Universities and State Policy Formation: Rationalizing a Nanotechnology Strategy in Pennsylvania


Universities and State Policy Formation: Rationalizing a
Nanotechnology Strategy in Pennsylvania

Creso M. Sá1

University of Toronto

Roger L. Geiger and Paul M. Hallacher
The Pennsylvania State University

Abstract

Technology-based economic development programs have become a salient feature of the state policy
landscape since the 1980s. While much research exists on the topic, little attention has been given to the
processes of policy formation. State programs have moved towards high technology areas emphasized at
the federal level over the past decades, and nanotechnology became one of the latest targets. This paper
examines the eight-year process through which Pennsylvania adopted a “state-wide strategy,” culminating
in the Pennsylvania Initiative for Nanotechnology. In this process, programs that responded to the
interests of multiple agents came first, and a state policy was formulated after the fact. This pattern of
“rationalized policy formation,” as opposed to rational policy formation, may be more common than
suspected. Its strengths and weaknesses in this Pennsylvania case are discussed.

KEY WORDS: state policy, science and technology, technology-based economic development, univer-
sity, policy formation, nanotechnology

Introduction

Technology-based economic development (TBED) programs have become a
salient feature of the state policy landscape since the 1980s. Such programs are
part of the evolution of state economic development policy from the industrial
recruitment approach to the entrepreneurial approach (Berglund & Coburn,
1995; Eisinger, 1988, 1995; Plosila, 2004).2 Their design and objectives have been
examined in light of a growing body of knowledge on technology transfer, the
economics of public R&D, and the role of innovation in economic growth
(Feller, 1997; Feller, 2004). States have experimented with a wide range of
approaches over the years, as expressed in the ‘Laboratories of Democracy’
(Osborne, 1990) metaphor. The metaphor denotes the optimism of TBED pro-
ponents on the role of states in fostering innovation. As state high-technology
initiatives have gained renewed momentum over the decade (Douglass, 2006;
Geiger & Sá, 2005), advocates have propagated ‘best practices’ and proposed a
range of policy instruments (National Governors Association, 2007; State Science
and Technology Institute [SSTI], 2006). Underlying these prescriptions is the
belief that states will (and do) in fact employ rational models of policy making,
based on the systematic analysis of state capabilities and strategic choice of tech-
nological areas and programs.

Nonetheless, there has long been criticism of state technology policies. Against
the optimism of enthusiasts of state policy experimentation, some analysts wonder
if the collective learning that might result from decentralized innovation is reliable
given the weakness of assessments and evaluations (Feller, 1992a). Also, the char-

3

Review of Policy Research, Volume 25, Number 1 (2008)
© 2008 by The Policy Studies Organization. All rights reserved.



acteristics of state policy making in this sector are sometimes viewed as antithetical
to the development of effective programs. Previous studies have noted the ten-
dency for geographical dispersion of resources, pork barrel allocations, and short-
term objectives that match the electoral cycle to influence the formation of state
high technology initiatives (Douglass, 2006; Etzkowitz, 1997; Feller, 1984, 1992b).
These features are detrimental to good policy, as both theorists and practitioners
believe that maintaining a long-term perspective is crucial for TBED, and that
merit-based criteria should guide resource allocation (Feller, 2004; Plosila, 2004;
SSTI, 2006; Zumeta, 2006). Merit, whether by academic standards or market
principles, is preferable to favoritism as a criterion for allocating scarce resources
to both upstream investments in scientific quality and infrastructure and down-
stream subsidies to applied research and development (R&D) and commercializa-
tion efforts.

Hence, one fundamental issue to the success of state TBED concerns the ability
of states to design and implement high technology programs effectively. Exploiting
such areas successfully through strategic planning is a major theme in this policy
realm (Feller, 2004). Reports on the implications of state policies have appeared
frequently, but studies of how states form high-technology programs have been
less common. Nonetheless, a few previous studies on the formation of state TBED
programs suggest that modes of policy making affect policy effectiveness (e.g.,
Atkinson, 1991; Portz & Eisinger, 1991).

This paper contributes to the sparse literature on the formation of state technol-
ogy programs by examining the process through which a ‘statewide strategy for
nanotechnology’ came about in Pennsylvania. The selection of this case is propitious
for exploring how states adopt TBED programs in an emerging technological area.
The Pennsylvania Initiative for Nanotechnology (PIN) was announced in 2005 after
six years of state investments surpassing $42 million. As one of the first states to
make investments in the field, Pennsylvania allows for the investigation of the role
of analysis and planning in the formation of state technology programs, as opposed
to simple imitation of existing policies. As presented by the state, PIN seems to be
a textbook case of a TBED initiative: it targets an inchoate science-based technology
for which no industrial agglomeration has yet achieved a dominant position; it
involves industry and the state’s higher education institutions, both in R&D and
educational efforts; and, finally, it purportedly rests on a strategic assessment of
state capabilities and technological opportunities.

The research was exploratory and sought to identify relevant themes and ana-
lytical categories, rather than test a preestablished set of propositions. The fol-
lowing questions were addressed: How and why did Pennsylvania choose to invest
in nanotechnology? Who were the actors shaping that decision? How did the
current initiative get formed and why? What was the role of the preexisting
science and technology (S&T) policy infrastructure in the elaboration of a strategy
for nanotechnology? How does PIN relate to the state capabilities in the field?
The evolution of the state nanotechnology policy was reconstructed based on elite
interviews, following the “chain” sampling technique. In-depth, semistructured
interviews were conducted with current and former state officials, university
administrators, scientists, and industry representatives. Interviews were con-
ducted between spring 2005 and spring 2006.

