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I noticed that a lot of big companies are actively funding research at universities. I was wondering why they do this, as opposed to say funding in-house research as the knowledge ends up in the public domain.

Do they get actual patents out of it? Do they just want to keep in the loop of the research (and if so why not just read the papers)? Maybe they want to influence the direction of research?

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There is a variety of reasons, as someone who has worked on such projects, here are a few that come to mind:

  1. Access to research facilities. It's often far more rational to fund a study in a university than to invest in building your own wet lab/cleanroom/animal testing lab, etc. In some fields and countries, there are also regulations that limits certain area of research to university institutions (example: research on human tissues).
  2. Highly educated, relatively cheap human resources In the subsets of projects where academic researchers actually do the work from the project description, it is generally cheaper and bears fewer risks than hiring people directly.
  3. Great way of recruiting scientists by establishing a close collaboration, the company has the opportunity to meet and see potential hires in action.
  4. In some fields, it can be a form of advertisement. In particular for companies that have scientists or research labs as customers. Example: lab equipment manufacturer, metrology tools, lasers, etc.

Do they get actual patents out of it?

Yes. It's frequent for industry-funded projects to result in patents. The patents are usually owned jointly by the company and the academic institution. Sometimes the technology is already patented and the study is only about testing an application. Publishing a technology in the scientific literature can also be a way to prevent other companies from claiming ownership, since you can't patent something that is already published.

Note that industry implication in academic research might diminish, as it becomes evident that they aren't always getting good research for their money. See: http://blogs.nature.com/news/2011/09/reliability_of_new_drug_target.html

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  • Another note on patents: often company funding gives the company the option to take out an exclusive license to any university IP developed with their money. – jakebeal Apr 11 '15 at 12:15
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A few other reasons, which are less glamorous:

  • Often provides tax incentives for companies
  • Very cheap way of training potential future employees who are experts in their research
  • Inexpensive way to explore new ideas. If a company has financial issues, far better from a PR perspective to stop funding research at a university than it is to lay off some of their employees
  • Speaking of PR, it provides them benefits and can get their name EVERYWHERE within a University
  • Some US companies are obligated to spend a certain amount of money on domestic research (our institution had several grants of this nature)
  • Easy and cheap way to stay informed of latest technology/research trends. A research project for a year is a much cheaper way to generate a literature review than paying a fulltime employee, for example

as opposed to say funding in-house research as the knowledge ends up in the public domain.

This is not always true.

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  • 1
    Can you clarify "Some US companies are obligated to spend a certain amount of money on domestic research" ? – earthling Apr 11 '15 at 14:40
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    How is any of this 'less glamorous'? – Cape Code Apr 11 '15 at 14:42
  • Good points. I think people underestimate how much cheaper is to fund a PhD student in comparison with employing a junior research scientist (salary, insurance, etc.). – user8458 Apr 12 '15 at 11:20
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    @usεr11852 it might be cheaper but the productivity is also lower, because PhD students and their advisers have other priorities and are usually free not to do what the company paid for. The vast majority of industrial research is still done in-house for good reasons. – Cape Code Apr 12 '15 at 17:38
  • @CapeCode, Yes I fully agree with your point. Nevertheless the fact that more and more profit-oriented institutions opt to fund academic research strongly implies that they are able to reap financial rewards from this. Payroll is a major expenditure so reducing it always helps. Your own #1 point (I upvoted your post you but I did not say "+1" or anything) also suggests that you too recognise that a company through academic funding is able to indirectly cut costs by subletting research infrastructure that would otherwise be too expensive or outside its reach. – user8458 Apr 12 '15 at 19:21
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There is an organizational problem with doing long-term research internally in a high tech company: it is almost always more cost-effective to divert the researchers into solving some short-term problem related to a current project.

Outsourcing the research via a long-term commitment to funding an independent organization that has its own priorities (e.g. a university department awarding PhDs to its student "employees") is a good way to resist that short term pressure.

My employer (a multinational engineering company) doesn't have any delusions that every university research project will produced something "useful." It's more like investing in Broadway shows were one big hit pays for all the flops, but you can't predict in advance which show will be the hit.

The conflict between open publication of results in academic papers and PhD theses, and the commercially sensitive application of those results to benefit the sponsoring company, needs to be managed, but that isn't an insuperable problem. For example new analysis techniques or computer algorithms can usually be demonstrated using well-known problems addressed in earlier academic papers, or using sanitized data, while the "real" application remains confidential to the sponsoring company. If a competitor decides to learn how to use the research starting from what is openly published, it's their choice to fund the costs of that task, both in money and elapsed time.

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Answering this as someone who works in public health, and whose work has been funded by industry in the past:

  • "as the knowledge ends up in the public domain" is not necessarily true, as some others have noted. It is fairly common for corporate funders to require their approval of a study before publication - something I usually pretty vigorously oppose. But it is not safe to assume that it automatically ends up being publicly accessible.
  • They can get patents for the work or otherwise receive IP rights to the results of the study, but again, this isn't universal.
  • It is a good way to recruit scientists, or recruit scientists short term. Research funding means you can get a "burst" of productivity to answer a particular question without having to hire and maintain an employee. It's also a good way to add expertise that the company lacks without having to build a whole group around it.
  • Funding steers the direction of research. If a company thinks there's a topic that needs more exploration, making funding available is a good way to foster that research.
  • It adds credibility. While industry-based research isn't inherently biased, there's often an assumption that it is. Funding independent university-based groups means having studies done in different settings, and with researchers with their own free-standing reputations. It's much easier for them to point to "Dr. So-and-so's Study..." if they don't work for the company.
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