Abstract
This paper adds to the nascent economics literature about nanotechnology by estimating industry’s benefits and costs for the early investments in documentary standards that support the commercialization of nanotechnology, by identifying barriers to the successful development and use of the nanotechnology documentary standards, and by providing public policy recommendations to overcome the barriers.
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Notes
The report, Leech and Scott (2015), provides detailed discussion and references about nanotechnology documentary standards and the emerging nanotechnology industry, with many of the references cited coming from direct participants in the nanotechnology community of researchers and policy makers. In this article, we focus on the material in the report that is new to the literature and is based on our survey of the nanotechnology standards developers and users.
Salamon et al. (2010) explain that nanotechnology applies nanoscience—the knowledge about the manipulation of matter on an extraordinarily small scale with dimensions measured in a fairly small number of nanometers. A nanometer is a billionth of a meter. Nanomaterials are <100 nm in size in at least one direction, and nano-objects are materials with at least one dimension in the nanoscale range of 1–100 nm, and a nanoparticle is a nano-object with all three dimensions in the nanoscale range and with a property not exhibited by the bulk material.
ISO/IEC Guide 2: 2004, Standardization and related activities—General vocabulary, provides a general overview of standards. There are two broad types of standards—physical measurement standards and documentary standards. The National Institute of Standards and Technology (NIST) develops, maintains, and disseminates U.S. national physical measurement standards traceable to the international system of measurements. Documentary standards are written agreements among the producers and users of products and services; the agreements contain precise criteria for specified characteristics ensuring that materials, products, personnel qualifications, processes, and services are adequate for their purpose, compatible or interchangeable if necessary, protect the environment and the public health and safety. Documentary standards can specify product characteristics, define processes and systems, or specify knowledge, training and competencies for specific tasks. See also Breitenberg (2009).
The overview of the SDOs is based on Jillavenkatesa et al. (2012).
The evaluation approach is consistent with the methods, described in Link and Scott (1998, 2011, 2012, 2013) used in the evaluation of NIST’s investments in infrastructure technologies, although here the investments are only those of the SDO participants. Scott and Scott (2015) provide an alternative approach to the evaluation of the impact on industry of standards—an approach that may prove useful in evaluating the impact of nanotechnology standards once they have developed beyond the early documentary standards stage.
Communications with some respondents indicated that their estimates of pull costs included significant elements of direct operational costs. Adjustments were made to these high estimates based on communications with other respondents whose estimates, upon further investigation, were found to be a more accurate reflection of “pure” pull costs. Pull costs are indirect costs; the costs of identifying, acquiring, and implementing (“pulling in”) information or know-how from external sources. See Link (1996).
For the 13 respondents, the average was 3.19 FTE with a range between 0.05 and 20 FTEs.
The 13 respondents reported multiples as high as 3 times with the average being 1.45 times more.
For the 13 industrial respondents, that reported annual compensation averaged $137,000 for the fiscal year 2012.
Considering a technical committee’s standards as a group, survey respondents estimated that NIST’s participation in a technical committee’s deliberation process shortened a standard’s publication time by an average of 20 weeks. Since this economic impact assessment focuses on industry’s costs and benefits, this time saving was not developed into an estimate of the social return on the investment of NIST’s time in support of technical committee activities.
The average of the 13 industrial respondents’ average annual time for technical committee work was 218 hours per year, ranging from 40 to 500 hours. The average for the 13 respondents’ annual compensation was $159,000, ranging from $45,000 to $250,000.
The pull costs ranged from $975 to $66,000 for one-time labor costs and from $1000 to $4100 for one-time material costs. All but one of the 13 respondents were technical committee members during the study period (the one became a member in 2013) and, therefore, participated in the development of the standards. From the perspective of the respondent’s sponsoring company, technical committee cost associated with the development of standards could be construed as a type of pull cost. However, for the participants, their technical committee costs were reported and then any separable, additional “pull costs” (apart from the costs of participation in the technical committee) were reported and the two categories of cost are combined into a total cost for each respondent. Companies that benefit from the nanotechnology standards but do not participate in technical committee activities are free riders and do not incur the costs of participating in the committee work to develop the standards, but they do incur pull costs. To estimate these, it was assumed that the temporal distribution of the non-participants’ pull costs was identical to the temporal distribution of the separable pull costs reported by SDO-participating respondents (pegged to the earliest standard cited as most significant for the survey respondent’s organization). The respondents’ pull costs were multiplied by the average multiplier used to estimate benefits and costs of a respondent’s close competitors from the benefits and costs of the respondent.
