research

ELSEVIER Research Policy 24 (1995) 325-348

policy

Collaborative, pre-competitive R & D and the firm *

Paul Quintas *, Ken Guy
Open Business School, the Open University, Walton Hall, Milton Keynes MK7 6.4.4, UK
Science Policy Research Unit, Mantell Building, University of Sussex, Falmer, Brighton, UK
Final version received November 1993

Abstract

Governments in many countries have supported programmes of collaborative, pre-competitive R & D in enabling
or generic technologies. The paper is based on 6 years of research into the UK Alvey advanced information
technology (IT) programme, augmented by research on the Swedish IT4 programme. Our focus is the relationship
between pre-competitive, collaborative R & D and wider firm strategies and processes. The underlying premises of
the paper are that the benefits of pre-competitive R & D are long-term rather than short-term, systemic rather than
discrete, and accessible only through analysis of processes rather than by counting outputs or calculating return on
investment. The research provides insights into the strategies and mechanisms of firms' participation, modes of
collaboration, and the processes of technology transfer, knowledge assimilation and application within a firm.

1. Introduction corporate technology strategies and government

Industrial collaboration in research and devel-
opment ( R & D ) has been a major feature of
"The paper is based on research funded by the UK De-
partment of Trade and Industry and the Science and Engi-
neering Research Council, undertaken as part of the SPRU
evaluation of the Alvey Programme. Paul Quintas gratefully
acknowledges the subsequent support of the UK Economic
and Social Research Council's Programme on Information
and Communication Technologies. Additional material draws
on the evaluation undertaken by Technopolis Ltd., funded by
the Swedish Ministry of Industry, of the Swedish IT4 pro-
gramme. The authors thank SPRU colleagues Dr. Mike Hob-
day, Dr. Mark Dodgson, Dr. Robin Mansell and Professor
Keith Pavitt for comments on a previous draft, and the
anonymous US reviewers for their valuable guidance. Respon-
sibility for the final version remains, of course with ourselves.
Formerly at: Science Policy Research Unit, Mantell Building,
University of Sussex, Falmer, Brighton, UK.
* Corresponding author.
policy initiatives over the last decade. In particu-
lar, Japanese, US and West European pro-
grammes supported collaborative R & D in infor-
mation technologies (IT). The focus of this p a p e r
is the Alvey Programme, a U K government and
industry funded collaborative R & D p r o g r a m m e
in IT which ran from 1983 to 1989. 1
Our purpose is to provide an analysis of indus-
trial participation in Alvey in order to further the
understanding of collaborative R & D processes
within a firm. We do not focus in this p a p e r on
an extensive analysis of government policy as-
pects of R & D programmes, although some impli-
cations for policy are drawn from the firm-level
analysis. The central questions concern the rela-
tionship between participation in Alvey collabo-
rative R & D and wider company p r o c e s s e s - - t h e
strategies and drivers of participation, the dynam-
ics, mechanisms and organisation of collabora-