4 Creso M. Sá, Roger L. Geiger, and Paul M. Hallacher



The paper proceeds as follows. The next section synthesizes studies on the
formation of state high technology policies. The following section presents the case
study. Next, Pennsylvania’s efforts are contextualized nationally. The final section
discusses findings and conclusions.

Literature—TBED Policy Formation

The premise of TBED is that if states are to prosper in a global knowledge economy,
they need to build innovative capabilities and carve out niches in which they can
excel (Plosila, 2004; SSTI, 2006). Despite the trend among states of pursuing the
latest technological waves, we know little about how states develop TBED programs
in emerging areas of technology. This problem is interesting as the inchoate state of
such technologies entail substantive risks and uncertainties for policy makers.

Hard-pressed to produce tangible outcomes, ‘economic development policy
makers in the American states face strong political incentives to do the wrong thing’
(Hart, 2007, p. 4). The ‘wrong thing’ is industrial recruitment policy, which gen-
erates political dividends despite the cumulative evidence of ineffectiveness in
generating economic development. These dividends accrue from the visibility of
beneficiary constituents of successful industrial recruitment efforts, the large facil-
ities erected that help attract publicity, and the tangible economic activity generated
(and the invisibility of foregone revenues and opportunity costs). TBED programs,
on the other hand, aim at influencing a range of largely unspecified actors, and
their benefits are more diffuse. Inherently long term, investments on building
innovative capabilities and creating entrepreneurial cultures coexist with the short-
term political pressures for hard, short-term measures of employment generation
and business development. TBED policies may have unclear tangible benefits to
substantiate their claims for state resources.

Notwithstanding the uncertainty, most states are presently committed to TBED
strategies in one way or another. Previous studies suggest that governors are key to
the adoption by states of high technology agendas (Douglass, 2006; Etzkowitz, 1997;
Feller, 1984). This is consistent with recent findings on entrepreneurial economic
development policy (including but not limited to TBED) that policy making follows
a technocratic pattern (Hart, 2007). Governors and their appointees to senior
positions shape policy, and entrepreneurs—the target constituency—do not appear
to influence policy making. On the other hand, Plosila (2004) claims that S&T
became institutionalized in state governments in the 1990s, making the continuity
of high-tech programs less dependent on gubernatorial and legislative cycles.

In one of the few efforts to investigate the choice of states for investments in high
technology in the 1980s, Portz and Eisinger (1991) observed three models of state
policy making in the field of biotechnology. The interest-based model is characterized
by the state response to public and private interests in the policy community. The
second model consists of states’ employing a strategic planning process to verify and
exploit existing resources in the field. In the third model states perform an initial
strategic assessment followed by allocations that respond to the interests of actors.

Atkinson (1991, pp. 37–38) argued for the importance of the mode in which
interests interact with the state to shape TBED policy. He identified pluralist and
corporatist modes of interaction in his investigation of state high-technology pro-

Rationalizing a Nanotechnology Strategy in Pennsylvania 5



grams. The former consists of multiple interests competing with each other to
influence state policy through lobbying efforts. In the latter, interests cooperate with
each other and are involved in policy making by the state. Atkinson asserts that the
corporatist mode leads to more effective policy for two main reasons: (1) organized
interests brought into the policy process are more likely to influence the state to
form and maintain high-technology programs, and (2) corporatist bodies often
conduct analysis and communicate their needs to state policy makers, facilitating
the design of effective programs. Pluralist lobbying, on the other hand, is
characterized as leading to policies designed to serve particular and scattered
interests.

The actors involved in TBED policy making have disparate interests that relate
to different policy alternatives. Relevant actors in TBED policy making include
business, higher education, economic development organizations, venture capital-
ists, and entrepreneurs (Atkinson, 1991; Douglass, 2006; Feller, 1992b; Plosila,
2004). Among these, universities have assumed particular prominence as central
partners in TBED efforts (NGA, 2007; Plosila, 2004; Portz & Eisinger, 1991; SSTI,
2006). Atkinson (1991) argued that pressure from higher education institutions
is likely to drive state policy toward upstream investments in scientific infrastructure
and basic research. Feller (1992b) hypothesized that heavy involvement from indus-
try in the policy-formulation process also leads states to adopt upstream programs.
However, influence from state economic development agencies and small firms
shifts the emphasis to downstream programs, which are more likely to generate
employment in the short term. More recently, Douglass (2006) suggested that
industry seems to have greater influence over state officials than universities in the
formation of upstream programs.

A Policy for Nanotechnology: The Case of Pennsylvania

TBED Policy in Pennsylvania

Pennsylvania typifies the efforts of many states to adapt to long-term restructuring
of the American economy. Pennsylvania has the sixth largest population and the
sixth largest economy among the American states. Since 1960, the steady erosion of
high-wage manufacturing jobs has contributed to a lackluster economy, an aging
population, and an exodus of young workers. Moreover, the commonwealth has
been the site of TBED initiatives for quite some time. It established a technology
assistance program for industry as early as 1956, but more ambitious initiatives date
from the 1980s, especially the four regional Ben Franklin Partnerships. Pennsylva-
nia thus illustrates the struggle of once prosperous manufacturing regions to adapt
to the so-called knowledge-based economy. It also represents an active state in terms
of TBED policy making, with a history of experimentation with high-technology
programs and an institutionalized S&T infrastructure. In general, Pennsylvania has
since the 1980s been regarded as a leader in TBED (Etzkowitz, 1997; Osborne,
1990).

