Understanding Private-Sector Decision Making for Early-Stage Technology Development: A "between Invention and Innovation Project" Report

Posted: 24 Nov 2009

See all articles by Philip E. Auerswald

Philip E. Auerswald

George Mason University - Schar School of Government and Policy

Lewis Branscomb

Harvard University - Harvard Kennedy School (HKS)

Nicholas Demos

affiliation not provided to SSRN

Date Written: 2005

Abstract

Examines varyinglevels of funding by U.S.companies for early-stage technology development (ESTD), across industries andfirms. For purposes of this study, ESTD is defined as the early development offundamentally new products or processes that lie outside of, or might be inconflict with, the firm's current technology strategy or that deploy currenttechnology outside of the firm's current core businesses. Data were collected through 39 interviews with R&D executives from eightventure capital firms and 31 large corporations across eight industry sectorsfrom July 2001 to January 2002. Results indicate that, despite recognition thatESTD investments are critical to long-term growth, these investments are not acorporate priority. Approximately 7.3% of corporate R&D budgets aredirected toward ESTD activities. Of the industries considered in this analysis,the chemical industry invested the highest proportion (33%) of their R&Dbudgets in ESTD. Companies have developed several strategies for maintaining access to newtechnologies while minimizing cost. Such strategiesinclude alliances,acquisitions, and outsourcing. The variation across firms for ESTD funding canbe attributed to the increased sophistication required to develop newtechnologies and mounting pressure on R&D divisions to demonstratefinancial value from R&D investments. (SRD)

Keywords: Early stage technologies, R&D expenditures, Private sector, Management decisions, High technology firms, Innovation process, New technologies, Product development, Acquisitions & mergers, Outsourcing, Interfirm alliances

Suggested Citation

Auerswald, Philip Edgar and Branscomb, Lewis and Demos, Nicholas, Understanding Private-Sector Decision Making for Early-Stage Technology Development: A "between Invention and Innovation Project" Report (2005). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship. Available at SSRN: https://ssrn.com/abstract=1509975

Philip Edgar Auerswald (Contact Author)

George Mason University - Schar School of Government and Policy ( email )

3351 Fairfax Dr.
Arlington, VA 22201
United States

HOME PAGE: http://auerswald.org

Lewis Branscomb

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Nicholas Demos

affiliation not provided to SSRN

No Address Available

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