By Rinav Battula and Alaina Roberts

“I believe that science is how we solve big problems, and I believe that business usually is a platform for addressing those types of challenges,” stated Professor Sharon Belenzon. Belenzon is a professor of business administration and expert on the shifting landscape of corporate research at Duke’s Fuqua School of Business. Belenzon was originally drawn to studying how businesses engage with scientific research rather than focusing solely on market strategy or finance. He sees companies as essential to solving widespread problems, pointing to moments like World War II, when government coordination played a major role.

Above: Dr. Sharon Belenzon, Professor of Business Administration at Fuqua School of Business. Photo courtesy of Duke Fuqua School of Business.

“In the past,” he explained, “young people like yourself, graduating from high school, let's say, 50 years ago, one of your dream jobs would be to go and work for Bell Labs.” Everything from our laptops to countless other modern technologies can be traced to scientific developments in the labs of big American corporations in the 1950s, 60s, and 70s. Firms like Bell Labs and AT&T were at the forefront of innovation, and these companies understood that to solve technical problems and create better, more efficient products, it was necessary to understand how the technologies actually worked. However, as we crossed into the 21st century, many of these big firms have disappeared. 

This led Belenzon to investigate why the ecosystem of ingenuity has shifted and what the implications are for the United States’ economic model, its ability to compete globally, and its capacity to solve modern problems. Belenzon’s research examines how corporate investment in scientific research has changed, pointing to several key turning points that led to the reduction of developmental and preliminary research conducted by companies. 

Belenzon observed a significant change in universities, as they started to commercialize their own science in the 1980s. Commercialization of academic science arose partly due to government legislation and partly the promise of potential institutional profit. This shift enabled companies to simply license packaged inventions from universities instead of understanding the underlying framework of science.

Effectively, this made the role of internal scientists obsolete. “To understand what others are doing, you need to make investments. Like if I want to understand what the physics department does, everything is public. I can go, everybody can go and see, but I will not be able to understand it unless I learn physics, unless I hire physicists,” Belenzon explains, referring to the concept of “absorptive capacity.” Licensing, however, gives companies the opportunity to replace internal physicists with staff focused on making an invention based on said licensed information and monetizing it.

Above: Belenzon (right) conducts research into the trends and shifts of the innovation landscape at Duke. Photo courtesy of Duke Today.

Another considerable factor was China’s economic ascent and their increased import penetration into the United States since the mid-1970s. Competing with lower-cost producers puts downward pressure on profits. Therefore, the financial slack needed to support big, expensive research departments where only some cases lead to breakthroughs became scarce, making it more difficult to hire, employ, and maintain costly scientists.

The third turning point Belenzon mentioned was the change in the way the government buys and incentivizes industrial development. After the successful launch of Sputnik by the Soviet Union in the late 1950s, becoming the first nation to launch a satellite into space, the U.S. government began spending “tons of money” on products of basic research, becoming the “buyer of first resort.”This procurement agenda gave companies an incentive to develop and invest in upstream research, such as semiconductors, that were necessary for spacecrafts, even when no application existed in the industries themselves. After the end of the Space Race and collapse of the Soviet Union, this procurement regime was changed, removing the benefit of immediate revenue streams and disincentivizing investment by companies in real technical research.

Finally, Professor Belenzon suggests that a growing perspective emerged that basic corporate research did not reliably pay off. While there had been a few success stories, like DuPont’s creation of Nylon, there were “not lots of successes.” This realization, coupled with other stressors like the pressure to cut costs, led to cutbacks, resulting in the eventual destruction of research even in companies like DuPont.

Professor Belenzon asserts that this division of labor, in which universities specialize in early-stage scientific discovery while corporations focus on downstream development and commercialization, has created new gaps in the U.S. innovation system. Specialization is a well-established source of economic growth. Adam Smith famously argued that the division of labor is what makes economic systems productive.

Professor Belenzon argues, however, that this division has become skewed toward sectors where market mechanisms are effective at coordinating activity and startups can readily operate, such as biotechnology and computer science. In these sectors, intellectual property rights and standardized milestones allow scientific advances to be licensed and transferred to downstream firms that handle commercialization.

In other “deep tech” sectors, this division of innovative labor works far less well. Areas such as clean technology, renewable energy, battery materials, and advanced materials require close coordination between discovery, validation, and scale-up, often within partner-specific systems. As a result, scientific advances cannot be easily packaged and licensed, and firms struggle to translate discovery into commercial success. The deepening division of innovative labor has therefore left these sectors behind, suggesting a role for government intervention to help close the gap.

Ultimately, Professor Belenzon asserts that understanding this shift in the structure of American innovation is the “critical determinant of our ability as a society to solve the big challenges we have,” and balancing our industrial development, whether through government funding or public comprehension, is necessary to create an ideal economic and innovation system for the United States.

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Alaina Roberts is a junior at the North Carolina School of Science and Math. Alaina is interested in theater, public speaking, and loves spending time with her friends.

Rinav Battula is a senior at the North Carolina School of Science and Mathematics. Rinav is interested in finance, sustainability, and enjoys playing table tennis with friends.