0048-7333/95/$09.50 © 1995 Elsevier Science B.V. All rights reserved

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326 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348
tion, and the processes of technology transfer,
knowledge assimilation and application within a
firm.
Alvey resulted from government recognition of
declining IT supply-side competitiveness, market
failure to support longer-term R & D , the success
of previous Japanese R & D programmes (particu-
larly in memory semiconductors) and the threat
of another, the so-called Fifth Generation pro-
gramme. The aim was to coordinate effort, re-
duce duplication, maximise the return on scarce
resources and hopefully create synergistic bene-
f i t s - t h e scale and scope economies of R & D
coordination identified by Nelson [34].
In general terms, R & D collaboration in the IT
sector had become necessary because of the pace
of technological change and the increasing scale
and complexity of systems, requiring ever-increas-
ing competences across a widening range of disci-
plines [30,36,54]. This has led firms to seek access
to technology from external sources in order to
reduce the cost of R & D , to share resources
(especially scarce skilled personnel), to partici-
pate in the development of industry standards,
and to reduce risks and uncertainty in the R & D
process. Even the largest international companies
may not possess all the leading-edge skills and
expertise covering the waterfront of technologies
required to develop new complex technological
systems [30,54].
For political and economic reasons Alvey, like
the E u r o p e a n Commission's E S P R I T Pro-
gramme 2, was largely confined to 'pre-competi-
tive' R & D ; i.e. R & D which is distanced from
the market, being focused on 'generic' or 'en-
abling' technologies rather than the development
of final-use products targeted on specific mar-
Unlike most such programme names, 'Alvey' is not an
acronym, but is named after John Alvey, former Research
Director of British Telecom, who headed the eponymous
committee which proposed the programme.
2 ESPRIT is the European Strategic Programme for Re-
search and Development in Information Technologies, cur-
rently in Phase III (Phase 1 1984-1987; Phase II 1988-1992).
kets. 3 Here 'enabling' technologies are mainly
process technologies--e.g, techniques, tools,
methods and equipment--which enable a multi-
plicity of product markets to be satisfied down-
stream. Although the programme covered a spec-
trum of work from applied research through to
near-market development, in the latter case it
was not expected to produce commercially usable
process technologies or products, but rather to
reach the stage of demonstrating feasibility or
providing research prototypes. These would re-
quire further investment and combination with
firm-specific competences in order to bring them
through to the market.
The underlying premise of this paper and the
research upon which it is based is that it is not
feasible to analyse the success or failure of long-
term, pre-competitive R & D in terms of conven-
tional performance measures such as financial
return on investment, or quantitative analysis of
discrete outputs. The benefits from knowledge
generation, new collaborative research structures,
and pre-competitive enabling technologies are not
to be found in the short term. Therefore, the
benefits and costs of initiatives such as Alvey are
best understood, at the present time, through an
analysis of the processes occurring within partici-
pant firms. In particular, these processes include
the strategies adopted by firms towards Alvey,
the organisation of firms' Alvey participation, the
dynamics and mechanisms of collaboration, the
processes of technology and knowledge acquisi-
tion, and the internal processes by which technol-
ogy and knowledge are assimilated and applied
within the firm.
These are complex issues which cut across
many disciplines and are informed by many bod-
ies of literature. Because of the empirical focus of
this paper and the need for brevity, this is not an
appropriate vehicle for a comprehensive review
of the literature and theoretical perspectives on
R & D policy, inter-firm transactions and collabo-
3 The pragmatic if atheoretical working definition of 'pre-
competitive' R&D that emerged in the 1980s was 'that R&D
which competing firms will agree to collaborate on'.
 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348
ration, technology transfer and the internal cor-
porate processes of technology acquisition, learn-
ing and assimilation. 4 It is necessary, however,
briefly to highlight the central concerns underpin-
ning the questions and hypotheses which form
the basis of the empirical enquiry.
The relationship between public policy and
corporate technology strategy is of primary inter-
est. It has long been accepted that, unaided, the
market invests sub-optimally in research [7,32,39].
Through the 1980s, even the UK Conservative
government under Margaret Thatcher (extreme
espousers of the sovereignty of the market) con-
tinued to acknowledge that market mechanisms
fail to ensure that adequate resources are allo-
cated to R & D [14]. The case for the Alvey Pro-
gramme was largely formulated in terms of mar-
ket failure arguments, as we describe below.
However, political considerations imposed con-
straints on the type of intervention sanctioned. In
particular, and in addition to the focus on pre-
competitive R & D, the UK government sought to
protect the interest of the tax-payer by ensuring
that firms participating in such R & D pro-
grammes use public funding for additional work;
that is, for R & D which would not have occurred
in the absence of government support. This re-
quirement for 'additionality' clearly raises ques-
tions about the relevance of such research to
firms' broader technology strategies and business
objectives, an issue returned to in Section 4.
Alvey provides an opportunity to analyse R & D
collaboration at the level of the participant firms.
Such an inquiry must be located within the
framework of an understanding of the function of
R&D, such as that provided by Freeman [18]. In
particular, we know that firms, in addition to the
pursuit of wholly internal projects, undertake R&
D in order to be able to track external develop-
4 A comprehensive introduction to many of the issues relat-
ing to inter-firm cooperation may be found In Contractor and
Lorange [13]. See also Mowery [29,30]. Badaracco [8] contains
insights into competitiveness through collaboration. Watkins
[56] presents a concise review of the literature relating to
R&D cooperation. Technological learning within organisa-
tions is addressed in Argyris and Schon [5] and Fiol and Lyles
[16]. For a review of IT R&D policy see Arnold and Guy [6].
327
ments and to assimilate knowledge or technology
from outside the firm boundary, as is recognised
by many authors [1,20,27,29-31,49]. This function
of R & D has been noted in relation both to
scientific knowledge [50] and to the transfer of
technology, as has been shown by Evanson and
Kislev [15] in the context of agricultural technol-
ogy transfer. Building on this body of evidence,
Cohen and Levinthal's empirical analysis [11]
confirms that R & D has a dual role: in addition
to the generation of information and innovations,
its function is to enable the firm to learn from its
environment.
This process is not only dependent on the
ability of the organisation to access, assimilate
and learn, but is also conditional on the types of
knowledge being transferred. Much of the knowl-
edge generated by R & D is tacit knowledge, which
tends to build cumulatively within the organisa-
tion concerned [35]. The key distinction between
codifiable and tacit knowledge was first articu-
lated by Polanyi [42]. Codifiable knowledge can
be expressed and transferred in written and other
recorded forms (designs, formulae, specifications,
etc.) whereas tacit knowledge resides within the
R & D personnel and may be embedded in organ-
isational and social processes [56]. Such knowl-
edge is difficult to transfer between organisa-
tions, as is aptly illustrated by a study of collabo-
ration between Western and Japanese firms.
Hamel et al. [22] found that Western companies
tended to bring easily imitated technology to a
collaboration, whereas Japanese firms' strengths
were often 'difficult to unravel' competences
which were less transferable.
The difficulties associated with the transfer
and assimilation of knowledge and technology,
including questions of transaction costs, appropri-
ability, and particularly the problems associated
with the transfer of tacit knowledge, are argued
by many authors to be driving firms to seek
collaborative relationships [8,24,56]. 5 There are
5 These arguments draw on the more general theory of
transaction costs (Williamson [57,58]) which suggests that
market relationships between firms may fail to minimise the
cost of inter-firm transfers.
328 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348
many different forms of inter-firm collaboration.
Hennart argues that tacit knowledge is " . . . more
efficiently transferred if the transferor and the
recipient are linked through common ownership"
(i.e. equity joint ventures) rather than licensing
agreements [24, p. 366]. The efficiency of R & D
collaboration with respect to overcoming appro-
priability problems is emphasised by Ouchi and
Bolton [37] and Watkins [56]. Drawing on
second-source material, Watkins suggests that R
& D consortia provide an effective mechanism for
firms to overcome the shortcomings of market
relationships in the inter-firm transfer of infor-
mation and technology [56]. Reviewing high-tech-
nology policies, Nelson concludes that R & D con-
sortia are a particularly appropriate mechanism
for R & D in the case of generic or enabling
technologies [33]. This is the form of collabora-
tion focused on in this paper.
The question addressed here is not just
whether the special case of pre-competitive R & D
collaboration provides an effective opportunity
for knowledge and technology transfer, but also
whether such collaboration enables participant
firms to assimilate and utilise the knowledge and
technology generated. This necessitates that we
take a close look at corporate structure and or-
ganisation in relation to R & D and the internal
transfer and assimilation of knowledge. Current
understanding of the innovation process suggests
a number of questions regarding interventions
such as Alvey. For example, empirical evidence
shows that the involvement of customers, users
and marketing departments is a key factor in
determining success or failure of the innovation
process as observed in many sectors [25,26,51,53].
In line with pre-competitive R & D policy, which,
as Watkins [56] points out, tends to assume an
outmoded linear model of innovation, most Alvey
R& D projects did not involve user organisations
or support the participation of customers for final
products, although projects often contained part-
ners linked in vertical chains that were expected
to promote technology and knowledge transfers.
Within participant firms, Alvey's concentration
on enabling technologies (e.g. techniques, tools,
process technologies) meant that the envisaged
'customers' for Alvey outputs were often the
business and production units within the firms
undertaking the R&D. The linkages between
Alvey R & D and other functional areas of the
firm are thus important factors determining the
ultimate value of Alvey work. The provision of
horizontal links between the functional areas of
the firm, often involving pro-active internal
'gatekeepers' and the transfer of individuals be-
tween R & D and production, has been identified
as being of key importance in the successful man-
agement of innovation [4,10,18,28,40,48,55]. In the
latter sections of the paper, we analyse these firm
processes in relation to outcomes of the research
projects.
The paper is organised as follows. Broadly, we
move from participation strategy, through the
process of collaboration (accessing external
knowledge and technology) to the internal pro-
cesses of technology and knowledge assimilation
and use. First, the main features of the Alvey
Programme are briefly described. We then dis-
cuss firms' strategies towards Alvey and the loca-
tion of Alvey R & D within the wider perspective
of firms' technology strategies, and draw out the
implications for firms of the constraints imposed
on the programme by government. Following this,
we use empirical data on project outcomes to
analyse key aspects of firm participation strategy
and R & D organisation. The processes of tech-
nology and knowledge transfer via collaboration
are then discussed, and different collaboration
models identified. This is followed by an exami-
nation of intra-firm processes surrounding the
transfer, assimilation and use of Alvey R & D
results.
2. Methodology and data sources
The paper draws on many hundreds of contact
hours with R & D personnel, senior management
and business unit representatives, in participant
firms over the period of the 'real-time' Alvey
Programme evaluation, 1984-1990. This research
generated questions and hypotheses which formed
the basis for the final Science Policy Research
Unit (SPRU) questionnaire, undertaken at the
 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348
end of the programme in 1989-90. This received
responses from 350 research teams, representing
over 60% of Alvey projects, and provides quanti-
tative data to support the qualitative interview-
based data. The paper also draws on the final
interviews with 90% of fully collaborative project
managers, carried out by colleagues at PREST 6,
University of Manchester. The interim [19] and
final [21] Alvey evaluation reports summarise the
main findings of the evaluation and detail the
numerous evaluation reports produced during the
period. Additional material, and support for the
validity of the concepts and questions pursued
here, is provided by the evaluation by Technopo-
lis Ltd. of the Swedish IT4 programme.
3. The UK Alvey Programme
Throughout the 1980s, government and indus-
try in many countries supported programmes of
collaborative R & D in IT, involving firms, re-
search institutes and academic institutions [6].
Examples include the US Microelectronics and
Computer Technology Corporation (MCC), the
US Semiconductor Manufacturing Project (Sema-
tech), the Japanese TRON, Sigma, and Fifth
Generation Programmes, the European Commu-
nity's ESPRIT, RACE and other programmes,
and the pan-European Eureka Programme [6]. In
this paper, the focus is on the UK Alvey Pro-
gramme, which ran from 1983 to 1989. 7
Alvey was a national programme launched by
the UK government largely in response to the
Japanese Fifth Generation Computer Programme
announced in 1981. The Japanese strategy gal-
vanised action in many countries by threatening a
quantum leap to next-generation computing. In
the UK the announcement coincided with con-
cern over the competitive failure of much of the
IT supply industry. The UK IT sector had been in
relative decline for over a decade, performing
especially poorly in the computer, consumer elec-
6 PREST is the Programme of Policy Research in Engineer-
ing Science and Technology.
7 Due to late starts and extensions, some projects continued
until 1991.
329
tronics, packaged software and semiconductor
markets. The UK balance of trade in IT goods
moved from a surplus of £100 million in 1975 to a
deficit of £300 million in 1980 [6]. Moreover, the
future looked bleak. The Alvey Committee, set
up to propose a response, warned that the IT
trade deficit would reach £1 billion in 1990, a
level which was in fact exceeded in 1984. Analysis
of UK IT firms' patenting performance in the US
market showed that UK relative technological
strength in key IT areas such as semiconductors,
