Government funding of university-industry collaboration: exploring the impact of targeted funding on university patent activity

With innovation as a third mission of universities, governments around the world have competitive funding schemes to support university-industry collaboration. Little is known about the effectiveness of these schemes compared to traditional competitive funding programs in increasing commercially valuable research outputs from universities. We explore whether university-industry targeted schemes are more effective by comparing two Australian funding programs that share the processes of how funds are awarded—one with a requirement of university-industry collaboration, the other traditional, not requiring collaboration. We use patenting activity as our measure of commercially valuable research outputs. We find that university inventors awarded university-industry targeted grants have greater patent activity compared to those awarded non-targeted grants. Analysing the dynamics, we find the effect is rather short lived, with an increase in patent activity in the year of award of grant not persisting in subsequent years. We find a similar effect on a university level. We also find that the number of new patent applications, but not patents granted, is greatest when universities achieve a mix of both types of funding.