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WORKING PAPER
ALFRED P. SLOAN SCHOOL OF MANAGEMENT



THE MIT INTERNATIONAL AUTO RESEARCH PROGRAM
A STUDY OF UNIVERSITY-INDUSTRY RESEARCH PARTNERSHIP

VANDANA UPADHYAY



AUGUST, 92



3548-93



MASSACHUSETTS

INSTITUTE OF TECHNOLOGY

50 MEMORIAL DRIVE

CAMBRIDGE, MASSACHUSETTS 02139



THE MIT INTERNATIONAL AUTO RESEARCH PROGRAM
A STUDY OF UNIVERSITY-INDUSTRY RESEARCH PARTNERSHIP

VANDANA UPADHYAY
AUGUST, 92 3548-93



The MIT International Auto Research Program



A Study of University-Industry Research Partnership



August 1992



WORKING DRAFT



By

Vandana Upadhyay
MOT '92



INDEX



Executive Summary
Introduction

SECTION 1: OVERVIEW OF AUTO PROGRAMS

I. University-Industry Research Partnership

1.1 Fundamental Issues

1.2 New Modes of R&D Cooperation

1.3 Climate for Cooperation

1.3.1 Legislation

1.3.2 Change in Corporate Culture

1.3.3 Automotive Industry Characteristics

1.3.4 New Challenges Facing the Industry

II. MIT Auto Research Program

2.1 Genesis

2.2 First Phase 1979-1984

2.2.1 Program Objectives

2.2.1.1 Research Agenda

2.2.1.2 Policy Forums

2.2.2 Research Organization

2.3 Second Phase 1985-1990

2.3.1 Research Agenda

2.3.2 Research Organization

2.4 Third Phase 1991-1994



SECTION 2: INSIGHTS FROM THE AUTO PROGRAM

III. Program Management

3.1 Learning Process

3.2 Organization Structure and Management Tasks

3.3 People Management

3.4 Communication

3.5 Information Collection and Management

3.5.1 Researchers as Gatekeepers

3.5.2 Data Presentation and Protection

3.5.3 Access to Sponsor Facilities and Information

3.5.4 Ethical Issues

3.6 Sponsor Management

3.6.1 Sustaining Sponsor Interest

3.6.2 Keeping Sponsors Satisfied and Interested

3.6.3 Company Gatekeepers

3.6.4 Future of the Relationship

IV. Research Management
4 . 1 Research Agenda

4.1.1 Motives for Cooperation

4.1.2 Evolution of Research Agenda



4.1.3 Learning Curve and Life Cycle

4.1.4 Maintaining Intellectual Content

4.2 Researcher Involvement

4.2.1 Faculty

4.2.2 Graduate Students

4.2.3 Professional Consultants

4.2.4 Full-Time Program Managers

4.3 Research Results

4.3.1 Metamorphosis in Research Results

4.3.1.1 Interim and Final Results

4.3.1.2 Synthesis versus Analysis

4.3.2 Disclosure Issues

4.3.2.1 Confidentiality versus Openness

4.3.2.2 Industry Impatience versus Academic
Deliberation

4.3.3 Dissemination

4.3.4 Books as the Most Visible Products

4.3.4.1 The Future of the Automobile

4.3.4.2 The Machine That Changed the World

4.3.4.3 Attendant Issues

4.3.5 Academic Recognition

4.3.6 Byproducts

4.3.7 Industrial Application

4.3.8 Active Involvement in Dissemination

V. Negotiation Aspects

5.1 Negotiation Process

5.2 Components of Negotiation

5.2.1 Participation

5.2.2 Facilitators

5.2.3 Funding

5.2.4 Scope of Research

5.2.5 Research Results

SECTION 3 : INSTITUTIONAL RELEVANCE

VI. Institutional Context

6.1 Why MIT?

6.2 Did MIT Act as an Industrial Consultant?

6.3 Relevance to MIT's Missions

6.3.1 Education
6-3.2 Research

VII. Institutionalization

7.1 Institutional Precedents

7.2 Institutionalization

7.2.1 Governance

7.2.2 Long-Term Research Direction

7.2.3 Reward System

7.2.4 Continuing Education

7.2.5 Societal Role

VIII. Recommendations





Executive Summary

The MIT auto research program has set the standard for
global industry studies. By involving numerous governments,
firms, researchers, and stakeholders from all over the world, the
program has produced an extensive, systemic body of knowledge
that is of great use to the industry. In fact, as a result of the
program, more is known about automobile production than about any
other industry of comparable size and international importance.