computers, and image and sound equipment de-
clined over the two decades to 1984 [38]. More
significantly, UK firms were patenting relatively
less frequently in the fastest growing IT fields
than were their overseas competitors [38].
Principally aimed at improving competitive-
ness, but also including a Ministry of Defence
(MoD)-driven semiconductor programme and
longer-term academic research, Alvey ostensibly
attempted all three types of government support
programme as identified by Nelson [34]: basic
research; programmes tied to procurement needs;
programmes aimed at improving the competitive-
ness of a particular industry. The fundamental
aims of Alvey [19] were:
- to increase the competitiveness of the UK IT
suppliers;
- to ensure a measure of self-reliance in key
technological areas for commercial and de-
fence purposes;
- to strengthen the R & D base of the UK by
rationalising and uniting fragmented resources,
and particularly by encouraging academia and
industry to work together;
- to achieve specific technical targets in each of
the enabling technology areas.
Alvey was therefore focused on economic,
strategic and structural objectives. The aims were
ambitious and long-term; improving competitive-
ness could not be expected within the lifetime of
a 'pre-competitive' R & D programme. Thus
achievement of the competitiveness objectives
could only be assessed over a longer time-frame
than the 5-year programme duration. Moreover,
the extent to which the Alvey management could
direct the programme to achieve these aims was
significantly reduced by the decision to restrict
330 P. Quintas, K. Guy~Research Policy 24 (1995) 325-348
public support for firms to 50% of their costs.
Industry invested approximately £150 million out
of the programme total of £350 million. The
ability of government directly to address its eco-
nomic objective was therefore constrained by re-
liance on corporate investment decisions, in rela-
tion to both project selection and post-pro-
gramme exploitation.
The structural objectives were more readily
approached. Firms had to collaborate with others
a n d / o r with academic researchers in order to
qualify for funding. Collaboration was expected
to help promote structural change through the
establishment of R & D communities, linkages be-
tween firms, academia and government research
institutions, and the rationalisation of research
efforts.
Over the 5 years, Alvey supported 198 collabo-
rative R & D projects, each project lasting 2 or 3
years on average. Unlike the Japanese Fifth Gen-
eration Programme, Alvey R & D was undertaken
at split sites, each participant working in their
own premises, and collaboration being effected
through meetings, telephone and electronic mail.
A total of 115 firms, 68 academic institutions and
27 government research laboratories participated.
The average full collaborative project involved 3.9
participating organisations [3]. In addition to full
industrial collaborative R& D, Alvey supported
113 'Uncle' projects, which were those under-
taken by academic researchers, with a non-paying
'avuncular' industrial partner assigned to each to
provide an industrial perspective. This device en-
abled academic research to proceed irrespective
of whether industrial investment could be gener-
ated. The main focus of this paper, however, is
the 198 full industrial collaborative R & D pro-
jects.
The programme focused on four principal
technology areas: VLSI (Very Large Scale Inte-
gration) semiconductor technology; IKBS (Intelli-
gent Knowledge-Based Systems), an approximate
euphemism for AI (Artificial Intelligence); SE
(Software Engineering); MMI (Man-Machine In-
terface). Subsequently, Systems Architecture
emerged as a fifth sub-programme, focused on
parallel processing. There was considerable varia-
tion in the aims of these sub-programmes due to
the differences in the relative maturity of the
technology areas, and the relative position of the
UK vis-a-vis international competition.
The VLSI programme had a clear objective: to
transfer 1 ~m feature-size semiconductor process
technology to pilot production by 1989. In line
with UK capabilities and corporate strategies, the
programme focused on process technology for
ASICs (Application Specific Integrated Circuits)
rather than for mass market memory and micro-
processor Chips. VLSI was the closest to the
market of all the Alvey areas, and was essentially
a catch-up exercise for the UK. One Alvey pro-
ject manager described the work as 'unspectac-
ular engineering'. In contrast, the IKBS pro-
gramme aimed at promoting an industrial IKBS
community where this was almost non-existent
pre-Alvey. The programme sought to forge links
between industry and the academic AI commu-
nity, increase the skills base and stimulate a UK
IKBS market. The contrast with VLSI is acute: in
IKBS both the market and the industrial R & D
community had to be 'boot strapped' by Alvey.
In Software Engineering (SE), Alvey sup-
ported R & D into radical process innovations
(tools, techniques, methods) for subsequent use
by software developers. Prototype tools and tech-
niques were expected to benefit industry in the
post-Alvey period. The challenge facing the SE
programme was therefore not one of promoting
the creation of an industrial community, as in
IKBS, but of developing radical new methods and
techniques for use within the established, labour-
intensive software development process.
The heterogeneous MMI area had different
initial conditions pertaining in each of the four
main constituent areas: Human Interface (HI);
Speech; Image Processing; Displays. The HI pro-
gramme aimed at raising awareness of human
factors in industry and at uniting a fragmented
industrial capability. Speech and Image Process-
ing aimed at strengthening long-term research,
and Displays at promoting a formerly weak area
that was nearer to development than research.
The Systems Architecture programme was
concerned with research into concepts and tech-
niques, as well as prototype parallel architecture
systems research. It aimed at providing a UK
 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348
base for further R & D, particularly within a Eu-
ropean collaborative context. In a departure from
the pre-competitive focus, Alvey also supported
five Large Scale Demonstrator projects which
were intended to provide exploitation-led goals
for Alvey R & D projects, and to demonstrate the
results of Alvey within the programme's lifetime.
Some dissemination and awareness activity was
also pursued on a small scale, the most successful
mechanisms being technology-specific clubs which
provided fora for interaction.
Government support for R & D collaboration
between firms raises a number of issues relating
to corporate R & D strategy. The following sec-
tion discusses the interaction between govern-
ment policy and R & D strategy at the level of the
participant firm.
4. Alvey and firm technology strategy
In this section we look at the relationship
between firms' Alvey R & D participation and
their broader technology strategies. How do pre-
competitive, collaborative R & D projects fit into
corporate and business-funded R & D activities?
The first point to acknowledge is that the formu-
lation of the Alvey programme strategy itself in-
volved industrial contributors. UK IT companies
GEC, Plessey, ICL, Logica, Inmos and British
Telecom were represented on the Alvey Commit-
tee and involved in the process which led to the
production of the Alvey Report [2]. For some of
these firms, a close relationship existed between
their own corporate R & D strategies and the
development of technology strategies within the
Alvey programme.
This was particularly the case in the VLSI
area, where the needs of the UK Ministry of
Defence (MoD) played a crucial role in influenc-
ing the shape and direction of the programme.
The VLSI programme replaced the planned VH-
PIC (Very High Performance Integrated Circuit)
programme, which the MoD would almost cer-
tainly have funded without Alvey. Because the
VLSI strategy reflected the needs of the MoD, it
also mirrored the interests of the major players in
the UK semiconductor sector, for whom the MoD
331
was the principal customer. Such companies were
therefore well placed to seek Alvey portfolios
which matched the core R & D strategies of their
firms. The other Alvey technology areas were less
influenced by the needs of any one single cus-
tomer, e.g. the MoD, and were more diffuse in
nature, although not diffuse enough to span all
the core R & D elements of the main industrial
actors. Whilst it was feasible for some firms to
seek Alvey project portfolios which closely re-
flected their core R & D interests, it was less
likely that all participants would be able to do
this.
Small firms and those larger companies which
were excluded from the Alvey Committee were
less able to influence the overall strategic direc-
tion of the programme than the large IT compa-
nies. A few participated in the development of
the technology area strategies, and comments on
the strategy documents were invited from a broad
spectrum of industry. However, the extent to
which the wider IT community influenced the
programme was necessarily very limited; the ma-
jority of participants had to respond to the tech-
nology strategies as formulated.
The relationship between firms' Alvey partici-
pation and their existing R & D strategies was
further constrained by political considerations.
The UK government was concerned that public
funds should not directly substitute for corporate
investment in R&D; that is, that Alvey work
should be somehow additional to that which
would have happened anyway. This is a signifi-
cant and controversial point, since strict compli-
ance with the 'additionality' criterion would sug-
gest that Alvey R & D was non-essential for firms'
overall business and technology strategies; other-
wise, logically, they would fund the R & D them-
selves. Moreover, the fact that they were pre-
pared to collaborate with other companies might
be taken to imply that the work was not commer-
cially significant.
Discussing this issue in relation to Alvey and
ESPRIT, Sciberras [52] contends that firms were
"most prepared to engage in those research pro-
jects ... upon which they themselves place only
marginal value" [52, p. 21]. He suggests that as
long as projects are funded from the public purse,
332 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348
firms will be prepared to undertake research pro-
jects which on strict commercial criteria they do
not themselves consider worthwhile. Such pro-
jects are therefore marginal, as argued by IT
industrialist Rob Wilmot (former chief executive
of ICL), who states that there is no point in
governments "bringing marginal projects into life
with subsidies" precisely because they are, by
definition, not central to the firms' core activities
[59]. This argument is in direct opposition to
government's desire for R & D to be 'additional'.
The distinction between core and marginal
R&D, and the related 'additionality' question,
thus require discussion. Pavitt et al. [41] show
empirically that in most UK industrial sectors,
firms' innovative activity is concentrated within
their principal sector of competence. The authors
conclude that technological knowledge is cumula-
tive and differentiated, and that "firms' techno-
logical strategies are heavily constrained by their
core activities, their size, and their forms of or-
ganisation" [41, p. 64]. However, concentration
on current core technologies may make the firm
vulnerable to threats from new technologies (e.g.
semiconductors for 1950s vacuum tube makers,
laser technology for 1970s photocopier manufac-
turers). Technology regarded as being peripheral
Number of Respons
40
30
20
10
C
Core Technology
Peripheral Technology
Fig. 1. The nature of Alvey R&D.
today may, over time, become the basis of the
core business.
Therefore, the greater the area of technology
covered by the firm, the less vulnerable it is to
technology-based competition [9]. The need to
continuously track emergent technologies has
been emphasised in a number of studies [17,23],
with early awareness of technological develop-
ments conferring competitive advantage [9,33].
Firms must therefore find ways of tracking new
technological developments whilst maintaining
competence in their core technology areas. This
presents challenges in generating the resources
and developing the expertise to do this. Collabo-
rative R & D offers an opportunity to pursue a
wider spread of technologies and access a broader
range of expertise than would otherwise be possi-
ble, whilst maintaining core R & D effort.
How, then, did firms structure their involve-
ment in Alvey in terms of the core-peripheral
divide? An interesting way of viewing the kind of
R & D Alvey allowed firms to undertake can be
seen in fig. 1. This depicts core versus peripheral
technology along the left-hand dimension, and
the time horizon (i.e. short to long term) of R & D
projects along the right-hand dimension. The
left-hand scale provides a spectrum between core
Long Term
. . . . . . . . . . II
5
 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348
Number of Respon:
30
20
10
Core Technology
Peripheral Technology
Fig. 2. The nature of IT4 R & D .
technologies, which are the current central tech-
nological concerns of firms, and peripheral tech-
nologies, here defined as possible replacement
technologies, i.e. alternative technological trajec-
tories. The right-hand scale shows a spectrum of
work running from R & D with very short-term
objectives to work which has much longer-term
horizons. Participant firms were asked to charac-
terise their Alvey projects along these two dimen-
sions using 1-5 scales as indicated.
With firms characterising their own in-house
R & D in this fashion, we might expect the bulk of
R & D projects to lie in the core technology/
short-term sector (i.e. the left-hand corner), with
some of the richer, larger a n d / o r more innova-
tive firms supporting longer-term work in core
areas. In contrast to expectations, fig. 1 demon-
strates that Alvey allowed firms to expand their
R &D portfolios in two major ways. In the first
instance, the programme allowed firms to con-
duct more long-term R & D in their core areas, as
illustrated by the cluster at the back of the ma-
trix. This is the kind of work that is on the 'wish
list' of firms; usually it is only financial or other
resource constraints which limit a firm's ability to
undertake this work. It is mistaken to think of
such R & D as unimportant or marginal; rather, it
is more fitting to think of it as luxury R & D ,
333
Long T e r m
.......... ;i
possible only because there is an element of
subsidy involved.
Now contrast this with the remaining work
undertaken within Alvey. This falls predomi-
nantly into the long-term/peripheral technology
sector. It is insurance R & D . 8 Such R & D allows
firms to cover or explore alternative technological
options normally out of their reach, providing
information and capability which may prove in-
valuable should these technologies assume greater
importance to the business than is presently be-
lieved. It is not directly relevant to firms in the
same way that short-term/core technology re-
search is, and it is not first-choice R & D if a little
extra money becomes available, i.e. it is not lux-
ury R & D as defined above, but again it is not
marginal or unimportant R & D . It is more accu-
rate to say that it is normally inaccessible, for
although it may be of great import to firms in
determining long-term technological options and
strategies, it is usually ruled out because of the
expense incurred in conducting such work in ar-
eas where internal capabilities are weak (by deft-
s Freeman [18] discusses the insurance value of R&D within
firms' defensive innovation strategies.
334 P. Quintas, K. Guy~Research Policy 24 (1995) 325-348

