Colleges May Not Want the Role of Economic Booster

Pity America’s universities. First they had to worry about being “politically correct.” Now they have to worry about being “industrially correct.”

Thanks to critical references in Michael Crichton’s best-selling novel, “Rising Sun,” and a recent “news” segment on ABC’s 20/20 news magazine program, UC Irvine has come under scrutiny for cutting a special deal with Hitachi Chemical, one of Japan’s most diversified chemical companies.

In exchange for a free lease on university land about 50 yards off campus, Hitachi agreed to build a state-of-the-art research facility that it would share with UC Irvine’s excellent biochemistry department. So Hitachi has a lab where it can not only conduct its own proprietary research, but one where its researchers can also pop downstairs to chat with professors and post-docs about basic molecular biology questions. To be sure, rigorous conflict-of-interest agreements have been drawn, and Hitachi insists that its researchers are there to learn, not influence UC Irvine’s research agenda.

But as biotech is one of the hottest research areas around, this is not a bad location for an ambitious chemicals company to be. Quite understandably, critics wonder why a Japanese company--rather than an American company--should be able to cohabit with a top-flight university research department. The answer is simple: UC Irvine needs the space, and Hitachi was prepared to pay for it.

“To us, it was a land deal--we just needed space,” says UC Irvine’s vice chancellor for research, Paul S. Sypherd. “To them, it was a laboratory deal. We don’t see this as a harmful case.”

“Because it was Hitachi, because it was the first foreign company, because it was unusual, we bent over backward to make sure that all our rules and policies were scrupulously and meticulously observed,” Chancellor Jack Peltason says. “We understood that this arrangement is a more difficult one to explain than if there were two separate buildings separated by three blocks. . . . We wanted to be able to pass the ‘red face’ test, and we think we do.”

In essence, UC Irvine played real estate mogul and had Hitachi Chemical build it an expensive “research condo” with no strings attached. Pretty clever, huh?

Actually, no. While this deal isn’t stupid, dumb or venal, it’s certainly unwise. It creates the sort of unfortunate precedent that will end up haunting UC Irvine and, ultimately, the entire UC system.

The real concern shouldn’t be that this particular company on campus is Japanese, although California taxpayers can rightly ask why their tax dollars are helping subsidize foreign research efforts. The issue is just what forms of industrial cohabitation should a state-funded university permit?

If you agree with the idea that universities should be a source of both technological innovation and economic competitiveness, what is the rationale for giving one private company precedence over another? If the answer is “money”--then you have a policy where the state is putting its taxpayer-funded research institutions up for the highest bidder. Then why not simply “privatize” the university?

Indeed, why should Hitachi Chemical and not Toray or Du Pont have shared biochemistry labs? Why not have IBM or Apple adopt the most desirable parts of the computer science department? Perhaps Merck or Sandoz might be willing to pay for joint hospital research facilities. Having top university brains right next door can be a wonderful competitive advantage.

“I think the idea of a physical co-location is a red herring,” UC Irvine’s Sypherd insists. “We’re already co-located globally with all our electronic mail, faxes and international conferences.”

But if physical co-location doesn’t matter, why would Hitachi Chemical bother to cut the deal? If Hitachi finds that the shared facility boosts its research productivity, why shouldn’t other companies seek similar accommodations? It’s one thing for a campus to encourage private industry to participate in research, it’s quite another to have facilities that blur the lines between public and proprietary.

Clearly, it is not “industrially correct” for a campus touting itself as an innovation generator to provide preferential access to a Japanese company over an American one. Perhaps UC Irvine and the UC system might want to consider inaugurating an “affirmative action” plan that assures that American companies are well represented on campus. You can be sure that if they don’t, the state of California will.

Just as today’s state universities shouldn’t discriminate against students on the basis of gender, ethnicity or ability to pay tuition, the enlightened research university that’s promoting technology transfer should assure that minority- and female-owned businesses are adequately represented on campus and in the industrial parks. The university wellsprings of economic competitiveness shouldn’t just be for the elites, but must be made accessible to all business strata, right?

The point here is that America’s research universities in general--and the UC system in particular--have done a grossly inadequate job of articulating what roles they want to play in promoting economic development. Soliciting funds and playing Trammell Crow should be a byproduct of the university’s mission--not its focus.

Similarly, state governments that happen to fund world-class research universities have to look beyond funding levels and intellectual property agreements and ask what kind of public/private deals make the most sense for their citizens.

The tough questions are beginning to be asked. It’s not clear that the answers are the right ones.