That Old School Tie

Report shows small companies and companies with university affiliations have better rates of return on RD dollars.

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The Small Business Administration recently published a report that should provoke second thoughts about how we organize our research-and-development efforts. The report compared the rates of return on R&D dollars in small and large companies that have a relationship with a university. Not surprisingly, small companies proved more efficient at commercializing the fruits of their R&D: their average estimated rate of return was 44%, compared with 30% for the larger companies.

More startling was another finding: companies with a university affiliation, regardless of size, had a rate of return almost twice that of companies with no university affiliation, 26% to 14%. Researchers such as David Birch of Cognetics Inc., in Cambridge, Mass., and George Kozmetsky of the IC Institute, in Austin, have long argued that business leaders and policymakers underestimate the role universities play in promoting economic vitality. The SBA report lends weight to their case.