nition, since the technologies explored are pe- Table 1

ripheral). However, this is exactly the kind of What Alveyenabled industrial participants to do
work which is facilitated by collaborative R & D . Activity % of teams Achieve-
Collaboration allows cost-sharing, leverage and declearing ment
Alvey to score b
access to complementary expertise that is too be very
costly and risky to acquire (because of its periph- important a
eral status) via go-it-alone routes. Alvey allowed Develop new tools and techniques 64 3.7
firms to hedge their technological bets by facili- Accelerate R&D 57 3.8
tating the pursuit of insurance R & D . Moreover, Upgrade skills 52 3.9
fig. 2 indicates that Alvey was not alone in doing Use new tools and techniques 51 3.9
this. Work undertaken in the context of the Maintain R&D presence 46 3.6
Access academic know-how 46 3.2
Swedish IT4 p r o g r a m m e - - a programme closely Enter new R&D areas 45 3.8
resembling Alvey, running initially from 1987 to Build on R&D base 45 3.8
1990--supported an almost identical pattern of Enhance image/reputation 38 3.7
work. Establish new academic links 38 3.5
We can look in more depth at the ways in Spread costs 37 3.6
Deepen understanding 35 3.8
which Alvey participation brought benefits to the Develop prototypes 35 3.5
companies involved. Cross-checking between a Achieve critical mass in area 28 3.6
range of questions put to participants verifies the Keep track of R&D 27 3.6
previous findings concerning peripheral and Spread risks 25 3.8
Develop products 22 3.0
long-term R & D . Table 1 shows that 45% of
Establish new industry links 22 3.1
industrial teams said that Alvey was very impor- Access industry know-how 22 3.1
tant in enabling them to enter new R & D areas, Enter international R&D 22 3.3
and 46% said that it had enabled them to access programmes
academic knowledge. Twenty-eight per cent of Enter private sector R&D ventures 20 3.2
Enter national R&D programmes 15 3.2
industrial participants stated that Alvey had been
Get used to new IT standards 10 3.2
very important in enabling them to build critical Influence new IT standards 10 3.1
mass in an R & D area (i.e. where capability was Enter new non-R&Dcollaborations 6 3.1
previously sub-critical mass), and 27% stated that a Categories are not mutually exclusive.
their participation had enabled them to keep b Mean score on a satisfaction scale from 1 (low) to 5 (high).
track of R & D developments. More directly rele- Source: SPRU Final Alvey Questionnaire [21].
vant to core activities, Alvey allowed firms to
accelerate R & D activity beyond the pace that
would otherwise have been achieved (57% of chant semiconductor business, or GEC's with-
teams), to 'maintain an R & D presence' (46%) drawal from the CMOS semiconductor market,
and 'build on their R & D base' (45%). Similarly, both of which happened during the Alvey Pro-
Alvey enabled 35% of firms to deepen their un- gramme. Therefore, it should not be assumed
derstanding in a particular technology area. These that core technology is immutable and thus that
benefits--accelerated R & D , maintained R & D investment in core R & D is devoid of risk.
and deepened knowledge--suggest that firms One of the most significant result in table 1 is
used the programme to enhance and support that 46% of industrial participants stated that
pre-existing technological strategies in addition to Alvey had enabled them to maintain a presence
entering new R & D areas. in an area which would otherwise have been cut.
We also need to take account of the fact that There were also examples of firms admitting that
firms' business and technology strategies may they could not have undertaken the R & D neces-
change radically over a period of 5 years, and sary for their core business activities (e.g. C A D
firms may decide to pull out of a business area, R & D in the case of a semiconductor producer)
e.g. STC's decision to withdraw from the mer- without the provision of Alvey funding, because
 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348 335

of the need to maintain profits in a particular
financial year in order to keep City predators at
bay.
High interest rates in the mid-1980s promoted
a climate of shrinking investment horizons in
which R & D of longer than 2 years to market (9
months in one case) became 'marginal'. Firms'
failure to fund R & D was therefore by no means
indicative of that R& D being irrelevant to their
core technology needs. The additional benefits of
Alvey are therefore not solely to be found in
wholly new R & D areas, but in added achieve-
ments in existing areas: accelerating R & D ,
broadening and deepening knowledge, building
critical mass and protecting R & D from cutbacks.
5. Alvey participation strategy and outcomes
In this section we analyse companies' strate-
gies towards Alvey, linking these to project out-
comes. First, companies' strategies towards Alvey
can be differentiated in terms of the way they
constructed their Alvey project portfolios. Some
firms set out to attain a coherent group of inter-
related Alvey projects; others had much more ad
hoc, uncoordinated approaches which resulted in
relatively isolated and disconnected projects.
The way in which firms constructed their Alvey
portfolios is related to the characteristics of the
different technology areas, to the structural posi-
tion and strategic orientation of R & D within
companies, and to the size of projects--large
commitments requiring higher-level decision-
making. In particular, the central core of the
VLSI programme required a 'top down' approach
by participant firms--a coherent set of projects
clustered around whole-process projects, as shown
in fig. 3. This represents the portfolio of VLSI
projects of one firm, showing how six smaller
projects feed into the large whole process project
over time. This coherent approach contrasts with
firms that had numerous isolated Alvey participa-
tions, each driven by one or two researchers with
little wider support within the firm. Coherent
strategies were not restricted to the VLSI area.
ICL's involvement in the Systems Architectures
sub-programme, which had significantly more dis-
tant horizons than VLSI R & D, featured a cluster
of related projects, including several long-term
research projects addressing alternative techno-
logical paths.
A second way of looking at firms' Alvey strate-
gies is to focus on structural and organisational
factors within the firm, in particular, the degree
of integration or autonomy of the R & D depart-
ment undertaking the Alvey work. One indication
of R & D departmental autonomy is control over
funding decisions. Alvey project budgets were
approved by the firms' R & D management (as

Mask making project

techniques

projects
o,, etchn.°,oj°c,k
Lithography project~\

Plasma etching equipment project

Mask etching equipment

equipment

projects Measurin9 equipmentproject

1984 1985 1986 1987 1988

Fig. 3. Example of coherent firm strategy. Note the seven horizontal lines each represent one Alvey project. Results from the
Techniques projects and Equipment projects feed into the Whole Process project over time, as shown by the angled lines.
336 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348

opposed to central management) in over 40% of Table 2

projects. The danger of this pattern of funding R & D outputs: expectations and achievements a

and R & D autonomy is that the Alvey work may Expected outputs Percentage Mean
of teams output
be isolated from broader operating company
expecting achieve-
needs. outputs ~ ment
Conversely, in some large firms Alvey propos- scores c