The program's research methodology was revolutionary. It
bridged the social science and technology disciplines by
systemically studying the interaction between technology and
people in industry. Thus, the program's broad range, usefulness
to the industry, and innovative methodology make it an excellent
model for other international research programs.

The two books that emerged from the program — The Future of
the Automobile and The Machine That Changed the World — set an
example for academic writing. They were readable and practice
oriented, and they had a profound impact on auto industry
executives, industry practitioners, and policy makers.

The industry accepted the program's findings, which were
contrary to prevailing wisdom, because the books furnished
empirical proof for concepts that journalists had described but
not supported. The fact that these conclusions were drawn by
academics who were perceived as impartial and free of any vested
interest lent them substantial credibility.

The program's policy forums established an effective process
for information exchange between university researchers and
industry practitioners. They also promoted more meaningful
dialogue among the representatives of government agencies, firms,
union officials, and consumers.

The program has demonstrated that the university is the
ideal setting for research projects that attempt to understand
industrial activities as large-scale systems. No other agency has
the access, networks, resources, expertise, and reputation for
impartiality that a university has.

Further, the program has proved to have direct relevance to
MIT's educational and research goals. For instance, graduate
students who participated in the program are more conversant with
real-world problems than others, and when they enter the
industrial environment, they adapt to practice very quickly.



Despite the auto program's great successes, some areas for
improvement remain. Confidentiality of company data remains a
concern to sponsors. Some sponsors believed that identities were
not effectively concealed in The Machine That Changed the World .
They are concerned when the researchers go on to work for
consulting firms or their competitors.

While the program has maintained a close working
relationship with industry, it has not developed strong links
with the academic community. More senior faculty need to be
involved. The academic evaluation system needs to be reformed to
reward participating researchers and faculty members. Program
managers need to place more emphasis on publishing in scholarly
journals. Academics should more actively work to disseminate the
findings, not only to industry, but to business students as well.
The translation of research findings into the curriculum remains
a challenge.

And finally, the relationship between the university and
industry must be finetuned. Guidelines must be developed for
licensing or giving the byproducts of research — analysis tools
and computer programs — to sponsors. It must be decided how far
the university can go in helping companies implement suggestions
without entering into a consulting relationship. University
governance of research programs must be reviewed,

MIT's strengths are its leadership in technology education
and research, its tremendous wealth of intellectual capital, and
its tradition of working with industry on industrywide problems.
It is well placed to develop more industry-sponsored research
programs .



Introduction



To increase and diversify their funding sources,
universities began entering into cooperative agreements with
companies. Between 1978 and 1988, industry spending on university
research and development (R&D) nearly tripled in real dollars. At
the same time, nearly a hundred universities started research
parks to encourage R&D companies to locate near their campuses.

However, conflicts emerged when industrial sponsors wanted
to restrict the use of the research findings. Most universities
gave sponsoring firms special access, agreed to limited
publication delays, and revised their patent policies to
encourage more patenting and licensing of their discoveries. The
same ten-year period also saw a doubling of universities' share
in patents awarded in the United States.

Critics inside and outside universities were alarmed by
these developments and warned that increasing interaction with
industry could damage universities by encouraging research with
commercial applications instead of basic research, by restricting
communication among scientists, and by creating conflicts of
interest for faculty.

When these concerns first surfaced in the early 1980s,
sufficient evidence was not available to draw conclusions.
However, in 1992 it became plausible to examine some of these
concerns. In the spring term, MIT began a faculty seminar on "The
Changing Landscape of University-Industry Relations." MIT was an
ideal setting for this investigation, given its long tradition of
working with industry and its diverse industry-related programs,
such as the Industrial Liaison Program, research centers focused
on particular industries, and industry consortia.

