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The premodern industrial craft economy provided the initial intersection of industry with science through scientiﬁc instrument making. The development of scientiﬁc inquiry through craft-based production, and its eﬀects, can be seen in Galileo and the telescope, changing the world-picture and the place of humans within it. From as early as Leeuwenhoek’s microscope to as late as the making of the Hubble telescope in the 1980s, lens and mirror construction was an uncertain art, not fully amenable to scientiﬁc analysis and control.
The invention of moveable type transformed the transfer of knowledge, through storage and retrieval devices, and facilitated the development of modern scientiﬁc as well as popular literature. However, it was the development of the steam engine by a scientiﬁcally informed inventor, James Watt, which led to a systematization of practice that could be analyzed scientiﬁcally, becoming the basis for the next advance. This process gave rise to a new term, technology, to denote an innovation process as well as its results.
Technology is the feedback link between science and industry. Invented in the eighteenth century, this new concept represented, on the one hand, the systematization of craft, through the creation of engineering disciplines, originally to quantify and sytematize the construction of military fortiﬁcations (Calvert 1967). On the other hand, technology was also derived from the extension of science. This occurred through the creation of applied sciences such as solid state physics and the invention of semiconductor devices such as the transistor. This research paper surveys the relationship between science and industry since the 1700s.
1. Early Science And Industrial Development
Science originated in the seventeenth century as organized investigation of the natural world according to relatively secure methodological principles. In this era, practical and theoretical concerns each provided between 40–60 percent of the impetus to research, with some overlap (Merton 1938). Well before science was institutionalized in universities and research institutes, individual scientists, loosely connected through scientiﬁc societies, provided an occasional basis for industrial development. For example, in the absence of reliable navigational techniques, commerce was impeded by the need for ships to stay close to shorelines. In response to a prize oﬀered by the British government, astronomers used their observational techniques and knowledge base to develop star charts useful to navigators. Their involvement in solving a commercial problem was secured without incurring explicit costs. These were considered to be assumable by the astronomers themselves, with navigational research considered as an oﬀshoot of their government or academic responsibilities that could be carried out at marginal cost.
Clockmakers approached the problem from the opposite stance by adapting a mechanical device to the solution of the navigational problem. Of lower status and with lesser ﬁnancial resources and institutional backing than the astronomers, a clockmaker who arrived at a mechanical solution to the problem had great diﬃculty in being taken seriously by the judges of the competition. Moreover, as an independent craftsman he was dependent upon receiving intermediate ﬁnancial dispensations from government to improve his device. Nevertheless, science and craft intersected to overcome blockages to the ﬂow of trade by providing reliable navigational methods (Sobel 1996).
Science became more directly involved in industrial production in seventeenth century Germany when professors of pharmacy invented medical preparations in the course of their experimentation. With support from some German princely states, and in collaboration with entrepreneurs, ﬁrms were formed to commercialize these pharmaceutical discoveries. Thus, the academic spin-oﬀ process, with governmental and industrial links, was adumbrated at this time (Gustin 1975).
2. Incremental Innovation: Learning By Doing
In an era when most industry was craft based, incremental improvements arose primarily from workers’ experience with the process of production. For example, in the course of ﬁring bricks a worker might notice that a brick had attained exceptional strength under high heat and then attempt, through trial and error, to duplicate what the observation of a chance event had brought to light. Eventually, the conditions that produced the original improved brick might be approximately reproduced and a suﬃciently high rate of production achieved, with the ‘experimenter’ knowing more or less how but not really why the useful result had been achieved (Landes 1969).
Scientiﬁc advance was also built upon what is now called ‘learning by doing’ (Lundvall and Borras 1997). By interviewing various practitioners, researchers began to collate and systematize their local knowledge into broader syntheses. Thus, advances in understanding of stratigraphy derived from miners’ practical experience in eighteenth-century Italy (Vaccari 2000).
Much, if not most, innovation still takes place through craft-based experience. Indeed, scientiﬁc principles and methods such as those developed in operations research have recently been applied to systematize incremental innovation. Incremental innovation itself has been scientized through the application of statistical techniques, pioneered in Japan during the 1930s by the disciples of Edward Deming, the US researcher, who only later gained consulting opportunities and renown in his own country.
3. The Industrialization Of Science
The connection between academe, science, and industry strengthened with the invention of the chemistry laboratory as a joint teaching and research format by Justus Liebig at the University of Giessen in the mid-nineteenthth century (Brock 1997). Having achieved reliable analytical methods, Liebig could assign an unsolved problem to a student and expect a solution to arise in due course, with a minimum of supervision from the master or his assistants. The teaching laboratory model then spread to other experimental ﬁelds. As an organizational innovation combined with replicable methods of investigation, the laboratory allowed training and original investigation to be coordinated and expanded, creating a larger market for research equipment.