als were instigated by business units. In the VLSI Hardware 17 3.7

area the relevance of Alvey R & D to firms' Software 68 3.6
shorter-term business objectives meant that busi- Neither 27 -
ness units were closely involved with the work New tools and instruments 18 3.6
and its outputs. In one example, the operating New methods and techniques 76 3.9
divisions provided one-third of the funding for Neither 21 -
Alvey R&D. More commonly, the inability of Research outputs
business units to consider R & D projects with Test and m e a s u r e m e n t 12 3.7
horizons of 3 years or more prevented them from Specifications/designs 38 3.9
funding Alvey work or even sharing an interest in Evaluations 41 3.7
Feasibility statements 26 3.8
it. In the majority of firms, Alvey participation
Simulations 16 4.2
was driven by R & D departments, with invest- Standards recommendations 1l 3,8
ment coming from central R & D funds. Demonstrators 36 3,7
We therefore have two sets of distinctions. Total research outputs d 84 -
First, between firms with coherent portfolios of Development outputs
clustered, related Alvey projects, and firms with Prototypes 36 3,8
unconnected 'island' projects, often driven by in- Marketable products 14 3,2
dividuals. Second, between 'business driven' and Neither 8 -
Total development outputs d 43
'research driven' R & D strategies. These varia-
tions are used below as the basis of a comparative a All Alvey participant teams in the survey are included.
b Categories are not mutually exclusive; teams may expect > 1
analysis of participation strategy in relation to
output types.
outcomes. c Mean score on a satisfaction scale from 1 (low) to 5 (high).
Before moving to the comparative analysis, o Percentage of teams expecting any output type listed in this
table 2 identifies the kinds of outcomes being box.
pursued by participants. The first numerical col- Source: S P R U Final Alvey Questionnaire [21].
umn shows that more Alvey R & D was aimed at
software rather than hardware, and more at
methods and techniques rather than tools and
instruments. Eighty-four per cent of participants
expected 'research outputs' compared with 43% Table 3
expecting (nearer market) 'development outputs' R & D financial autonomy and R & D performance a
(note that these are not mutually exclusive). The Project budget Rating of project performance b
second numerical column shows how achieve- approved by Unsatisfactory Satisfactory Total
ments matched these expectations (respondents Higher m a n a g e m e n t 27 29 56
scoring on a scale of 1 (very unsatisfactory) to 5 R&D management 7 37 44
(very satisfactory)). The overall picture is one of
Total 34 66 100
satisfaction with achievements; all scores are
above three. a Data are for projects aimed at 'new methods and tech-
niques'.
The aggregate data presented in table 2 con-
b Percentage of industrial teams rating their project output
ceal a number of important variations. Compara- performance satisfactory or unsatisfactory.
tive analysis reveals that firm R& D organisation Statistical significance: X 2 = 8.4; significance 0.004.
and strategy are significantly correlated with pro- Source: S P R U Final Alvey Questionnaire [21].
 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348 337

Table 4 Table 5
R & D locational separation and R & D performance a Links to other Alvey projects and R & D performance a
Location of R & D Rating of project performance Alvey project links Rating of project
and production within the firm performance b
Unsatis- Satis- Total
factory factory Unsatis- Satis- Total
factory factory
Located on the same site 23 27 50
Located on different sites 9 41 50 Few or no links with other 47 17 64
Alvey projects
Total 32 68 100
Part of a coherent portfolio 15 21 36
a Data are for projects aimed at 'new methods and tech- of Alvey projects
niques'.
Total 62 38 100
b Percentage of industrial teams rating their project output
performance satisfactory or unsatisfactory. a Data are for projects aimed at 'development-oriented' ob-
Statistical significance: X 2 = 6.4; significance = 0.011. j e c t i v e s - p r o t o t y p e s and marketable products.
Source: S P R U Final Alvey Questionnaire [21]. b Percentage of industrial teams rating their project output
performance satisfactory or unsatisfactory.
Statistical significance: X 2 = 3.5; significance = 0.062.
Source: S P R U Final Alvey Questionnaire [21].

ject success. First, table 3 shows the distinction

between 'Research Driven' and 'Business Driven'
projects, using control over project funding as a success, and project isolation with unsatisfactory
proxy measure of the autonomy of the R & D performance.
department. The table concentrates on projects Pursuing the analysis of firms' R& D strategy,
aimed at methods and techniques: that is, pure table 6 shows that the degree to which Alvey
enabling technology. This shows that project bud- R & D was isolated from other in-house (i.e. non-
get control by R& D management is strongly re- Alvey) R & D affects the achievements of devel-
lated to satisfactory R & D performance (as as- opment-oriented projects. Alvey projects having
sessed by the project researchers). Further indi- no connection to firms' existing R & D activities
cations of the relationship between R & D auton- had poor achievements compared with Alvey pro-
omy and project success are given in table 4. jects linked to in-house R & D activity. In addi-
Here the measure of autonomy is the locational
separation of R & D from production. R & D au-
tonomy is again significantly correlated with satis-
factory achievements. Tables 3 and 4 thus show Table 6
In-house R & D links and Alvey R & D performance a
that, in the case of projects aimed at pure en-
abling technology (new methods and techniques), Links with other R & D Rating of project
in the firm performance b
relatively autonomous R & D is strongly related to
perceptions of successful R & D achievements. Unsatis- Satisfac- Total
factory tory
We now turn to firms' R & D strategy, and the
distinction drawn above between Alvey R & D No links with other in-house 26 17 43
R & D projects
which was part of a coherent portfolio of related
Some links with other in-house 18 38 56
Alvey projects in the firm, and those which had R & D projects
few or no connections to other Alvey projects in
Total 44 55 100
that establishment. Table 5 develops this, focus-
ing on nearest-to-market projects: that is, those a Data are for projects aimed at 'development-oriented' ob-
aimed at prototypes and marketable products. j e c t i v e s - p r o t o t y p e s and marketable products.
b Percentage of industrial teams rating their project output
This shows that in the case of these development- performance satisfactory or unsatisfactory.
oriented projects, a coherent portfolio of Alvey Statistical significance: X 2 = 3.5; significance = 0.062.
projects within the firm is correlated with project Source: S P R U Final Alvey Questionnaire [21].
338 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348
tion to these data, success in development-ori-
ented projects was also found to correlate strongly
with high levels of project effort in terms of
person/years.
In contrast to these results concerning devel-
opment-oriented projects, those projects geared
to research-oriented objectives tended to achieve
satisfactory performance where the Alvey R& D
projects had no connections to other Alvey pro-
jects conducted by the firm (i.e. no coherent
portfolio), or connections with other in-house R
&D. In other words, research-oriented projects
had greater success where these were individual,
isolated efforts, whilst development-oriented pro-
jects benefited from linkage to other R & D in the
firm, both Alvey and non-Alvey.
This complex picture points to some tentative
conclusions, although these are strongly sup-
ported by qualitative interview material. Coher-
ent strategies, where Alvey projects were part of
a portfolio or linked to in-house R & D , were
correlated with successful achievements in the
case of projects aimed at the development end of
the R & D spectrum. Coherent strategies were
not, however, correlated with success in the case
of research-oriented projects. Here, isolated pro-
jects achieved satisfactory outcomes, and success
was strongly correlated with the relative auton-
omy of R & D units,
Further analysis reveals other correlations be-
tween R & D organisation and strategy and satis-
factory project achievements. In the case of pro-
jects geared to software outputs, success was
linked to R & D autonomy, both in terms of bud-
get control and location. Success in these cases
was also linked to projects being considered core
R&D: that is, R & D perceived as highly neces-
sary, often with a high level of effort committed
in terms of person/years.
Success in project terms does not, however,
indicate that the R & D results have been taken
up within the wider firm context. This points to
the need to look at 'internal' technology transfer
and assimilation within participant firms. Before
turning to this, however, we look at participants'
experience of Alvey R & D collaboration in order
to understand why and how collaboration oc-
curred.
6. Industrial collaboration in Alvey
Collaboration in R & D presents both opportu-
nities and challenges for participants. Effectively
managing collaboration and reaping the benefits
implies a need for the redefinition of firms'
boundaries and structures [54]. In this section we
identify the reasons for collaboration, types of
collaborative arrangements adopted, and the key
factors influencing successful technology and
knowledge transfers through collaboration. The
following section focuses on the internal pro-
cesses by which firms assimilate and use technol-
ogy and knowledge flowing from collaborative
R&D.
Prior to Alvey, many participants were used to
working as joint contractors on products and sys-
tems, but collaborative R & D aimed at enabling
technologies was new to most firms. In some
cases R & D departments were keen to collabo-
rate, but business units reacted against any col-
laboration with long-standing competitors. The
majority of project partnerships, in fact, avoided
collaboration between firms that were in direct
competition in the same downstream product
markets.
Most collaborators were known to each other
before the Alvey programme, and 40% of firms
had worked on joint projects (primarily joint or
sub-contracted product or systems development)
with one or more project partners prior to Alvey.
Twenty-two per cent of industrial participants
regarded Alvey as important in enabling them to
form new links with other industrial teams. In
20% of projects, partnerships were imposed by
the Alvey Directorate. Such 'forced marriages'
were the cause of some complaint, and some
firms refused to participate because of the per-
ceived threat to commercial confidentiality.
Alvey-imposed partnerships were ultimately less
successful in achieving all or most of their objec-
tives [21].
There was a wide range of assumptions about
the types of advantages and benefits to be gained
from participation in Alvey collaborations. Inter-
views in the early stages of the programme re-
vealed a diverse expectation of benefits: the ac-
quisition of technology know-how, an enhanced
 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348
knowledge base and skills, and the development
of tools, techniques, process technologies, sub-
systems and even marketable products. Partici-
pants also expected benefits through the develop-
ment of national linkages with industrial and
academic researchers, and the leverage of addi-
tional resources through collaboration accessing a
larger resource base than one firm alone could
support. Additionally, a minority believed that
Alvey would enable them to participate in the
development or application of emerging IT indus-
try standards [46].
Sixty per cent of participants considered that
collaboration was essential, the R & D being fea-
sible only in conjunction with partners. Con-
versely, around a quarter of all participants in
collaborative projects considered that the R & D
would have been feasible, and even desirable,
without their Alvey collaboration partners. R & D
collaboration was novel in the UK in the early
1980s. Some participants were undoubtedly drawn
into Alvey collaboration without having a clear
idea of the benefits to be expected, but being
concerned not to be left out of a new funding
regime.
There were four principal modes of collabora-
tion adopted by participant firms.
(1) Close collaboration, with commonly-held
objectives, interdependent work packages, and
working towards an integration of the whole pro-
ject.
(2) Shared parallel work, such as an evalua-
tion of a number of possible options, e.g. tech-
niques or materials, the division of work between
the collaborators leading to shared results and a
reduced risk of wasted effort.
(3) Loose collaboration, with work divided into
discrete packages or areas of most interest to
each partner. Some technology and knowledge
transfer is possible, but there is no final 'bolting
together' of the whole.
(4) No real collaboration, participants working
independently with minimal contact. Such pro-
jects are often the result of 'forced marriages'
a n d / o r are affected by clashes over objectives,
personalities and different cultures. In some
cases, transfer of results occurred 'in spite of' the
collaboration.
339
Interviews with Alvey project managers at the
end of the programme found that the most com-
monly cited reason for collaboration (78% of
project managers) was the acquisition of comple-
mentary expertise, including familiarity with tech-
nology, techniques or access to equipment [21].
The second most common reason, cited by over a
quarter of project managers, was to comply with
Alvey funding criteria. The third (under 15%)
was to spread risks. This was particularly the case
in projects where alternative research avenues
were being followed and compared, or different
techniques (or materials in the case of VLSI
research) being evaluated. In these projects all
participants benefited from shared results, with
those entering the 'blind alleys' not being disad-
vantaged. Cost reduction is closely linked to risk
reduction, and was the fourth most frequently
mentioned reason for collaboration (under 10%
of respondents). Gaining market contacts, the
establishment of standards and the development
of future collaborative links were each cited as
reasons by less than 5% of project managers [21].
Regardless of whether reduced risks and costs
were thought of as motives for collaboration, the
SPRU questionnaire survey revealed that 24% of
firms concluded that Alvey had been an impor-
tant means of reducing risks, and 36% acknowl-
edged that Alvey had enabled them to cut R & D
costs.
Collaboration has disadvantages as well as ad-
vantages for firms. The costs associated with col-
laborative overheads were cited by 51% of indus-
trial teams as having a negative effect on project
progress. 'Overheads' include the time and re-
source costs of meetings, information exchange
and travel, as well as the cost of the compromises
necessary in collaborative partnerships. However,
the most common factor negatively affecting pro-
ject progress (cited by 56% of questionnaire re-
spondents) was 'changes affecting collaborators'.
These were usually changes beyond the control of
the R & D units involved in the project, such as
changes in ownership or business strategy, result-
ing in partners moving off in a different research
direction, taking staff away from projects, or, in
extreme cases, withdrawing from projects.
The process of negotiating intellectual prop-
340 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348