For 2005, 34 % of the Table 3 2006 multiplier is used.
“Industry Rate of Return” is adopted here to indicate the study focus on industry-wide costs and benefits, exclusive of other social costs (for example, NIST’s costs of participating in the SDO activities) and benefits. Previous NIST reports have reported a similar metric, the “social rate of return” (SRR) that is an interpretation of the ordinary financial metric, “internal rate of return” (IRR) used routinely by industry to rank private sector investment projects. The “social” in SRR ideally measures the costs and benefits that accrue to all investors and beneficiaries, public and private.
There are then three “boxes” into which a chosen standard can fall with probabilities 9/40, 9/40, and 22/40. The approach to evaluating the statistical significance of the difference between universities and industry in the types of standards of most importance to them is an application of the approach used in Scott (1993, pp. 124–128). It is a conservative approach that does not depend on the properties of large-sample estimators or normality.
For a readily seen upper bound on the p value, from Chebyshev’s inequality, the probability of such a large deviation is less than the reciprocal of that squared deviation, or <0.163.
Alternatively, we could think in terms of the average outcome for the U.S. universities. An average X = (1/m) ∑ m1 x i for a sample of m of the random variables has expected value E(X) = (1/m) ∑ m1 E(x i ) = 0.55. Given the null hypothesis of pure randomness, the variance of the average is the double sum over the weighted terms in the covariance matrix for the m random variables, and given the assumption of pure randomness, that double sum is (1/m 2) ∑ m1 σ 2 i = (1/m)σ 2 i = (1/m)(0.2475). Against the null hypothesis, the expected average outcome for the four U.S. universities would be 0.55 with standard deviation equal to 0.25 (the square root of one-fourth of 0.2475). The average outcome for the U.S. respondents is then 2.2 standard deviations below its expected value. For the readily computed upper bound p value, from Chebyshev’s inequality, the probability of such a large deviation is less than the reciprocal of that squared deviation, or <0.21.
However, we have observed that the forward-looking SDO participants are appropriating substantial returns from their investment; moreover, they may do even better in the future because of their early involvement in the development of documentary standards.
See Link and Scott (2011, pp. 5–8, pp. 119–123).
See Leyden and Link (1999).
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Acknowledgments
For their help with Leech and Scott (2015), the report on which this paper is based, we are grateful to many individuals. We thank the respondents to the survey. Also, for their support with the process of carrying out the survey, we thank Heather Benko of the American National Standards Institute (ANSI), Mike Leibowitz of the National Electrical Manufacturers Association (NEMA), Debra Kaiser of the National Institute of Standards and Technology (NIST), Vincent Caprio of the NanoBusiness Commercialization Association (NanoBCA), and Jessica Adamick of the National Nanomanufacturing Network. We also thank Ajit Jillavenkatesa, of NIST’s Standards Coordination Office, who provided guidance about the organizations and people involved in the nanotechnology standards community, and Andrew Salamon of PerkinElmer, who provided understanding about the structure and nature of the burgeoning nanotechnology industries. We thank Gary Anderson, of NIST’s Economic Analysis Office, for his questions that helped shape the analysis of the different classes of beneficiaries and Erik Puskar, of NIST’s Standards Coordination Office, who selected early stage nanotechnology documentary standards for study in Leech and Scott (2015) and then guided the project to completion.
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Leech, D.P., Scott, J.T. Nanotechnology documentary standards. J Technol Transf 42, 78–97 (2017). https://doi.org/10.1007/s10961-016-9472-9
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DOI: https://doi.org/10.1007/s10961-016-9472-9