Alexander Von Humboldt theorized the unity of teaching and research as an academic model as well as a practical tenet (Oleson and Voss 1979). The incorporation of science into the university along with methods to revive classical knowledge led to the development of research as an academic practice. The research university model was transferred from Germany to the US in the mid-nineteenth century and eventually became the base for technology transfer and ﬁrm formation (Jencks and Riesman 1968).
Liebig, himself, attempted to take the development of technology from academic research a step further by starting businesses based upon his scientiﬁc discoveries. His mix of successes and failures foreshadowed the contemporary science-based ﬁrm. Nevertheless, this was an unusual combination of roles of researcher and entrepreneur in one person at the time (Jones 1993). More typically, the professor’s students made technology arising from scientiﬁc research into companies. Thus, the emblem of the Zeiss optical ﬁrm incorporates a portrait of the original founders, including professor and student.
4. The Foundation Of Firms Based On Scientiﬁc Research
With the invention of the laboratory, instrument making was internalized within science. As science and the need for research equipment grew, instrument production began to be externalized and made into an industry. Scientiﬁc instrument making is an early source of ﬁrm formation linked to academic research. For example, scientist-initiated instrument ﬁrms grew up around MIT and Harvard in the late nineteenth century, along with consulting ﬁrms such as A. D. Little providing a formal overlay of relationships between university and industry, beyond personal ties between teacher and former student.
Until quite recently, scientiﬁc instrument making was a specialized niche industry, having more to do with academia than industry. A shift toward dual use industrial and scientiﬁc technologies began to occur with the development of electronic instrumentation. Oscilloscopes served as research tools, for example, to record nerve impulses in physiology, but were also utilized to provide quality assurance in industrial production. The formation of the Hewlett Packard and Varian Corporations, based upon innovations in electronics in the physics department at Stanford University in the 1930s, exemplify this transitional phase in the relationship between scientiﬁc instrumentation and industry (Lenoir 1997).
Industrialized science is exempliﬁed today by mass-produced scientiﬁc equipment such as the sequencing machines crucial to the human genome project. What is new is the breakdown of the distinction between scientiﬁc instrumentation and the means of industrial production. This has occurred through the emergence of technologies such as computers that have broad application to science, business, art, and other techniques (Ellul 1964). Indeed, the computer is a machine with such protean implications that it became the basis of a science itself and contributed to the creation of a new class of sciences of the artiﬁcial.
5. The Rise Of Science-Based Industry
Although it had its precursors in China, with gunpowder, paper making, and the organizational technology of bureaucracy, the science–industry interface has been rationalized in the West and North and transferred to the East and South in the modern era. Karl Marx, the initiator of the theory of science-based industry, even though he lost conﬁdence and retreated to a labor theory of value, was far seeing. In the late nineteenth century, he had one example on which to base his thesis, the British chemist Perkin’s research on aniline-based dyes that was translated into an industry in Germany.
According to a close observer, ‘Science and technology may have converged circa 1900’ (Wise 1983). The rise of the chemical and electrical industries in the late nineteenth century fulﬁlled some of the promise of science for industrial development. Nevertheless, even in these industries the translation of science into useful products often hAdvan intervening phase based on ‘cut and try methods that only later became rationalized as in the unit method of scaling up chemical production (Servos 1980).
Thomas Alva Edison, the inventor of the electric light, was also the inventor of the systematic production of inventions. His ‘idea factory,’ staﬀed by formally trained scientists and craftspersons, provided a support structure for the application of Edison’s basket of techniques to a series of technical problems whose solution was the basis for the creation of new industries and ﬁrms (Israel 1998).
One of these companies, the General Electric Corporation (GE), took the connection between science and industry one step further in the US by hiring an academic scientist to organize a research laboratory for the ﬁrm. GE’s hiring of Willis Whitney brought the consulting function of academics to industrial problems within the ﬁrm and also created a new source of product development, the corporate R&D laboratory (Wise 1983).
A reverse relationship between science and engineering exists when corporations have ‘ﬁrst mover’ rather than ‘follower’ business strategies. Siemens, for example, developed new business on the basis of advanced research in semiconductors during the early postwar period while its competitor, AEG, waited to see if a suﬃcient market developed before entering a ﬁeld. Indeed, Siemen’s conﬁdence in science was so great that it did not employ suﬃcient engineers to reﬁne and lower the cost of its production (Serchinger 2000).
