A systems world needs systemic thinking about research funding

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Dec 10, 2018

This article is part of the Forum Network series on Digitalisation and International Co-operation

Funding research involves a range of actors, influences and policies, each with limited reach, which tend to be managed separately. If we look at the whole picture, it becomes clear that a range of policy levers exist to improve system performance (not all of which are accessible to all policy actors), and that a co-ordinated approach provides an opportunity to steer the whole system in a way that helps it develop, and supports the implementation of national research and innovation policy.

Fundamentally, funding instruments serve specific policy intentions and should be considered in the context of the overall system of rewards (and punishments) policy offers to research performers, such as universities.

The figure below provides a bird’s-eye view of that system. The central box focuses on research funding. Traditionally, education ministries provided universities with institutional funding in the form of block funding – lump sums they could use to produce teaching and research. Some countries provided a detailed budget to indicate the intended uses of the block fund, but the principle of university autonomy meant (and still means) that there was a distance between what the education ministry could decide, and what the universities would actually do. More recently, education ministries have started not only to distinguish between institutional funding for education and institutional funding for research, but also to base parts of this funding on performance, introducing an unprecedented element of inter-university competition for institutional funding. Performance-based research funding systems have received increasing policy attention in recent years as policymakers try to manage national research systems more effectively. These systems can be contentious (academics hate them, university research managers love them), and a growing literature studies the role of performance assessment in their operation.

Research funding in a policy context

Recognising the difficulty of assuring the quality of research by autonomous universities, education ministries also tend to fund research councils offering competitive “external” (i.e. non-block) funding on a project basis. This is normally “bottom-up” and investigator-initiated research lacking any predetermined societal relevance. This “excellence” funding is expected to assure quality, as well as increase the volume of research. However, with academics controlling the research councils and the committees prioritising projects, it is the academics – not the rest of society – who are firmly in charge of the nature and quality of research.

Backed by “sector” or “mission” ministries, innovation agencies and sector funders (e.g. covering health, transport and the environment) offer other funding incentives for the research system to address societal problems.

Read: OECD Science, Technology and Innovation Outlook 2018

However, the direct operation of these incentives is far from the only policy influence on the development of the research system. The overall amount or growth of research funding is one positive factor (for example, Denmark’s dramatic surge in scientific performance in recent years builds on substantially increased funding). Internationalisation raises quality in lagging countries (international co-publications are more highly cited than single-author or national ones). University governance and management also have a big impact. It is widely believed that the competition involved in having a high share of external money in universities’ research income drives up quality). Finally, there is increasing faith in performance-based research funding systems, as well as significant disagreement about whether it should govern a high proportion of institutional funding for research (there is evidence that both high and low proportions affect researcher behaviour.)

Statistically, it is very difficult to connect observed patterns in national performance to most of these policy levers. Multiple policies are at play. Their effects are hard to untangle; contextual factors, such as history and culture, are also important. Often, good performance seems to result from changes in one or more of the “levers” discussed above, rather than from the presence of particular ratios among funding streams. As with much else in innovation systems, policymakers need to adopt a systemic perspective of their specific national situation when analysing needs and using policy instruments. Ultimately, a single ministry cannot do this – a higher power, such as a research and innovation council or the government itself, needs to co-ordinate the different components of a research and innovation system.

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Erik Arnold

Chairman, Adjunct Professor in Research Policy, Technopolis Group, Royal Institute of Technology (KTH)

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