Report puts UW at head of economic class
When it comes to fostering state and regional economic development, the university is near the top of its class, according to a new report assessing the role of American universities in regional and state economic growth.
The report, issued by the Southern Growth Policies Board and funded by the National Science Foundation, places UW–Madison in the top 12 among all U.S. universities that seek to invigorate state economies through technology transfer and the development of companies born of university research.
According to the book-length report dubbed “Innovation U.,” over the past 15 years some American universities have undergone a fundamental transformation, creating “a new model for the American university as a partner in its regional and state economy.”
The report evaluates university involvement in 10 types of activities, from entrepreneurship to technology transfer and industry-research partnerships. It describes UW–Madison as “a story of an extraordinarily successful research university that has also nurtured a long-standing mission of service to its state, while at the same time creating a very entrepreneurial culture and some novel approaches to technology transfer.”
UW–Madison Chancellor John Wiley says the report underscores the importance of Wisconsin’s long history of innovative technology transfer: “Technology transfer and faculty entrepreneurship are avenues for us to make research accessible to the larger world. The payoff is new products and new sources of high-paying jobs.”
Graduate School Dean Martin Cadwallader, the university’s chief research officer, says the Southern Growth Policies Board study provides independent confirmation that UW–Madison research is a key influence on the state’s fiscal well being. “This study demonstrates a very important return to taxpayers as a result of their investment in public higher education. It recognizes and documents the roles we play in growing Wisconsin’s economy.”
The universities cited in the study were selected through a nomination process that identified those institutions “that systematically understand and are comprehensively addressing their role in regional economic development.” Selections were made by a panel of 55 nationally recognized experts in the areas of economic development, regional economics and organizational innovation. With the exception of Georgia Tech, which was rated as the best in the nation, the 12 universities were not ranked.
The panel, according to the report, came to one unexpected conclusion: “A small group of institutions were notably effective and innovative across performance and practice domains. We kept seeing the same universities among those that were best in class and engaging in novel practices or policies.” UW–Madison was among those cited.
Institutions were evaluated based on activity in these key areas:
- Industry research partnerships.
- Technology transfer.
- Industrial extension and technical assistance.
- Entrepreneurial development.
- Industry education and training partnerships.
- Career services and placement.
- Formal partnerships with economic development organizations.
- Industry/university advisory boards and councils.
- Faculty culture and rewards.
- Leadership/structures, policies and institutionalization.
Instrumental to UW–Madison’s success, according to the report, is a century-old tradition of community service embodied in the Wisconsin Idea. It cites UW–Madison’s triad of technology transfer entities — the Office of University-Industry Relations, University Research Park and the Wisconsin Alumni Research Foundation — as central to the university’s role in helping bolster the state’s economy.
Steven Price, director of UIR, says UW–Madison’s ranking as a technology transfer leader is the result of decades of effort by faculty researchers and campus leaders. He cites the establishment of WARF, founded in 1925 and now the world’s oldest and best established university intellectual property organization, as a keystone event. The development of University Research Park beginning in the 1980s and now home to nearly 100 companies was also central to helping shift the university’s culture to one that was more accepting of entrepreneurship and partnering with business and industry.
UIR itself, established in the early 1960s, was one of the first offices of its kind at any university and has played an instrumental role in organizing industrial research consortia and administering programs designed to facilitate connections between UW–Madison research and business and industry.
Among the UIR-administered programs cited in the report is the state-funded Industrial and Economic Development Research program. The I&EDR program distributes about $900,000 annually in small grants to campus researchers in support of early-stage applied research that’s been identified as having high potential to benefit Wisconsin’s economy. Over a 10-year period and with an investment of about $2.5 million, the program has spawned nearly 45 patents, nine spin-off companies and an 8-to-1 leverage ratio of subsequent outside funding.
Ironically, the I&EDR Program, which was slated for a significant boost in funding under the state’s Madison Initiative, may lose up to $260,000 in funding under various proposed cuts to help offset the state’s billion dollar-plus budget deficit.
“We’ve made a commitment to promoting economic development in the state,” says Philip Sobocinski, associate director of UIR and a recognized expert on spin-off companies and technology transfer and whose work is cited in the report. Sobocinski estimates that UW–Madison has had varying levels of involvement in creating at least 225 technology-based companies in Wisconsin. Ninety-eight of those have been created since 1995, he says.
“These firms constitute a major biological and physical science-based industrial cluster capable of creating thousands of high-quality jobs,” Sobocinski notes.
All of the key pieces to the research university-driven economic development puzzle are in place for Wisconsin, says Sobocinski. He cites faculty buy-in to the idea of transforming research into products, and a long-standing commitment from UW–Madison chancellors dating back at least 20 years to Irving Shain, who promoted the development of University Research Park.
Other recent developments, such as WARF’s involvement in facilitating start-up ventures, and an entrepreneurial-friendly campus promoted by successive chancellors, have contributed to making the Madison campus a key player in the state’s effort to build a high-technology industry base.
Using data from the 1999 Association of University Technology Managers survey, the report places WARF and UW–Madison in the 94th percentile for income derived from licenses on patents, and in the 89th percentile for return on investment for royalty income reported by the 142 academic institutions that participated in the survey.
The Southern Growth Policies Board report notes, as well, the $220 million in WARF support for UW–Madison research over the 15-year period from 1984-99.
The report also notes a relatively new WARF tactic of assuming an equity stake in new companies in lieu of up-front fees. That activity, done in tandem with traditional licensing arrangements for UW–Madison start-ups, permits “spin-offs to gain quicker access to their intellectual property and get a head start on business development and capitalization,” according to the report.
Cadwallader says the Southern Growth Policies Board study provides the university and state policymakers with a timely measuring stick of UW–Madison performance in terms of state economic development.
“We are at a point, obviously, where some independent measures are needed to assess performance and our actual contribution to the economic health of Wisconsin. This report is one such measure and indicates, so far, that UW–Madison has lived up to its economic development commitments.”
The authors of the Southern Growth Policies Board report are Louis G. Tornatzky, a senior fellow of the Southern Technology Council; Paul G. Waugaman, also a senior fellow at the Southern Technology Council; and Denis O. Gray a North Carolina State University professor affiliated with the Psychology in the Public Interest Program.