The function of the corporate R&D lab was at least threefold: (a) maintain contact with the academic world and other external sources of information useful to the ﬁrm; (b) assist in solving problems in production processes and product development originating within the ﬁrm; and (c) originate new products within and even beyond the existing areas of activity of the ﬁrm.
A few corporate labs, typically in ‘public’ industries such as telecommunications took on a fourth function as quasi-universities, contributing to the advance of science itself (Nelson 1962). Smaller ﬁrms typically focused on the ﬁrst two functions, close to production, while larger ﬁrms more often spanned the entire range of activities (Reich 1987).
6. University–Industry–Government Relations
Models for close public–private cooperation that were invented before World War II have recently been revived and expanded (Owens 1990). During the early postwar period, an institutional division of labor arose in R&D, with industry supporting applied research; government funding basic research in universities and research institutes; and universities providing knowledge and trained persons to industry (Reingold 1987). This ‘virtuous circle’ still accurately describes much of the university–industry–government relationship (Kevles 1977)
Socialist countries developed a variant of this format, attempting to create closer connections to research and production through central planning mechanisms. However, by locating the R&D function in so-called branch institutes, socialist practice actually created a distance between research and production that was even greater than in capitalist ﬁrms that located their R&D units geographically apart from production while retaining organizational ties.
Recently, socialist and, to some extent, large corporate formats for R&D have been decomposed and recombined in new formats. In the US, where these developments have taken their most advanced form to date, several innovations can be identiﬁed including:
(a) Universities extending their functions from research and training into technology development and ﬁrm formation through establishment of new organizational mechanisms such as centers, technology transfer oﬃces, and incubator facilities.
(b) The rise of start-up, high-tech ﬁrms, whether from universities, large corporate laboratories, or previous failed spin-oﬀs, providing a new dynamic element in the science–industry relationship, both as specialized research organizations and as production units rooted in scientiﬁc advance.
(c) A new role for government in encouraging collaboration among various academic and industrial units, large and small, in industrial innovation going beyond the provision of traditional R&D funding, including laws changing ‘the rules of the game’ and programs to encourage collaboration among ﬁrms and between universities and ﬁrms.
An industrial penumbra appears around scientiﬁc institutions such as universities and research laboratories, creating feedback loops, as well as conﬂicts of interest and commitment between people involved in the two spheres. Over time, as conﬂicts are resolved, new hybrid forms of science-based industry and research, as well as new roles such as the industrial and entrepreneurial scientist, are institutionalized (Etzkowitz 2001).
Economic development is increasingly based on science and technology at the local, regional, national, and multinational levels. The science–industry connection, formerly an ancillary and subsidiary aspect of both science and industry, now moves to the center of the stage of economic development strategy as the university and other knowledge-creating organizations become a source of new industry. Political entities at all of these levels develop policies and programs to enhance the science–industry interface, and especially to encourage high-tech ﬁrm formation (Etzkowitz et al. 2000).
The ‘endless frontier’ model of ‘knowledge ﬂows,’ transferred to industry through publications and graduates was insuﬃcient to induce industrial innovation in most cases (Brown 1999). Closer connections were required. A series of organizational innovations to enhance technology transfer took place along a continuum: providing training in entrepreneurship, translation of research ﬁndings into intellectual property rights, and encouraging the early stages of ﬁrm formation.
The potential for participation in knowledge-based economic development reviviﬁes the discredited nineteenth century notion of progress. During the colonial era, technology transfer typically took place in a format that helped maintain political control, and the higher forms of tacit knowledge were kept secret by employing expatriate engineers. Nevertheless, as in India, a steel industry, created by local entrepreneurs, provided an economic base for a political independence movement. Moreover, a seemingly over-expanded higher educational system, originally put in place to train lower level bureaucrats and technicians, has become an engine of growth for India’s software industry.
The synthesis of science and industry is universalized, as both industrial and natural heritages, such as machine-tool industry in German and biodiversity in Brazil, are integrated into new global conﬁgurations, often through local ﬁrms in strategic alliance with multinationals. Given the decreasing scale of scientiﬁc equipment and the increasing availability of higher education, countries and regions in virtually every part of the world can take advantage of opportunities to develop niches. A trend toward worldwide technological innovation has transformed the previous designations of third and second worlds into the ‘emerging world.’
New candidates for science-based economic growth bridge the expected gaps between ‘long waves’ of economic growth. Heretofore, the technology-based long waves identiﬁed by Freeman and his co-workers were made possible by a few key technologies; that is, information technology and biotechnology (Freeman and Soete 1997). The potential for growth from technologies such as solar photovoltaics, multimedia, and the Internet, and new materials arising from nanotechnology are so numerous that there is little or no technical reason, only political, for business cycles with declines as well as rises.
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