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.
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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 (Citation2023) Science and Technology Statistics, https://www.ntis.go.kr/rndsts/selectStatsDivIdctVo.do
5 Reference: Han, Citation2022; Hwang et al., Citation2022; National Science & Technology Information Service (Citation2023) Science and Technology Statistics, https://www.ntis.go.kr/rndsts/selectStatsDivIdctVo.do
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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.