The development of nanotechnology policy in Pennsylvania occurred on top of
an established, albeit evolving, TBED infrastructure. The key state actor for S&T

6 Creso M. Sá, Roger L. Geiger, and Paul M. Hallacher



policy in Pennsylvania is the Department of Community and Economic Develop-
ment (DCED). The Secretary of this department reports directly to the governor,
and the DCED is the chief source of discretionary funds for the policies in question.

Pennsylvania TBED programs are regionally decentralized. This assures that
initiatives are consistent with local conditions, but also provides the opportunity for
regional interest groups to set their own goals and vie for state resources. Pennsyl-
vania’s most renowned TBED policy, the Ben Franklin program, illustrates the
pattern. Currently, four highly autonomous regional authorities administer the
program. Besides the original mission of linking university S&T with industry, these
authorities serve as conduits for other state programs of TBED funding. Since it was
established in 1982, the Ben Franklin programs have provided some support for
universities, community colleges, and local economic development organizations,
but the majority of its funds has supported small and start-up companies (Nexus
Associates, 2003; Rahm & Luce, 1992, pp. 41–51). The general pattern of central-
ized funding and regional implementation is visible in other major state initiatives.
(For a list of other Pennsylvania TBED programs, see Table 1.)

An ‘Accidental’ Policy for Nanotechnology

The origins of the PIN—and its financial commitments to nanotechnology—lie in
the first state allocations to nanotechnology in the late 1990s, before such invest-
ments became fashionable. In 1997, the DCED agreed to provide $2 million to
support a Penn State proposal to the Semiconductor Industry Association for a
research center. At the time, Penn State was establishing a new nanofabrication
facility as part of the National Science Foundation (NSF)-sponsored National Nano-
fabrication Users Network. Companies using the nanofabrication facility were
reporting a need for skilled clean-room technicians. When the SIA proposal col-
lapsed, Penn State requested and received authorization from the state to use the $2
million allocation to create a clean-room technician education program called the
Pennsylvania Nanofabrication Manufacturing Technology (NMT) Partnership. The
program seemed to fulfill a useful role and faced no opposition. Starting in 1998,
the NMT Partnership received annual state funding of $2–$3 million. The program

Table 1. Pennsylvania Programs for Technology-Based Economic Development

Program Year Aim

Ben Franklin Partnership (BFP) 1982 Use university science and technology to strengthen industry
competitiveness and job creation

Industrial Resources Centers 1986 Assist small manufacturing firms to adopt advanced process technologies
[precursor to the federal Manufacturing Extension Partnership]

Pennsylvania Technology
Investment Authority (PTIA)

1999 Support university research and business development in technology areas

Life Sciences Greenhouses 2001 Uses tobacco settlement funds to support commercialization of discoveries
arising from university biotechnology research

Pittsburgh Digital Greenhouse To commercialize robotic and digital technologies
Ben Franklin Technology

Development Authority
[merger of BFP and PTIA]

2002 Use university science and technology to strengthen industry
competitiveness and job creation

Keystone Innovation Zone 2004 Build alliances between regional economic development organizations and
universities

Rationalizing a Nanotechnology Strategy in Pennsylvania 7



resulted in the nation’s first associate degree program in nanofabrication for Penn-
sylvania community colleges, in addition to other training and outreach programs
(Hallacher, Fonash, & Fenwick, 2002). The NMT Partnership attracted federal
funding as well. In 2001, it was designated an NSF Advanced Technological Edu-
cation Center for Nanofabrication Manufacturing Education, receiving a four-year,
$2.8 million award. Other federal grants followed.3

As the NMT partnership was being developed in 1998, the Ben Franklin Tech-
nology Partners of Southeastern Pennsylvania detected interest in nanotechnology
among local companies. It organized several industry forums in 1999 and 2000,
recruiting the participation of local and national organizations. In this same time
period the Ben Franklin center was assisting the NSF to develop its new Partner-
ships for Innovation program, and the DCED was reorganizing its approach to
supporting university research. These efforts culminated in a one-day strategy
session in the spring of 2000 involving representatives from Ben Franklin, NSF, the
Council for Urban Economic Development, the Progressive Policy Institute, the
Eastern Technology Council, the DCED, the University of Pennsylvania, Drexel
University, a private consulting firm (ANGLE Technologies Group), and others.
The outcome of this session was a successful $600,000 Partnerships for Innovation
proposal to the NSF with matching funds provided by the state and Ben Franklin
to establish a nanotechnology center. This center linked universities, economic
development organizations, and firms in the region.

Led by the University of Pennsylvania, Drexel University, and the regional Ben
Franklin center, this group submitted a proposal to the state DCED in 2001 request-
ing $10 million and over three years to establish a Nanotechnology Institute (NTI),
focusing on research and commercialization. The NTI proposal was particularly
aimed at exploiting opportunities in the emerging field of nanobiotechnology,
reflecting the heavy concentration of biotechnology and pharmaceutical companies
in the Philadelphia area, and the biomedical research strengths of the University of
Pennsylvania. The NTI proposal was approved in 2001 and received $3.5 million of
annual state funding. NTI offers grants and services to firms wishing to commer-
cialize nanotechnology, awards seed grants to university researchers, and hopes to
promote workforce development. Beyond these activities, it serves a promotional
and networking function to stimulate activity linked with nanotechnology.