erty rights (IPR) agreements negatively affected Table 7

48% of projects, according to industrial partici- Follow-up R&D of Alvey industrial participants
pants. Each project consortium was required to Percentage of teams in each technology area
produce its own agreement, causing heavy front- with each follow-up action
end administrative workloads and major delays. SE IKBS VLSI MMI LD Total
In some cases IPR agreements took over a year No follow-up
to complete, and projects suffered from staggered R&D 28 19 31 35 45 30
starts between the various partners. In part, this One firm only 17 19 22 12 27 18
With Alvey
reflects the novelty of collaborative R & D in the academic
UK in the early 1980s. partners 33 26 19 38 36 29
A key indicator of the success of collaboration With Alvey
engendered by Alvey is the extent of subsequent industrial
participation in similar collaborative R & D. Some partners 11 11 9 15 27 13
With new
firms participated in the ESPRIT programme partners 22 41 25 35 45 30
concurrently with Alvey, and many more followed
their Alvey participation by entering national and Team numbers
in sample 18 27 32 26 11 114
international programmes. Seventy-one per cent
of project managers in full industrial collabora- Rows 3-5 are not mutually exclusive.
Source: SPRU Final Alvey Questionnaire [21].
tive projects indicated that they would continue
to work with one or more of their partners after
the Alvey programme ended. However, opportu-
nities for R & D funding significantly diminished Alvey participation they had identified those firms
in the UK following the end of Alvey when the with which they would not wish to collaborate in
UK government switched resources to ESPRIT. the future.
Twenty-two per cent of industrial teams felt that
Alvey had a positive effect on their entry into
international collaborative R & D programmes, 7. Technology and knowledge transfer, assimila-
only 15% felt the same about entry into (much tion and utilisation
diminished) national programmes.
Table 7 shows the extent of follow-up R & D We now turn the central issues of technology
across all Alvey technology areas. Further collab- and knowledge transfer, assimilation and utilisa-
oration with industrial partners is markedly low tion. The first point at issue is the ability of firms
--only 13% of all respondents. This may be be- to acquire knowledge and technology via collabo-
cause the Alvey partners were appropriate for the rative R&D. The results of collaborative R & D
R & D project but not for follow-up work, which may be exploited by consortia members in a range
is inevitably closer to the market and thus com- of follow-up activities, at which stage, for reasons
mercially sensitive. Continuing collaboration with of competition, collaboration may no longer be
academic researchers is significantly more com- appropriate. Table 1 above showed that 46% of
mon, and collaboration with new partners is even industrial participants thought that Alvey had
more pronounced. Alvey undoubtedly helped UK been very important in enabling them to access
firms to move up the learning curve in managing academic know-how, compared with 22% feeling
and benefiting from collaborative R & D and in the same about know-how from industrial part-
negotiating IPR arrangements. Several partici- ners. The latter comparatively low rating reflects
pants stated that their R & D teams had devel- several factors. For example, some participants
oped better links with their opposite numbers in felt that they could have accessed the knowledge
other firms compared with the links that existed without Alvey, and there was often a problem in
with the business units in their own company. transferring knowledge. Interview data suggest
Conversely, quite a few teams said that through that accessing technology through collaborative
 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348
R & D is a function of many factors, including:
- the capability and compatibility of collabora-
tive partners (i.e. expertise levels at the start
need to be roughly on a par);
- the nature of the collaboration: how work is
divided, mechanisms for integration, the chan-
nels of communication (see the four modes of
collaboration in Section 6);
- the nature of the technology or knowledge
being generated and transferred (e.g. codified
knowledge such as software modules are easier
to transfer than tacit knowledge);
- the relative maturity of the technology area
(e.g. the comparatively low incidence of partic-
ipants accessing know-how from industrial
partners in the IKBS area, which may be ex-
plained by the low level of industrial IKBS
capability in the UK at the time);
stability within participant organisations (e.g.
- R & D stressed a distancing from the market. The
in terms of ownership, business and technology
strategy, and continuity of personnel active in
the project);
- the ability of the recipient firm to understand
and internalise the technology and know-how
(i.e. their ability to learn).
The extent to which firms can internalise tech-
nology and knowledge, and how far these benefits
can be transferred internally within the firm and
combined with firm-specific competences remain
crucial questions. An important aspect of the
nature of the know-how being assimilated is its
inherent utility; i.e. the ways in which it is possi-
ble to use it. Some R & D outputs are capable of
being directly taken up and exploited by produc-
Table 8
Transfers from Alvey industrial teams
Recipient Type of output transfer a
environment
Output Out- Output
demon- put further
strated evalu- developed
ated
Within own R&D unit 44 34 43
Within own business/ 27 22 15
production units
Figures are the percentage of all industrial teams indicating
each type of transfer.
a Transfer categories are not mutually exclusive.
Source: SPRU Final Alvey Questionnaire [21].
341
tion units. Other outputs primarily serve to
strengthen R & D capabilities generally and have
more indirect impacts on production units. Some
forms of knowledge, such as that resulting from
insurance R& D which may help rule out certain
unfruitful development lines, is of direct rele-
vance to production units but difficult to 'count'
as transferable outputs, since its utility lies in
negative results and the subsequent adoption of
alternative technological routes. In Alvey, it
should always be remembered that only a small
proportion of the work was expected to be di-
rectly transferable or of direct utility to produc-
tion units without a significant commitment of
resources for further development.
It is also the case that the political constraints
on the programme directly framed the agenda for
R & D usage. The Alvey focus on pre-competitive
programme remit did not ensure the involvement
of product development and production person-
nel, or of marketing departments or final users.
Alvey aimed at technology generation, but was
not intended to support the complete innovation
process. How far did this inhibit the internal
process of technology assimilation and use, and
how far were firms able to effectively bridge the
gap between Alvey pre-competitive R & D and
other functional areas of the firm?
Table 8 presents findings on the extent and
nature of technology and knowledge transfers
identified by Alvey industrial participants. Two
functional areas of the firm are shown; the R & D
unit concerned with Alvey, and production or
business units. Within these a range of technol-
ogy transfer modes are shown. 'Output demon-
stration' indicates an attempt to communicate
and raise awareness through a demonstration of
Output the technology. 'Evaluation of outputs' indicates
in an active participation by the recipient depart-
regular
ment. 'Further development' would be the ex-
use
pected action following satisfactory pre-competi-
29
rive R&D. The 'regular use' of outputs shows
17
that elements of Alvey R & D have already fed
into current practice, either in the R & D depart-
ment or the business unit.
Table 8 shows that 43% of industrial teams
were further developing their Alvey R & D within
342 P. Quintas, K~ Guy/Research Policy 24 (1995) 325-348

