Governance and Performance of Publicly Funded R&D Consortia

Abstract

R&D consortia have been regarded as an effective means of promoting innovation, and several R&D consortia obtain public financial support, which may affect its governance structure and performance. This study investigates the governance mechanisms of publicly funded R&D consortia and their effects on innovation. Regarding R&D consortia, few studies have empirically addressed the effect of project monitoring by the government. Moreover, the role of project leadership in R&D consortia remains poorly explored. Focusing on a major support program for R&D consortia in Japan and using a sample of 315 firms that participated in publicly funded R&D consortia from 2004 to 2009, we empirically confirm that project leadership by a private firm, especially its coordination capability, significantly increases the probability of project success (early commercialization of innovation outcomes). We also find that project performance is positively affected by the strictness of project monitoring and evaluation by the government, but negatively affected by interventions in application procedures. Finally, we find neither complementarity nor substitution between project leadership and government monitoring with regard to the effects on project performance.

Appendices

Appendix 1: Overview of the “Consortium R&D Project for Regional Revitalization” (CRDP) by METI

This program is carried out as R&D projects contracted by METI to competitively selected research consortia, so that the R&D expenditures of the supported projects are fully covered by the subsidy. The subsidy is paid for the contracted work; thus, payment is received after a project is finished. Each consortium has a management organization that can be a private firm, university, public research institute or a public agency and that prepares for and submits applications (project proposals). These proposals include detailed information on research and commercialization plans, project schedules, budget plans, management organization, project leaders, sub-leaders, and each of the members (e.g., firms, university professors, etc.), and each member’s role in the project.

Upon acceptance, the management organizations of selected consortia must enter into a formal contract with a regional department of METI to conduct the projects. Then, management organizations usually enter into subcontracting agreements with project members. Project members are also asked to provide collective confirmation for the commercialization of research outcomes.

After finishing the project (typically within two years), each management organization submits a project report to METI, which then reimburses the R&D expenditures for the project. Project evaluation is conducted by METI based on the final report provided by the management organization. In the final report and evaluation, not only the technological achievements of the project, but also the efficiency of project coordination and any efforts to improve it are taken into consideration. METI publishes information on the selected consortia, including membership and the final reports of these projects. Moreover, METI follows up on further research and the commercialization of project outcomes by the supported consortia for five years after the end of the projects.

In this way, METI and its regional departments monitor and evaluate UIC projects, enforce clear mutual agreements among members, and publicize project information. We expect such an institutional background to encourage trust formation in UIC projects.

Appendix 2: Questionnaire Items for the Leadership and Monitoring Variables

(translated from Japanese original into English by the authors)

2–4. Please evaluate the strength of leadership by the project leader of the entire consortium for each of the following items by the four-point scale:

1: weak, 2: rather weak, 3: rather strong, 4: strong.

• (1) Designing the research plan of the project

• (2) Progress control of the project

• (3) Coordination among the participants during the project

• (4) Efforts to achieve the goal of the project.

2–5. Please evaluate the strictness of project monitoring by the government for each of the following items by the four-point scale:

1: weak, 2: rather weak, 3: rather strong, 4: strong.

• (1) Reminders in project application procedures

• (2) Budget (expenditures) control

• (3) Progress check in R&D

• (4) Midterm evaluation

• (5) Final evaluation.