Penn State observed the success of the Philadelphia group and nurtured its own
plans. The university is a significant performer of materials research and it per-
ceives itself as a leader in the area (The Pennsylvania State University, 2005). In
2002, Penn State submitted a proposal to the state modeled on the NTI proposal
requesting $3.5 million to support nanotechnology research and commercializa-
tion, separate from the annual request of $1.7 million for the ongoing NMT
Partnership. The university sought to continue its workforce development
program, but also to receive support for research and commercialization at a
comparable level to its state neighbors UPenn and Drexel. In response, a single
award of $3.5 million was approved through the Ben Franklin program in 2002
to support nanotechnology education, research, and commercialization activity at
Penn State. In the following two years, Penn State succeeded in obtaining separate
allocations for each of the programs. Located in rural central Pennsylvania, Penn
State operates in a rather different context from the Philadelphia group, despite the

8 Creso M. Sá, Roger L. Geiger, and Paul M. Hallacher



similarity of their resource claims. As a significant performer of industry-sponsored
research, Penn State forges relationships with major corporations in diverse fields.4

A New Administration and the Pursuit of a Strategy

When Governor Ed Rendell took office in January 2003, the new Secretary of
DCED expressed some skepticism about the economic development potential of
nanotechnology, especially in the near term. He stressed the need for a strategy to
help guide the Commonwealth’s ongoing investments in nanotechnology. In 2003
the Secretary commissioned a study of nanotechnology in Pennsylvania by the
ANGLE Technology Group, a consulting firm that had previously been associated
with the creation of the NTI. The stated purpose of this effort was to examine the
state’s situation in nanotechnology and develop recommendations for further
action. In particular, DCED sought to situate ongoing and proposed investments in
the context of a state strategy for TBED.

The ANGLE Report asserted that Pennsylvania has the capability to be the
national leader in nanotechnology commercialization. The report proposed a strat-
egy, an action plan, and performance metrics, organized around six elements:
building and sustaining the academic research base, leveraging existing industry
to drive commercialization, promoting statewide collaboration, developing industry
clusters, supporting workforce development, and establishing national leadership
(ANGLE Technology Group, 2004). The report recommended undertaking more
research for industry, the establishment of ‘Regional Collaboration and Focus
Centers,’ the creation of statewide bodies, including an advisory council, a Nano-
Forum, a database, and a governor’s advisory group, as well as various promotional
activities (pp. 51–55). However, the report did not evaluate the impact of the
existing state initiatives described earlier, nor did it make any funding recommen-
dations. In 2003 and 2004, Pennsylvania provided slightly under $10 million of
annual funding to support the three major elements of its nanotechnology “policy”:
the NMT Partnership, the NTI, and the Penn State nanotechnology research and
commercialization program.

While UPenn, Drexel, and Penn State developed their homegrown initiatives
based on their local interests, the Commonwealth supported other programs rel-
evant to nanotechnology. For example, since 2001 the DCED has supported the
Center for Optical Technologies at Lehigh University, located in the northeast region
of the state. The Lehigh center performs nanotechnology research and commercial-
ization in optics and photonics, but is not entirely dedicated to “nano” as such. State
funding for this center has risen from an initial $1 million grant in 2001 to subsequent
allocations of $3 million through 2005. Roughly one-third of this funding is devoted
to research at the nanoscale. Lehigh University has asserted an active role in
nanotechnology despite its relatively small size. The DCED has also supported the
Pittsburgh Digital Greenhouse, with annual funding of $3–$5 million per year since
2001. The Greenhouse involves Carnegie Mellon University, the University of
Pittsburgh, private industry, and others in efforts to develop and commercialize
robotic and digital technologies. Like the Center for Optical Technologies, these
state-funded efforts impinge on nanotechnology even though they are not dedicated
to nanotechnology per se. Finally, DCED has provided annual funding of approxi-

Rationalizing a Nanotechnology Strategy in Pennsylvania 9



mately $3 million to support participation by Lehigh University in the NSF Materials
Science and Engineering Center (MRSEC) at Carnegie Mellon University, an effort
that can be viewed (liberally) to support nanotechnology R&D.

In 2005, Alcoa, PPG, U.S. Steel, and Bayer MaterialScience combined with
the Pittsburgh Technology Council to support the Pennsylvania NanoMaterials
Commercialization Center (PNCC). These firms—heavyweights in the materials
industry—are committed to present and future applications of nanotechnology.
They have a large economic footprint in professional, if not manufacturing,
employment. For example, the Alcoa R&D Center employs 650. The common-
wealth awarded the council $200,000 to establish this center, matched by the four
corporate partners. The center is essentially an intermediary, aiming to encourage
much larger investments of “other people’s money,” principally from the federal
National Nanotechnology Initiative (NNI). It specifically intends to stimulate and
commercialize research in nanotechnology. The center is thus intended to comple-
ment corporate R&D laboratories by bolstering the ties with university research and
entrepreneurial firms.