the R & D unit, and 29% reported outputs in
regular R & D use at the end of the programme.
Business unit awareness of the Alvey R&D, and
subsequent development and use of results, are
particularly important indicators of effective link-
age and resource commitment. Demonstration of
results in business or production units occurred
in 27% of participant firms, and one-fifth of
project outputs have been evaluated in business
units. Fourteen per cent of industrial teams' out-
puts were being further developed in business
units, and 18% reported outputs in regular use.
Further analysis shows that there is consider-
able variation in technology and knowledge trans-
fers between different technology areas. This is
shown in table 9. In general, the transfer of
technology and knowledge from R & D to busi-
ness units is dependent on the relative maturity
of the technology, and also on the relative ambi-
tion of the strategy in each Alvey technology
area. Over half of VLSI teams reported regular
use of their outputs in R&D, and a quarter had
transferred technology into production. VLSI was
closely allied to the business interests of partici-
pants and was pursuing incremental change within
an established technological trajectory. In con-
trast, the Software Engineering and IKBS pro-
grammes had particularly ambitious objectives.
SE was pursuing radical change, and in IKBS
industrial business capability was at an embryonic
stage. The technology transfer problems of the
Alvey Software Engineering programme are dis-
cussed elsewhere [43,45,47]. Commercial software
development is highly labour- and skills-intensive,
and there are a range of factors that inhibit
radical change. The adoption of advanced soft-
ware engineering tools and methods has implica-
tions for organisational and institutional struc-
tures, the organisation of work, skills require-
ments, developer autonomy and career paths of
IT professionals.
Additional data reveal that a lack of business
unit interest in the Alvey R & D adversely af-
fected exploitation chances for 32% of industrial
participants. In the case of SE projects, 56%
reported that a lack of interest affected exploita-
tion, emphasising the particular problems with
software engineering: for Large Demonstrator
projects the figure was 36%, for VLSI 28%, for
MMI 27% and for IKBS 22%. Commenting on
the exploitation process, 20% of all respondents
noted that the cost of further development was
prohibitively high. Changes in corporate strategic
direction were thought to account for exploitation
problems by a quarter of all industrial respon-
dents. Lack of technology and knowledge transfer

Table 9
Technology area variation in transfers
Recipient Type of output transfer a
environment
Output Output Output Output in
demonstrated evaluated further regular
developed use
Within own R & D unit VLSI 40 VLSI 33 VLSI 50 VLSI 53
SE 38 SE 24 SE 43 SE 14
IKBS 27 IKBS 23 IKBS 50 IKBS 19
MMI 56 MMI 44 MMI 31 MMI 22