The main objective of the seminar was to encourage faculty
interest in university-industry relations. Each session featured
presentations by MIT faculty and administrators who had had
firsthand experience with industry-sponsored research. The
seminar coordinators, Bernard Freiden, Robert McKersie, and Dan
Roos, ultimately decided that a case study of MIT's International
Motor Vehicle Program (IMVP) would be a useful exercise. The case
study would analyze the program's evolution and record its
contribution to and impact on the industry as well as MIT. They
hoped that the case study would help MIT project administrators
manage other industry programs .

The seminar coordinators chose the IMVP program for a number
of reasons. The program's research agenda was unconventional in
that it was not strictly confined to one discipline. Further, the
program was not purely focused on science and technology nor on
social science. Rather, it was a study of the application of



technology in a social system. The program did not seek to
develop a product or technology but only know-how and knowledge.
Moreover, the program is considered very successful and has
earned considerable acclaim for MIT.

I arrived at MIT in 1991 to attend the Management of
Technology program, which is conducted jointly by the business
and engineering schools. Before joining this program, I worked in
a telecommunications R&D institution in India in a number of
functional areas including project management, product
development, technology transfer, and business development. The
seminar coordinators originally appointed me to report on the
seminar proceedings and, when the seminar concluded, I was
retained to conduct the case study.

The research methodology for the three-month project
included a literature review, a study of correspondence and
internal memos, and interviews with a number of individuals,
including past and present program researchers, administrators of
other industrial research programs, and faculty members who were
planning to develop similar research initiatives.

First, I studied the history of university-industry research
partnerships and the documents related to the IMVP program. Then
I conducted the interviews, which were customized for each
interviewee, depending on his or her current affiliation,
association with the program, and organizational
responsibilities. Next, I presented my findings to a group of
faculty members and administrators, who assessed their accuracy
and completeness. I used this feedback to prepare the final
report, which was reviewed by researchers associated with the
program and by Freiden, McKersie, and Roos .

A note on terminology is necessary. Two programs at MIT have
studied the automobile industry, and a third program began in
1991. For the purposes of this report, these projects are treated
as three phases of a single program: the MIT auto research
program. I use the word "phase" to stress the evolutionary
character of the research activities and their management.
Comparisons are made between the first and second phases in order
to highlight the extent of learning and improvement, not to imply
that the first phase was not successful. On the contrary, without
the groundwork laid by the first phase, the more visible and
acclaimed second phase — the IMVP — could not have been
conceived.

The body of the report consists of three sections. The first
section describes the history of university-industry research
partnerships, the genesis of the auto program, and each phase.
The second section presents the findings regarding research
management. The final section places the program in MIT's
institutional context and evaluates its contribution.



I would like to thank all the faculty members, program
researchers and administrators, and outside parties who helped
with this report. In particular I would like to mention Professor
John Paul MacDuffie, who was on the road this summer but still
managed to call me from wherever he was to do phone interviews
past midnight, and Dr. James Womack, who managed to find several
hours for interviews even while putting the final touches on his
book. Special thanks are due to Professor Bernard Freiden, who
helped me identify issues of institutional relevance. Thanks to
Professor Dan Roos , who gave me unrestricted access to all
program documents and correspondence. Last but not least, I would
like to thank Professor Robert McKersie for giving me the
opportunity to work on an extremely interesting assignment and
for his guidance in bringing this report to its final and vastly
improved form.

Finally, I would like to submit that my effort was sincere
and thorough given the limited time, and I hope I have been able
to present an objective, informative, and insightful report.





1.3 Climate for Cooperation



Four factors have directly or indirectly encouraged
cooperation among automotive companies. Two of these factors
affect U.S. industry generally and can be credited with
stimulating the recent spate of cooperative research initiatives
in other industries.

1.3.1 Legislation

A decade ago in the United States, four key legislative
actions promoted R&D cooperation among firms in the same
industry. These were the Steven-Wydler Innovation Act of 1980,
the Economic Recovery Tax Act of 1981, the National Cooperative
Research Act of 1982, and the Small Business Innovation
Development Act of 1982.

The direct impact of these enactments on industry

11



participation in the auto research program is unclear, but they
undoubtedly eliminated certain perceived barriers to collective
R&D. Also, the relaxation of anti-trust legislation with respect
to cooperative R&D made it easier for companies to collaborate.