During 2004 and 2005, the commonwealth undertook a series of conferences
and workshops involving industry and universities, which were intended to develop
a collective response the ANGLE Report. This effort included a statewide confer-
ence in spring 2005 entitled The Business of Nano, following up on similar events in
2004 and 2002. Following these deliberations, the DCED subsequently released the
white paper Pennsylvania Initiative for Nanotechnology (Pennsylvania Department of
Community & Economic Development, 2005a). Despite the workshops, confer-
ences, and discussions that had taken place, the white paper largely echoed the
ANGLE Report. The commonwealth then suspended funding for the NTI and the
Penn State research and commercialization program, and reduced the allocation to
the NMT Partnership to $1.4 million. DCED officials explained that this step was
taken to establish a basis for launching the new Pennsylvania Initiative for Nano-
technology in 2006, based on the ANGLE Report and subsequent deliberations.

In 2006, the state allocated $11.1 million to PIN. The programs funded in the
previous years were supported: $3.5 million for the NTI, $2.5 million for Penn
State research and commercialization, $2.6 million for the NMT Partnership, $1.4
million for Lehigh to support its participation in the Carnegie Mellon MRSEC and
a nanophotonics research infrastructure, and $1 million to the Pennsylvania Nano-
Materials Commercialization Center in Pittsburgh.5 In this latest chapter in the
evolution of Pennsylvania’s nanotechnology “strategy,” the state sustained ongoing
programs that evolved from the bottom up, on a decentralized (and sometimes
internally competitive) fashion. But now state funding for nanotechnology is, at
least nominally, part of a statewide initiative. According to the state governor, PIN
‘is positioning the Commonwealth to be a national force in this building wave of
development’ (Pennsylvania Department of Community & Economic Development,
2005b, p. PA02).

Pennsylvania’s Efforts in Context

Considering that nanotechnology resembles biotechnology in the salience of aca-
demic science for industrial innovation (Zucker & Darby, 2005), an argument might

10 Creso M. Sá, Roger L. Geiger, and Paul M. Hallacher



be made that economic gains from nanotechnology will accrue to a few regions
where there is a significant concentration of academic and industrial R&D and a
supportive innovative infrastructure. This is true within the United States and
beyond, as several countries have built research capacity in this area (National
Science & Technology Council, 1999). The sense that the United States must take
concerted action in a race for leadership in this area was aptly exploited by policy
entrepreneurs at the federal level to advance a national nanotechnology agenda
the late 1990s (McCray, 2005). The NNI was formalized in 2001, and the federal
commitment to supporting nanotechnology was signed into law in 2003, with the
21st Century Nanotechnology Research and Development Act (Public Law 108–
153). Industrial groups with a stake in nanoscale research and engineering have
largely backed these efforts (e.g., Chemical Industry Vision, 2020 Partnership,
2003; Semiconductor Research Corporation, 2003). Annual funding for the NNI
quickly surpassed a billion during the decade (circa $1.4 in 2007), disbursed
through 13 federal agencies (NRC, 2006).

These large investments in nanotechnology prompt states to use their own
resources to leverage federal R&D dollars. This leveraging role has been a feature
of state TBED policy across fields of technology (Feller, 2004; Plosila, 2004). As one
might suspect, Pennsylvania’s move and aspirations are not unique. Indeed, by
2003 no fewer than nine states had already made nanotechnology-related invest-
ments, particularly in R&D infrastructure (Murdock et al., 2003). Enthusiasm over
this science-based technology is evident, and its economic relevance is already taken
for granted by many (Roco, 2005; Zucker & Darby, 2005). Hence, a proximate
driver of state nanotechnology programs is interjurisdictional competition for
federal research dollars; the ability to grow, attract, and retain nanotechnology-
related businesses lies in the long-term horizon.

Rather than an open field, the subnational competition for leadership in nano-
technology seems to be circumscribed to a few states that possess established scien-
tific and innovative infrastructures. The data in Table 2 illustrate the relative
standing of major states in the production of nanoscience and nanotechnology-
related innovation. Far from capturing all nanotechnology-related activity, these
data are rough proxies of states’ scientific strengths in the field (NSF funding and
publications) and innovative activity (patents).6

These data suggest that Pennsylvania is well positioned nationally in terms of
scientific activity and innovation in nanotechnology. In every category, California
was the clear leader, followed by the same five states in different orders. More
apposite are the five states that trail California. This is Pennsylvania’s peer group for
nanotechnology—and its rivals for obtaining key resources for TBED. In addition,

Table 2. State Totals for University Nano NSF Funds, Publications, and Patents, 2002–2004

State NSF Nano Funds (in millions) Nano Publications Nano Patents Issued

California 119 2,077 530
New York 100 937 97
Pennsylvania 62 935 100
Illinois 59 874 98
Massachusetts 59 984 172
Texas 40 782 127

Rationalizing a Nanotechnology Strategy in Pennsylvania 11



Zucker and Darby’s (2005) longitudinal data on research and business activity in
nanotechnology (1980–2003) suggests that Pennsylvania is linked with some of the
most active regions in the field. Philadelphia is among the top ten metropolitan
regions (Philadelphia-Wilmington-Atlantic City) in terms of research and business
creation in nanotechnology.

California and New York have made the largest and most conspicuous invest-
ments in nanotechnology. Among the other states listed earlier, only Pennsylvania
has an explicit strategy to promote nanotechnology through state investments.
Illinois has made opportunistic and leveraged investments to expand facilities for
nanotechnology. Texas and other states have policies to stimulate TBED that
encompass nanotechnology along with biotech, informatics, or any other research-
based field (Geiger & Sá, 2005; Murdock et al., 2003).