Within own business or production units VLSI 25 VLSI 25 VLSI 10 VLSI 25

SE 33 SE 33 SE 19 SE 14
IKBS 23 IKBS 15 IKBS 19 IKBS 15
MMI 22 MMI 16 MMI 16 MMI 16
Figures are the percentage of industrial teams in each technology area indicating each type of transfer.
a Transfer categories are not mutually exclusive.
VLSI, Very Large Scale Integration; SE, Software Engineering; IKBS, Intelligent Knowledge Based Systems; MMI; Man-Machine
Interface.
Source: SPRU Final Alvey Questionnaire [21].
 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348
mechanisms was also a factor. Only 15% of all
respondents stated that there were well-identified
gatekeepers in business units whom they could
contact. Informal channels of communication
were thought to be more effective than existing
formal channels by a third of respondents. A
quarter stated that R & D personnel had to try to
generate interest in the R & D by proactively
'knocking on the doors' of business unit staff.
Only 5% said that business unit personnel were
actively seeking promising R & D outputs.
A further indicator of post-Alvey exploitation
is the extent of personnel transfers from R & D to
other business areas. Alvey involved approxi-
mately 5000 researchers over its lifetime, employ-
ing over 2000 at its peak, with each spending an
average of 1.5 years working on the programme
[21]. The movement of personnel from R & D into
business units and product development is known
to be an effective mechanism of technology trans-
fer, particularly in the case of tacit knowledge.
However, Alvey research staff, especially those in
SE and IKBS, were often reluctant to move across
to production departments. The majority of Alvey
researchers (60%) were working in their R & D
unit or department prior to its involvement in
Alvey. At the end of the Alvey projects surveyed,
45% of research staff remained in that R & D
unit. Nine per cent moved from Alvey R& D to
other R & D units or departments in the same
organisation, and 11% transferred to business or
production units (compared to the 13% of project
researchers that originated in these). There was,
however, a flow of 18% of all Alvey project
personnel (including academics) to external in-
dustrial organisations. Commenting on the ex-
ploitation process, 17% of all respondents agreed
with the statement that "technology transfer could
occur when R & D personnel move to production
and business units, but this rarely happens" [21,
p. 157].
These data indicate that personnel movement
occurred, but was not a major vehicle for Alvey
technology transfer within a firm, although there
was a significant outflow to external firms. It is
difficult to assess the extent to which personnel
movement results in Alvey technologies and
knowledge being utilised. However, recent re-
343
search following up Alvey Software Engineering
R & D projects suggests that the 'exploitation' of
pre-competitive R & D may be far more serendip-
itous, unpredictable and essentially non-linear
than was previously suspected. 9
For example, one large software engineering
project team spun-off from the parent firm to
form a management buy-out company. Their
business strategy was to turn the embryonic soft-
ware technology into a product-a software meta-
tool (i.e. a tool to build tools). This had not been
the objective of the Alvey project, but the meta-
tool drew heavily on the Alvey R & D. In a second
example, technology resulting from an Alvey soft-
ware development environment project has sub-
sequently been developed into a process manage-
ment tool aimed at applications outside of soft-
ware development. In a final example, a manager
had seen Alvey work going on in his company,
but was not personally involved. He later applied,
in another context, some of the ideas and princi-
ples he had seen the Alvey project team develop-
ing. These are limited examples, but they confirm
that the exploitation of pre-competitive R & D
may often be a non-linear process whose multiple
outcomes are far from predictable. The transfer
of tacit knowledge is also confirmed, albeit with a
very limited sample. Tracking these outcomes
presents a challenge, and further research is
needed over an extended period in order to build
up a richer picture of the ways in which Alvey
pre-competitive R& D is exploited.
Finally, we should note the success of the
largest Alvey project, the systems architecture
project Flagship, which focused on developing
parallel processing computer technology support-
ing declarative systems. Flagship, together with a
cluster of related projects, was seen by ICL in
1984 as being fundamental to the firm's long-term
(10-15 years) strategy. Following Alvey, this work
continued in the European Declarative Systems
(EDS) project as part of the ESPRIT II Pro-
9 As part of the Programme for Information and Communi-
cation Technology (PICT) funded by the U K Economic and
Social Research Council, Paul Quintas is following up some
Alvey Software Engineering projects in order to track post-
programme technology transfer and use.
344 P. Qumtas, K~ Guy/Research Policy 24 (1995) 325-348
gramme. In October 1993, ICL announced the
Goldrush parallel computer for shipment in
March 1994. This machine represents significant
exploitation of the R & D completed within Alvey
and ESPRIT, and £42 million investment by ICL.
The process of exploitation of the R & D has
included the commercially crucial development of
software to support the market leading databases
Oracle, Ingres, Adabas and Informix [12].
8. Conclusions
Drawing on the experience of the UK Alvey
programme, this paper provides an analysis of the
conduct of collaborative, pre-competitive R & D
at the level of the participant firm. Our purpose
has been to further current understanding of the
strategies and processes which frame such R & D
within companies.
We have differentiated a number of strategies
employed by firms in their approach to Alvey
R&D, and the analysis has linked strategy with
R & D outcomes. In evaluating the benefits of
programmes such as Alvey, the added value is not
simply measured in terms of research undertaken
that would not otherwise have been funded; the
benefits are also the acceleration, broadening and
deepening of R&D, and the maintenance of R&
D which may have been cut. Alvey also enabled
firms to undertake longer-term R & D in core
technology areas, and increased their ability to
carry out insurance R & D in peripheral areas.
Alvey projects covered a wide range, from
'unspectacular engineering' aimed at the next
incremental step straight down the technological
highway, to ambitious objectives, some located on
the far horizon along the main route, and others
out in uncharted territory. There are significant
differences between the policies and R & D
strategies appropriate for these. For those pro-
jects aimed at the development end of the R & D
spectrum, a coherent strategy in which Alvey
projects were clustered into a tight portfolio, or
linked to in-house R&D, was correlated with
successful achievements. In the case of research-
oriented projects (i.e. those focused on enabling
technology), analysis linking strategy with organi-
sational structure revealed that success was corre-
lated with the relative autonomy of R & D units.
Isolated projects achieved the most satisfactory
outcomes for researchers. This suggests that dif-
ferent management strategies and policy mecha-
nisms are required according to the focus of the
R&D.
Alvey's encouragement of collaboration suc-
ceeded in uniting and focusing formerly frag-
mented resources, and building networks of re-
searchers. Many project teams have learned how
to collaborate, and gone on to further R & D
alliances, particularly within European pro-
grammes. As a mechanism to enable participants
to access technology and absorb know-how from
their partners Alvey was a qualified success, with
much variation between firms, collaboration types
and (in particular) between technology areas. Al-
most half of the industrial participants stated that
Alvey collaboration had been very important in
enabling them to access technology and absorb
know-how from their academic partners, com-
pared with 22% when the source was a collabo-
rating industrial organisation. Success in access-
ing knowledge and technology through collabora-
tive R & D is a function of many factors, including
the compatibility of collaborative partners, the
mode of collaboration, whether codified or tacit
knowledge is being transferred, the relative matu-
rity of the technology area, and stability within
both supplier and participant organisations. We
have seen that Alvey collaborations took several
forms, and it is clear that different arrangements
are appropriate for different project types.
It should be noted that responses to direct
questions concerning knowledge and technology
transfer inevitably focus on codifiable knowledge,
tending to underestimate the extent to which
personal contact and collaborative working leads
to transfers of tacit knowledge. Interviews both
during and after the programme suggest that
Alvey did support tacit knowledge transfers, but
the extent of this is impossible to estimate. One
partial indicator is personnel movement. An out-
flow of 18% of research staff from R & D units
undertaking Alvey projects to external firms indi-
cates a potential for tacit knowledge flows be-
tween organisations. Subsequent data suggest that
 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348
this is indeed occurring, but further research is
required in order to establish the extent and
nature of the benefits.
Collaboration is not a panacea, nor is it cost-
less, and as Mowery and Rosenberg [31] have
pointed out, research collaboration alone is insuf-
ficient. In order to exploit the benefits of pre-
competitive R & D collaboration, the products of
research need to be transferred and assimilated
within participant firms. Utilisation of the bene-
fits of collaborative R & D is thus a function of
internal processes. Regardless of whether good
communications existed between project partner
research teams, many firms had inadequate
mechanisms linking in-house R & D with business
activities. Personnel transfer between R & D and
business units is one such mechanism, but this
had not happened to any great extent by the end
of the programme. Collaborative R & D pro-
grammes do not address firm-level internal prob-
lems focused on learning and technology transfer,
which require investment and supportive struc-
tures. Indeed, in some cases R & D collaboration
may exacerbate the problems by increasing the
divide between R & D and business-unit person-
nel.
The relative maturity of the technology is a
major variable here. Where Alvey R & D featured
incremental progress along well-charted routes
and was closely linked to shorter-term business
needs, as in the case of VLSI, the transfer of
technology and access to further investment pre-
sented few problems. Where Alvey pursued more
ambitious, radical technological goals, such as in
the Software Engineering and IKBS areas, tech-
nology transfer was more difficult and investment
problematic. In Software Engineering, Alvey
technologies were intended to confront and radi-
cally change current practice. In IKBS, Alvey
needed to boot-strap an industrial capability and
help create the market. Both technologies have
encountered problems in bridging the gap be-
tween R & D and commercial practice. The trans-
fer and adoption of Software Engineering tools
and methods, in particular, has implications for
organisational and institutional structures and for
social factors within the commercial software de-
velopment workplace, including skills require-
345
ments and career paths of IT professionals and
others [43,45,47]. These are factors which Alvey
had no remit to address.
The results presented here clearly have impli-
cations for government policy issues that have
been addressed in detail elsewhere [21,44]. At
first sight, the results might be interpreted as
suggesting that governments seeking a demon-
strable return on investment would be advised to
support R & D which is pursuing incremental
progress along an established technological tra-
jectory and geared to the immediate business
needs of industry. However, this minimises addi-
tionality, and is unlikely to fulfil the underlying
strategic objectives of a programme such as Alvey.
Focus on short-term business needs cannot be
expected to regenerate the IT sector, given that
this short-term focus has, with a few notable
exceptions, been the prevailing business ethos,
and the firms concerned are largely the same
firms which have experienced declines in interna-
tional competitiveness in recent years. If firms
are technological laggards, then more radical ap-
proaches are in order. It is also clear that collabo-
rative R & D is an effective way for firms to track
technological developments which may be on the
periphery of current requirements, but which may
shift into centre focus as markets or technological
developments unfold.
There is, therefore, a case for (currently)
'marginal' R&D, especially since what is consid-
ered marginal depends on investment decisions
which are dictated by financial criteria rather
than technological capability requirements. In
some cases, UK firms would have been unable to
undertake or maintain R& D investment in vital
technology areas without Alvey support (e.g. CAD
R & D for a semiconductor firm). Many UK IT
firms' failure to fund R & D adequately in the
1980s was not necessarily indicative of that R& D
being peripheral to their real needs, but was
rather a confirmation of the corporate financial
and investment climate.
Moreover, core R & D which is highly depen-
dent on companies' current product-market
strategies may be high-risk. Business strategies
may change, as illustrated during Alvey by STC's
withdrawal from the merchant semiconductor
346 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348
market, GEC's withdrawal from CMOS semicon-
ductor technology, and the volatile conditions
generated by the series of takeovers and mergers
in the IT sector. Counter to the Sciberras argu-
ment raised in Section 4, STC, GEC, Plessey and
Ferranti's VLSI strategies could hardly have been
labelled 'marginal' R & D in 1984, but they were
overtaken by business-driven change which, in
some cases, negated the investment. This again
suggests that a focus on enabling technologies
which maximise future flexibility is more appro-
priate than targeting government investment to-
wards current core business areas.
Conversely, the success of ICL's Flagship pro-
ject in leading (over 10 years and through addi-
tional collaborative R & D within ESPRIT) to the
Goldrush parallel computer illustrates the value
of supporting long-term collaborative R & D in
core technology areas. However, much of the
R & D undertaken in Flagship and the cluster of
projects surrounding it was pursuing enabling,
generic technologies (e.g. declarative systems) and
alternative paths leading into peripheral techno-
logical areas. Not all of these paths were ulti-
mately followed, but their pursuit was necessary
because the appropriate technological choices
could not be predicted with certainty in 1984.
This raises a more general question concerning
the limitations of present-day assessment of the
benefits of pre-competitive R & D in enabling
technologies. Whilst many projects reported at
the end of Alvey that their company was not
interested in further investment in the R & D
project and that 'exploitation' was not happening,
this is not necessarily the end of the story, as the
recent research described in the previous section
has revealed. This indicates that the 'exploitation'
of pre-competitive R & D may be a non-linear
process involving serendipitous links and unpre-
dictable outcomes. Therefore, assessment of the
benefits of Alvey cannot easily be bounded in
time or scope.
Whilst the particular circumstances pertaining
in the UK, such as the investment climate and
prevailing business ethos, may not directly paral-
lel experience elsewhere, the central lessons of
Alvey are nevertheless of relevance to other
countries. Our findings and recommendations
emphasise that support for pre-competitive R & D
is a necessary but insufficient strategy [21,46].
Programmes which aim to improve competitive
performance through technological innovation
derived from investment in R & D need to tackle
the organisational, social, economic and institu-
tional issues which condition the wider innova-
tion process. In particular, we echo the view of
Mowery and Rosenberg that the "utilization and
diffusion of the results of scientific and engineer-
ing research should receive greater weight within
R & D policy" [31, p. 292].
In the context of the innovation process within
companies, technology and knowledge adoption
and utilisation requires that it is not just the
R & D department that is involved, but the
broader functional areas of the firm. If govern-
ments have a difficult role in encouraging firms to
formulate technology strategies aimed at support-
ing the internal processes of technology and
knowledge assimilation and application [21], they
at least need to ensure that their policy interven-
tions do not have the reverse effect. A focus
solely on pre-competitive R & D and an implicit
assumption of a linear model of R & D and inno-
vation may be a less than helpful influence on
firm strategy.
Further, we argue that more effort should be
devoted to involving IT users, user organisations
and departments in R & D programmes. This has
begun to happen in some European Community
programmes aimed at 'pulling through' the en-
abling technologies developed in previous R & D
programmes. However, rather than addressing
application and use as separate issues that
chronologically follow R&D, it may be more
appropriate in many circumstances to provide
support for an iterative and integrated innovation
process that involves users (broadly defined) as
well as R & D personnel. Such a strategy, applied
for example to Alvey Software Engineering, would
have involved system developers in R & D pro-
jects as potential 'users' of the technology. This
may have slowed down technical progress, but
would have ensured a more rapid movement of
knowledge and technology from R & D into use.
User involvement has significant costs, and should
be seen as part of the R & D process and there-
 P. Quintas, K. Guy/Research Policy 24 (1995) 325-348
fore eligible for programme funding rather than
being solely subject to commercial investment
criteria. In this way policy initiatives may, in
addition to providing best-practice exemplars, as-
sist firms in finding a solution to the double-bind
problem--the need to insulate longer-term R & D
from business investment criteria whilst ensuring
that such R & D is effectively linked into wider
business functional areas and innovation pro-
cesses.
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