Research grant effects across funding modes and industry collaboration

The impact of public research funding remains debated, with limited evidence on how effects differ across funding modes. As funders are contemplating different instruments to support research and development, we provide causal evidence on the impact of a major UK funder and use this setting to explore how its effects vary across grant features. We implement a regression discontinuity design using novel data on more than 2000 applications evaluated by the Engineering and Physical Sciences Research Council (EPSRC). We study the causal effect and examine differences between open, investigator-initiated schemes, characterised by greater researcher autonomy in defining research questions, and directional, funder-initiated schemes, which direct efforts towards predefined priorities. We further explore heterogeneities in how industry collaboration interacts with these funding modes. Our results show that investigator-initiated grants are associated with stronger subsequent performance advantage for funded researchers, but only when projects remain academically embedded. Directional grants, instead, exhibit more positive effects when combined with industry collaboration. While on average research grants have a substantial positive impact in our setting, their effects vary across key features, informing debates on the design of public science funding systems and highlighting the need for further research on the interplay between different funding characteristics.