California obviously possesses a strong research base as well as an abundance of
entrepreneurial spirit. These comparative advantages received a further boost for
nanotechnology earlier in the decade, when the state committed support for
university–industry collaborations in key areas. The California NanoSystems Insti-
tute (CNSI) has received $100 million in state funding over four years to assert
scientific leadership in several specialties, as well as working closely with industrial
partners to assure the transfer and commercialization of innovations (Douglass,
2006, pp. 10–12; Geiger & Sá, 2005, p. 9). Opened in 2003, CNSI is based at
University of California-Los Angeles but also draws on faculty from University of
California-Santa Barbara. The initiative for this and the other three California
Institutes for Innovation arose in late 1999 from the efforts of a policy entrepre-
neur, who successfully sold the project to the president of the University of Cali-
fornia and former Democratic Governor Gray Davis.7 About a year later, the four
institutes were selected and the state committed a total of $400 million to those
units. More recently, California established the Blue Ribbon Task Force on Nano-
technology to craft a strategy to ‘ensure the state’s leadership in the field’ (Blue
Ribbon Task Force on Nanotechnology, 2005, p. 4).

Nonetheless, Zumeta (2006) contends that the state lacks capacity for strategic
policy making in S&T, and that the potential to develop such capacity is under-
mined by the state’s ballot initiative process. Through the initiative process, policy
entrepreneurs can succeed in earning citizen approval to commit state funding for
their proposed programs, trumping strategic priorities from the executive branch.
That was indeed the story of California’s most consequential commitments to
nanotechnology, which came about as a function of savvy policy entrepreneurialism.

New York has undoubtedly made the largest financial and political commitments
to nanotechnology since the 1990s. These have been centered at the University of
Albany, which has aptly exploited state support to build an impressive R&D infra-
structure. The governor and senior politicians in the legislature backed New York’s
substantial investments in S&T programs. State appropriations to university
research infrastructure were packaged into multiple “center of excellence” pro-
grams administered by the New York State Foundation for Science, Technology,
and Innovation. The state invested circa $500 million in the Albany Nanotech
complex, complemented by $2.5 billion in corporate investments. The University at
Albany created in 2004 the country’s first college of nanoscience and engineering,
capitalizing on the clout of the R&D venture, and support from the state’s key

12 Creso M. Sá, Roger L. Geiger, and Paul M. Hallacher



politicians. In general, New York State has combined entrepreneurial and indus-
trial recruitment approaches to build a nanotechnology agglomeration around
Albany: in addition to stimulating local entrepreneurialism, over $1 billion has been
devoted to retaining IBM and recruiting AMD manufacturing plants in the Capital
Region (Geiger and Sá, in press).

Pennsylvania’s investments fall short by a large margin compared to those of New
York and California. Spread out across a number of institutions and programmatic
priorities, the $53 million allocated under the guise of investments in nanotechnol-
ogy in Pennsylvania (2000–2006) pales in comparison to the more focused efforts
at building CNSI and Albany Nanotech. However, California and New York are
clearly outliers. Very few states have the economic muscle to commit resources for
emerging science-based technologies at such a scale. It is symptomatic that both
in New York and California, various institutions and regions have received state
support in other S&T areas, while investments in nanotechnology remained mostly
focused on a few institutions. In the politics of TBED in these states, it was possible
to prioritize big projects in a few universities because state funds for nanotechnol-
ogy were a slice of a larger pie. The geographically redistributive logics of state
technology programs were still present, perhaps making the total commitments
politically palatable.

A different argument might also be made on the feasibility of state policies for
nanotechnology. Clearly, the unbridled optimism of nanotechnology advocates
needs to be viewed critically (McCray, 2005). It might take many years before
significant economic benefits from nanotechnology are realized, and the ability of
states to sequester such benefits within their borders is arguable. For the federal
NNI, this is not as pressing a concern, because the goal is to create national-level
capabilities in nanoscience and engineering. States, however, frame TBED in terms
of the creation of local high-wage jobs. Policies for nanotechnology might appear
too risky an investment of state funds if measured against that yardstick, particularly
given the lack of clear evaluation mechanisms and an accountability framework.

Conclusion—Nanotechnology in Pennsylvania: Rationalized
Policy Formation

The nanotechnology policy created in Pennsylvania can be regarded as the result of
an interest-based model of policy making (Portz & Eisinger, 1991). The formation
of a Pennsylvania policy for nanotechnology emerged from the interests of local
actors—mostly universities, sometimes in partnership with local economic develop-
ment organizations and industry. The choice of nanotechnology as an area for state
investments had less to do with calculated efforts to get ahead in a nascent techno-
logical wave, than with the state response to the proposals of universities and their
partners. In the case presented here, state programs essentially provided supple-
mental support for the basic nanoscience and engineering activities of selected
universities based on their own initiatives, and linked these activities with other
organizations. Interest-driven programs predated any strategic assessments. The
state’s move to formulate a “strategy” served the purpose of rationalizing, justifying,
or legitimizing past and future state commitments, but certainly not crafting or
informing policy. The PIN is thus an example of “rationalized policy formation.”

