Valleys of Death and Darwinian Seas: Financing the Invention to Innovation Transition in the United States

The basic science and technology research enterprise of the United States—sources of funding, performing institutions, researcher incentives and motivations—is reasonably well understood by academics and policy makers alike. Similarly corporate motivations, governance, finance, strategy, and competitive advantage have been much studied and are relatively well understood. But the process by which a technical idea of possible commercial value is converted into one or more commercially successful products—the transition from invention to innovation—is highly complex, poorly documented, and little studied. In this paper we discuss the process by which basic research is converted into successful commercial innovations. Following Arrow (1962) and Zeckhauser (1996), we explore the hypothesis that asymmetries of informaion and motivation, as well as institutional “gaps,” may systematically deter private investment into early stage technology development. We describe the role of governments—federal and state (or provincial)—in promoting the commercial transition from an invention to an innovation. We conclude by suggesting some lessons that may be learned from the experience of the Advanced Technology Program (ATP) of the United States Department of Commerce, among the few Federal programs specifically intended to meet this need.