The purpose of this paper is to empirically examine the effects of different R&D funding inputs – including funding for basic research, applied research, and development – on different innovation outcomes (e.g. inventions, patents, licenses, and start-ups).
The study borrowed the resource dependence theory perspective by focusing on the proportion of funding secured from various external sources that fund university R&D, and assessed its effect on the nature and outcomes of the university research activity.
Results indicated that greater funding of basic research was associated with more inventions and patents; greater funding of applied research was associated with more licenses; and greater funding for development activities was associated with more university start-ups.
The contributions of this study are two folded: first, it added to the debate that more R&D investment is indeed associated with more innovation outcomes; and second, it is important to differentiate the R&D funding inputs as they are related to different innovation outcomes.