1.3.2 Change in Corporate Culture

The 1980s saw a sea change in U.S. corporate culture as
businesses took a new, positive attitude toward learning from
others. Business leaders perceived that U.S. competitiveness had
declined and that cooperative government-industry policies in
Europe and Japan were giving those countries a competitive edge.
Japanese competition, in particular, catalyzed this
transformation .

Recently, U.S. companies have made considerable investments
in improving quality and benchmarking best practice. They are not
as averse to sharing their operational knowledge with each other.
The Total Quality Management (TQM) movement and the Malcolm
Baldrige National Quality Award have enhanced this atmosphere of
cooperation. Thus the drive to improve performance has led to a
true management revolution in corporate America.

As a consequence, the boundaries between a company and the
rest of the world, between internal and external, have broken
down. The IMVP, which was based on extensive information sharing
regarding performance, productivity, and quality among companies
that were keen competitors in the marketplace, could succeed only
in such an environment.

1.3.3 Automotive Industry Characteristics

Although consortium R&D is not new to either universities or
industry, what is unique about the MIT auto research program is
that it represents the participation of the entire world car
industry. The automotive industry is highly concentrated, not
only in terms of manufacturing capacity but also in terms of
product characteristics. To illustrate, there are some two
hundred large chemical companies in the world with a very wide
range of products. In comparison, there are only about a dozen
major car assemblers in the world and, until the last decade, the
automotive industry was concentrated in a few countries. The
United States has the largest manufacturing capacity in the
world, the result of a large domestic market, and only three car
companies: Chrysler Corporation, Ford Motor Company, and General
Motors Corporation (GM). In Europe, only a few of the major
economic countries have a national car manufacturer, and Japan
emerged as a global competitor in the industry only in the 1970s.

1.3.4 New Challenges Facing the Industry

The golden years of the U.S. automobile industry ended with

12



the 1960s. In the 1970s, for the first time in history, the
industry faced such harsh challenges that many predicted it would
undergo fundamental change. The causes of the downturn included
increasing competition, economic recession, energy shock, traffic
congestion, and new passenger safety and environment compliance
requirements. Industry managers realized that overcoming these
challenges far exceeded the capability of any one manufacturer
and that, to survive, the industry would have to cooperate.



13



II MIT Auto Research Program



2.1 Genesis



In 1978, when civil engineering professor Dan Roos became
director of the Center for Transportation Studies, he considered
initiating a large-scale multidisciplinary research program that
would involve faculty from engineering, social science, and
management. After several discussions with other MIT faculty and
with the chairman of the German Marshall Fund, Roos had almost
settled on a project that would involve the auto industry. It is
important to note that MIT has had a long association with U.S.
auto companies and that GM has been funding research at MIT for
over two decades.



At about the same time, an earlier MIT research project,
which had started in 1975 with a grant from the U.S. Department
of Transportation, was coming to an end. The Cooperative
Automotive Research Program, headed by political science
professor Alan Altshuler, had studied problems in the U.S.
transportation sector, including mass transportation systems. The
result of the study was the book Urban Transportation Systems .
Although this program ended, a number of problems remained to be
studied, such as air pollution, energy consumption, safety, and
mobility for those without vehicles. At that time, U.S.
automakers were still looking to the Department of Transportation
to define a new R&D policy. With the end of this program, there
was an internal market for the new one.

Roos, who had worked with Altshuler before, asked him to be
codirector of the new program. Together they tried to set a
research agenda for the industry, convinced that there was
enormous potential in untapped technology to dramatically improve
the motor-vehicle-dominated transport system on practically every
dimension. They wondered if the automobile industry would be able
to rise to the challenge.

At that time, the U.S. car industry was in trouble. Higher
interest rates had suppressed the demand for durable goods, and
the rising dollar made Japanese imports cheaper. One of the
giants of the industry, Chrysler, was bailed out by the
government. Roos and Altshuler thought it would be interesting to
study why German and Japanese auto companies were thriving and
U.S. companies were not. Specifically, they wanted to study how
an industry responds to changing technology, increasing
competition, and regulatory pressure. Thus began a research
project that was somewhat aitibiguous in scope and intent.

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2.2 First Phase 1979-1984

2.2.1 Program Objectives

The first phase of the auto research program was a four-year


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