Rationalizing a Nanotechnology Strategy in Pennsylvania 13



In this instance of rationalized policy formation, the state responded essentially
to university interests. Considering the nature of emerging science-based
technologies—inchoate research fields with highly relevant prospects for industrial
innovation—it is not surprising that universities become key actors in the nano-
technology policy process in Pennsylvania. Universities have the research capacity
to steer scientific advancements in the field, and have become increasingly involved
in economic development generally (Feldman et al., 2002; Feller, 1990; Florida &
Cohen, 1999; Tornatzky, Waugaman, & Gray, 2002). In addition, universities are
naturally inclined to seek greater resources for their basic research and education
activities, all of which are resource intensive. They are immersed in a competitive
environment that creates incentives for the diversification of revenue sources and
the pursuit of discretionary funding for improvements in infrastructure (Geiger
2004).

According to Atkinson’s (1991) frame for discussing the role of interests in state
technology policy formation, Pennsylvania represents a mixed mode, whereby a
corporatist intermediation of interests occurred in some places (e.g., NTI, PNCC),
but a pluralist mode prevailed at the state level. The local corporatism can be
institutionally ascribed to the regional decentralization of the TBED policy struc-
ture in Pennsylvania, which allows and indeed fosters the coalescence of substate
interests. Despite the later efforts by the DCED to liaise actors with a stake in
nanotechnology through conferences and consultations, no statewide intermediary
body emerged to link or coordinate the various competing interests throughout the
state. While some regional initiatives involved a range of actors, they remained
essentially linked to their localities. Besides, rationalized policy formation did not
lead to changes in the “rules of the game” among state officials, the participants in
the funded programs, and the stakeholders in the nanotechnology industry in
Pennsylvania. Providing direct pledges for discrete projects remained the mode of
support for nanotechnology.

Having characterized the formation of the PIN, we now consider the implications
of Pennsylvania’s approach. To its credit, Pennsylvania was one of the first states to
invest in nanotechnology knowledge assets lodged within the universities, and it
remains one of the few with an explicit framework to fund research and commer-
cialization in various regions. A consequence of Pennsylvania’s approach is that the
state does not have “a” nanotechnology policy, but rather four regional policies,
each generated by different considerations and each having a unique structure. It
might be argued that this is an appropriate approach, given the different characters
of these regions. This was the rationale for decentralizing the Ben Franklin Part-
nership into four regional units (Rahm & Luce, 1992, pp. 43–44). By doing so, the
state allows for local actors to have a greater influence over TBED policy decisions,
which might therefore better reflect their economic and political conditions.

Besides, by working with the regional initiatives and allowing for field-originated
ideas to shape PIN, the state avoided controversy and managed to nurture nano-
technology programs for almost a decade. Considering the inchoate state of nano-
technology, developing research capabilities is a fundamental step to exploit the
innovative potential of this science-based technology (Zucker & Darby, 2005). In this
perspective, Pennsylvania’s initiative could be viewed as a test bed that ignites
interest in nanotechnology among the relevant agents without overcommitting state

14 Creso M. Sá, Roger L. Geiger, and Paul M. Hallacher



resources to this inchoate field. Larger and more conspicuous investments may
invite greater public scrutiny, which has been virtually absent in this case.

However, from the perspective of interstate competition for “national and inter-
national leadership” in science-based industries, the drawbacks of the Pennsylvania
approach are evident. States would more likely benefit from targeted rather than
scattered investments, considering how costly it is to build scientific leadership.
California’s investments seem to go in this direction, and New York’s commitments
to Albany Nanotech have been clearly focused on establishing a nanotechnology
cluster. (It is worth noting that the paths pursued by California and New York did
not involve careful strategic analysis either.) In Pennsylvania, however, PIN is a
relatively small pie that feeds many. Investment in nanotechnology, as in other
discrete areas, evolved independently, although anchored bureaucratically in the
same state departments and agencies. By responding to local interests in an ad hoc
fashion, state officials created a playing field where unique claims of universities for
supplemental funding could be articulated. Given these dynamics, it is not surpris-
ing that no strategic vision seemed to exist on whether or not the state could attain
a leading position in nanotechnology and how it would achieve such a feat, despite
the rhetoric of policy documents. The evidence presented in the previous section
suggests that Pennsylvania possesses greater potential than that reflected to date in
the aspirations of the current nanotechnology policy.

Moreover, Pennsylvania’s approach does not lend itself to policy evaluation and
learning. Reflecting findings of previous studies on economic development policies
(Dewar, 1998; Eisinger, 1995), program survival overtook the technical criteria of
efficiency and effectiveness as the driver of policy continuation. Even if one consid-
ers that the economic development outcomes of Pennsylvania’s nanotechnology
programs are not appreciable in the short run, the state is poorly equipped to assess
the quality of its investments.

We conclude by considering whether Pennsylvania’s rationalized policy forma-
tion is simply an idiosyncratic example, or illustrative of broader trends in state
technology policy. We have a few reasons to suspect that such rationalizations are
not unusual. First, reports on state TBED policies are often silent on the anteced-
ents of programs (e.g., SSTI, 2006) and thus do not reveal the real starting points
of state initiatives. The early policy formation process tends to be obscured in later
accounts.

Second, interests associated with state technology programs obfuscate rigorous
assessments, and unwarranted ‘success stories’ get disseminated by those with a
stake in them (Feller, 1992b). This is consistent with Dewar’s (1998) argument that
‘public stories’ are maintained to assure the political support to and continuity of
state of economic developed programs but that those stories may not reflect the
underlying reality. Part of these stories refers to the motivators and drivers of
policy formation. Strategic assessments and substantive analysis presents a more
palatable narrative than the interests of particular actors involved in the policy
process.

