Reputation and Competence in Publicly Funded Science: Estimating the Effects on Research Group Productivity

Abstract

This paper estimates the “production function” for scientific research publications in the field of biotechnology. It utilises an exceptionally rich and comprehensive data set pertaining to the universe of research groups that applied to a 1989–1993 research programme in biotechnology and bio-instrumentation, sponsored by the Italian National Research Council, CNR. A structural model of the resource allocation process in scientific research guides the selection of instruments in the econometric analysis, and controls for selectivity bias effects on estimates based on the performance of funded research units. The average elasticity of research output with respect to the research budget is estimated to be 0.6; but, for a small fraction of groups led by highly prestigious Pls this elasticity approaches 1. These estimates imply, conditional on the distribution of observed productivity, that a more unequal distribution of research funds would increase research output in the short-run. Past research publication performance is found to have an important effect on expected levels of grant funding, and hence on the unit’s current productivity in terms of (quality adjusted) publications. The results show that the productivity of aggregate resource expenditures supporting scientific research is critically dependent on the institutional mechanisms and criteria employed in the allocation of such resources.

We thank the Director of the CNR Programme “Biotechnology and Bio-instrumentation”, Professor Antonio De Flora, for his cooperation. Previous versions of this paper were presented to seminars at Carnegie Mellon University, the London School of Economics (STICERD), the NBER Summer Workhops in Industrial Organization (Cambridge), and the University of Pittsburgh. We have benefited particularly from the comments provided by Zvi Griliches, Bronwyn Hall, and Steve Nickell, and from Jacques Mairesse’s encouragement in preparing this version of the paper for publication. We also acknowledge the financial support we received for various stages of this research from the International Centre for Economic Research (ICER) in Torino, the University of Urbino (MURST 60%), the EC Human Capital Mobility Programme (Contract N.ERBCHRXCT920002), the Renaissance Trust (UK), and MERIT, University of Limburg. Fabrizio Cesaroni, Marco Cioppi, and Aldo Geuna provided competent research assistance.