."
The new program replaces the Advanced Technology Program
(ATP). From FY 1990 to 2007, ATP awarded funds
for 824 projects with a combined funding of $4.6 billion,
about equally split between the program and its participants
A national system of affiliated manufacturing extension centers, MEP is also housed at NIST. It was established by the Omnibus Trade and Competitiveness Act of 1988 to enhance the productivity and technological performance of small and medium-sized U.S. manufacturers (15 U.S.C. 278(k)).
MEP centers receive federal funding on a competitive basis
for their development and operations. Nonfederal funding
is required for 50% or more of the centers' capital and
annual operating funds. Companies receive technical and
managerial assistance, generally on a reimbursable basis,
but receive no direct federal funding (Schacht 2008). Federal
funding for MEP reached $106.8 million in FY 2007
and $91 million in FY 2008 (appendix table