Third, the increasing ‘professionalization’ of the field of economic development
policy contributes to the dissemination of tools and recipes for policy making
(Hart, 2007). Driving state investments strategically through planning is a central
element of TBED (Atkinson, 1991; Feller, 2004; Portz & Eisinger, 1991), and it

Rationalizing a Nanotechnology Strategy in Pennsylvania 15



also appears in prescriptions of how states should design nanotechnology initia-
tives (Murdock et al., 2003).8 Such prescriptions stem from the belief in a tech-
nocratic policy process, and may influence the views that state officials hold on
how best to influence policy making. Nonetheless, as cautioned by Feller (2004,
p. 144):

Concerning the exaggerated emphasis on strategic planning, ‘strategic’ as used in state
technology-based economic development planning is as much the required rhetorical
adjective needed in contemporary policy environments to justify or explain the programs
and decisions of public sector and not-for-profit organizations as it is a substantively
meaningful predictor of future outcomes. State technology-based economic development
programs are strategic primarily in the sense of concentrating resources on selected
technological areas, not in the sense of taking into account the actions of rivals.

We can add that the political need to stamp one’s own mark on ongoing state
allocations to S&T, as well as to draw a line between past and present policy
initiatives, may also drive strategy-setting for symbolic purposes.

Finally, states stand to benefit from creating incentives and structures for policy
making that exploit the valuable contributions of research universities to regional
development and consider the overall needs of the state as well. Universities are
uniquely positioned to help states foster technological innovation in emerging
fields. Nonetheless, they are not regional development agencies. They will thrive on
what they do best—advancing and disseminating knowledge through research,
teaching, and outreach—and each university seeks to outperform its peers. Indi-
vidually and collectively, universities would actually benefit from a policy process
that elicits their participation rather than one that simply responds to interests, as
their claims for resources could be more fully related to the wider contexts of state
policy needs and industrial R&D. States, if they wish to lead in innovation rather
than simply follow federal priorities and emulate peers, need to create channels for
universities, industry, and other agents in the economic development community to
interact in productive ways.

Notes

1 We wish to acknowledge support from the National Science Foundation to the research project that
originated this paper (Grant No. 0403783). We are indebted to the former and current state officials,
university administrators, faculty, industry personnel, and technology transfer staff who agreed to be
interviewed for this study. Any errors remain solely ours.

2 In the former, states’ efforts to spur economic development are based upon incentives for individual
firms to attract or retain their operations. In the latter, states attempt to promote endogenous growth
by supporting entrepreneurial activity through various mechanisms such as incubator facilities, tech-
nical assistance programs, venture capital provisions, and funding for research and development
(R&D).

3 In July 2001, a $600,000 NSF Partnership for Innovation award was received to explore the workforce
and technology development needs of biotechnology and pharmaceutical industries congregated in
the southeastern region of Pennsylvania. A NSF Nanotechnology Undergraduate Education (NUE)
award was received in June 2003 to support development of baccalaureate programs in nanotech-
nology. In June 2003, a NSF ATE planning grant was received to explore the feasibility of a national
center for nanofabrication manufacturing education.

4 Through 2003, Penn State researchers copublished 63 papers in nanoscience and engineering with
scientists at 41 different firms. A few of these were Pennsylvania small firms, but several were large
regional corporations (Air Products, Allied Signal, Corning, Dupont, Merck). Nonetheless, university

16 Creso M. Sá, Roger L. Geiger, and Paul M. Hallacher



facilities and research infrastructure serve as a magnet for smaller companies in the state as well.
Through 2003, an estimated 57 Pennsylvania-based companies had participated in nanoresearch at
Penn State. At least a dozen participants were major corporations or subsidiaries; the rest ranged from
small- to medium-size firms down to university start-ups.

5 The Pennsylvania State System of Higher Education also received $113 thousand to develop nano-
technology curricula.

6 A database with 112 universities was constructed of variables that could be identified with nano:
scholarly publications (with nano*), funding from NSF classified as nano (the only agency for which
this was possible), and patents (issued with nano*). Because of year-to-year variability, three years were
used (2002–2004).

7 The policy entrepreneur was Richard Lerner, a supporter and collaborator of Davis, who had been
president of Scripps Institute in San Diego and a professor of immunochemistry (Douglass, 2006).

8 Indeed, Murdock and others (2003) have proposed that states stand to benefit from adopting strategic
approaches to invest in the field: establishing leadership teams, coalescing key stakeholders, and
identifying and exploiting comparative advantages are part of the recipe.

About the Authors

Creso M. Sá is Assistant Professor of Higher Education at the University of Toronto. He
writes on science and technology policy and research universities. His forthcoming book is
Innovation and Economic Relevance: The University’s Fourth Mission (with Roger L. Geiger).

Roger L. Geiger is Distinguished Professor of Higher Education at the Pennsylvania State
University and former Head of the Higher Education Program. His books on American
research universities include Knowledge and Money: Research Universities and the Paradox of the
Marketplace (2004), To Advance Knowledge: The Development of American Research Universities,
1900–1940 (2004, new edition), and Research and Relevant Knowledge: American Research
Universities Since World War II (2004, new edition).

Paul M. Hallacher is Director of Research Programs at the Pennsylvania State University,
Office of the Vice President for Research. He wrote Why Policy Issue Networks Matter: The
Advanced Technology Program and the Manufacturing Extension Partnership (2005).

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