Bridging the Gap Between Science and Industry: The Fraunhofer Model

Fraunhofer was founded in 1949 and grew into Europe's largest application-oriented research organization. Fraunhofer currently employs over 20,000 members in Germany, is internationally networked, and manages an R&D budget of over 1,8 Billion Euros per year. An important step for Fraunhofer to become an integral component of the German innovation system was the introduction of the Fraunhofer Model of financing based on a performance-related system of financial management. The underlying model of the allocation and distribution of public funding to Fraunhofer that is subsequently allotted to specific research groups is one of the success factors of Fraunhofer. Fraunhofer is proud of its decentralized organizational model. Fraunhofer is comprised of 60 Institutes in Germany working in different fields, under one legal framework, and with a strong brand value. Every Fraunhofer Institute is affiliated with a German University and every institute director simultaneously holds a chair at the affiliated university. It is a challenge for the headquarter organization to balance the intended competition of individual Fraunhofer Institutes with complementarity cooperation in science among Fraunhofer-Institutes, especially when coming from different knowledge domains; however, this goal results in a significant advantage. The unique strengths of Fraunhofer offer system solutions in a world with increasingly complex R&D challenges. While growing to become the largest organization on Europe to focus on applied research it is the challenge to remain an agile organization that is flexible in organizational structure. Fraunhofer has reached a well-recognized position in the European innovation landscape. It is often referred to by science and governments as a role model for innovation policy and a key element of the latest successes in the German economy that has recovered quicker from the latest economic crisis than most other western economies. The paper explains Fraunhofer as an organizational paradigm and its underlying management model to elaborate on the challenges of managing a research organization. We wish to show how it is possible to transfer the management model and philosophy of Fraunhofer to innovation systems with different framework conditions and challenges. A universal conclusion may be drawn based on the description of Fraunhofer; however, changes in existing structures and innovation systems cannot be implemented over night.