3.3 Linkage between R&D and Industry

In a traditional market-based system, the market forces normally determine which ideas are to be supported. In particular, support for R&D projects should derive from competition among industry-generated proposals and should require cost-sharing from industry as a test of market-value. However, given the imbalances in the developing-country market, the government has to make use of certain economic policy-levers to trigger activity in certain areas and to discourage activity in certain other areas. The fiscal and monetary incentives to invest in plant, equipment, human resources and intellectual resources will keep the industry alert in regard to technological developments that can contribute to the continuous success, wherever they take place.

The technology capability gap is somehow a function of scientific education in a country and it takes its roots from the poor contact between the research institute and industry. The reasons, underlying the weak linkage between the industry and the government laboratory is the premise that the research carried out in these laboratories is not relevant to the local needs. The government laboratories, until recently, were themselves not willing to let individuals exploit the commercial potential of their research. The result was an ever widening gulf between the government laboratories and the industry. The communications between the two grew weaker over the years and the industry started to look for the packaged technology from the developed West. No effort was extended to adapt or disassemble the imported technology. The result is a low level of technology-capability to absorb, assimilate or improve upon it.

One major reason for the weak links is the insufficient demand-orientation of the research institutes. Generally, the R&D projects are conceived in-house, so that potential users have little impact on the design. The financial viability is not adequately examined during the phase of output-generation and there is little interaction with potential clients. Consequently, R&D outputs are often viewed by the industries as not being relevant - a fact which, reinforced by the research institutes’ weak marketing capabilities, leads to non-utilization of R&D outputs. The suspicious nature of industry towards the R&D outputs of the government laboratories puts some additional barriers in the process of transfer.

It has been experienced in many developing countries that proposals and even projects for product-oriented and customer-oriented research often originate outside the research organization. A salesman or a customer usually points out weaknesses in existing products and explains what kind of improvements would be desirable. Many proposals of the sort, " it would be wonderful if" initially originated from sources other than the research personnel may not be viable technically or feasible economically, to justify investments on research in a resource-constrained research institute of a developing country. However, care must be exercised, since, often inflated cost-benefit analyses by the research personnel, in favour of their proposal, sometimes prove a virtual disaster in the end. Thus, for customer-oriented and product-oriented research, the critical judgement of the R&D manager is very important.

In short, the weak and unsatisfactory linkage, between R&D institutes and the industry, is primarily because of three main causes, namely :

a) General lack of communication, which nurtures a mistrust between the R&D institutes and the industry;

b) Incompatibility of R&D outputs with the technological requirements of potential users; and

c) Inadequate arrangements for the implementation of research outputs.

Other related problems include: (a) a very large number of relatively small research institutes, with size and resources below the critical mass to yield any fruitful results; (b) inadequate facilities in the R&D institutes; (c) low level of motivation in the staff; (d) negligible budgets for actual R&D purposes; (e) lack of accountability; (f) absence commercialization practices; (g) negligible private-sector interests in R&D; (h) supply-driven public-sector R&D; (i) non-availability of design and engineering centres and pilot plants for technology-evaluation and testing, (j) short-sighted vision to read the future changing trends of market etc.