Alliances between research universities and the high-tech industry have become a hallmark of the New Economy. Such alliances are funded by corporations to the tune of $2 billion a year, twice what it was a decade ago. About 12% goes to California's research universities.

Both industry and universities benefit from such partnerships. Biomedical and software companies' costs of bringing a new product to market have skyrocketed - the cost for a new drug can rise to half-a-billion dollars, and the shelf life of new products has continuously shrunk, to some 18 months for software. Thus, the pressure to innovate is great, driving high-tech companies to outsource cutting-edge research to universities that have significant comparative advantages, including world-class scientists and engineers who would be loathe to take full-time jobs in industry.

For universities, collaboration with industry means financing faculty research and, at times, access to firms' costly equipment. In general, alliances also enhance economic growth.

While alliances yield gains, they also pose risks to universities' academic integrity in the form of potential conflicts of interest and commitment.

Faculty who staff research alliances tend to establish working relations with their counterparts and officers in the sponsoring firm. Consulting opportunities often follow and, at times, part-ownership and part-time positions as senior scientists or board members. These roles can result in faculty influencing university research or other decisions toward personal gain or in reducing faculty's commitment of time to the university.

Research universities have been facing these risks for quite some time, but perhaps never more acutely than today in California. Late last year, Gov. Gray Davis announced that the state will provide $300 million over four years, to be matched by $600 million in private or federal funds, for three Institutes for Science and Innovation within the University of California. "The most important thing a state government can do to improve local economies is to support research universities," Davis said. This view is consistent with findings that every $1 million in university research support can generate perhaps $5 million or more in economic activity.

Many of the matching funds are expected to come from California's high-tech firms. The California NanoSystems Institute of UCLA-UC Santa Barbara, which will receive $100 million in state funds, must raise $200 million in private and federal funds. It already has pledges of about $50 million from nearly 30 private companies, including IBM, Hewlett-Packard and Merck.

While commendable, this close collaboration between companies and universities also exposes universities to serious risks of conflicts of interest and commitment. Both must be reined in.

First, appropriate faculty guidelines must be put in place. To minimize conflict of interest, the guidelines must clearly define maximum levels of financial interest that faculty can have in a company while engaging in a related university activity. Regarding conflicts of commitment, guidelines must clearly define the maximum level of outside engagements, be they in the form of consulting, executive or managerial positions or conducting a professional practice.

Second, there is need to clearly define the circumstances under which the university is to be merely informed about an outside activity and when an advance formal approval to undertake an outside activity is required.

Third, the formal approval process should include carefully defined criteria for review committee membership - which should include some outsiders - and for request approval. The number of disapproving votes to block approval should also be noted.

When a conflict of interest or commitment of a highly valued faculty member is at issue and he or she is determined to engage in the outside activity, the university faces a serious dilemma. It might be solved by offering a faculty status that resembles the position of professor in residence in medical schools. This would allow for part-time employment and yet provide the cachet of a university professorship, though with limited privileges.

Since university/high-tech alliances promise to continue to play a significant role in years to come, we had better find ways to assure their contribution to the university, high-tech industry and economy, while safeguarding the defining values of academia.