Impact of funding size on research outputs: evidence from South Korea’s government-funded programme

ABSTRACT

Research and development (R&D)–driven innovation plays a key role in achieving global competitiveness. Consequently, R&D investment has been increasing globally. Hence, improving research quality in proportion to the increase in R&D investment is necessary. Thus, we attempted to identify the relationship between the size of R&D grants and output. By analyzing R&D projects funded by South Korea spanning from 2011 to 2019, we found that the law of diminishing returns was observed between the scale of R&D grants and output, along with concavity in the correlation between the number of researchers involved and research output. These empirical findings highlight a tipping point where inefficiencies emerge in R&D projects. Through conducting a rigorous investigation, we presented academic and policy implications designed to alleviate wasteful practices in R&D projects. We believe our findings constitute a significant contribution to the discourse in related fields, providing a foundational framework for the efficient management of R&D projects.

KEYWORDS:

• Research and development
• R&D grant
• research output
• productivity
• inverted U-shaped

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Despite the prolonged duration of research in this area, it is worth noting that no conclusive results on the relationship between R&D funding and output have been established. We posit that the inconclusive nature of these results may stem from unobserved heterogeneities and uncontrollable factors inherent in R&D projects.

2 As of 2023, South Korea adheres to established laws for R&D budget allocation, with 17 specialized funding agencies overseeing administrative agency tasks. It is worth noting that challenges like project planning overlap and inefficiencies in R&D management are recognized, prompting the need for innovation.

3 In accordance with the guideline of the national R&D programs in South Korea that we analyzed, it is explicitly stated that the observation of research outputs should be tracked for a period of at least 3 years after the project’s completion.

4 Reference: National Science & Technology Information Service (2023) Science and Technology Statistics, https://www.ntis.go.kr/rndsts/selectStatsDivIdctVo.do

5 Reference: Han, 2022; Hwang et al., 2022; National Science & Technology Information Service (2023) Science and Technology Statistics, https://www.ntis.go.kr/rndsts/selectStatsDivIdctVo.do

Additional information

Funding

This work was supported by the National Research Foundation of Korea (NRF) grant funded by the Korean government (2019R1F1A1063365).

Notes on contributors

Hoon Jang

Hoon Jang is an associate professor of College of Global Business at Korea University, Korea. His research interests are primarily in the area of complex system designs, data-driven modeling and applied operations management problems. Dr. Jang obtained his MS and PhD degree from KAIST in the Dept of Industrial & Systems Engineering.