Funding structure and university patenting: An analysis of European higher education institutions

Although European universities account for no more than 10% of all patents, examining their patenting patterns remains relevant, given their contribution to breakthrough innovations and European technological competitiveness. We examine the role of university funding sources in patenting, addressing three key research gaps: (i) the reliance on limited, country-specific samples rather than pan-European data in most patenting-funding studies; (ii) the scarcity of evidence on the impact of the funding structure on patent quantity and quality; and (iii) the lack of precise estimates of interactions between university patenting, funding structures, and regional systems. We fill these gaps thanks to a micro-level database of almost 2,900 higher education institutions (HEIs) in 31 European countries and 295 NUTS2 regions (2011-2019), containing detailed information on their activity as direct patent applicants and various institutional characteristics, including financial records. We show that universities with a greater share of third-party funds (research grants, contracts) apply for more patents and have better quality patents than those that rely mainly on core funding, i.e. national/regional allocations. The HEIs that do patent have more than twice the share of third-party revenues. This indicates that the very marked core-periphery pattern of university patenting in Europe is related both to the amount of university funding and to its sources. Additionally, we find that regional economic systems influence the way in which the funding structure relates to university patenting. The positive relationship between patenting and third-party funding is strongest in the wealthy regions, less so in developed areas, and negligible in the poorest regions.