How do public research labs use funding for research? A case study

TL;DR

This study analyzes how a major European public research organization allocates funding, revealing a predominant focus on personnel costs and highlighting inefficiencies due to budget constraints.

Contribution

It introduces a novel economic metabolism approach to analyze research funding usage in public labs through a detailed case study.

Findings

Personnel costs dominate research funding consumption.

Personnel expenses are growing faster than total revenue.

Budget constraints lead to inefficiencies and organizational stress.

Abstract

This paper discusses how public research organizations consume funding for research, applying a new approach based on economic metabolism of research labs, in a broad analogy with biology. This approach is applied to a case study in Europe represented by one of the biggest European public research organizations, the National Research council of Italy. Results suggest that funding for research (state subsidy and public contracts) of this public research organization is mainly consumed for the cost of personnel. In addition, the analysis shows a disproportionate growth of the cost of personnel in public research labs in comparison with total revenue from government. In the presence of shrinking public research lab budgets, this organizational behavior generates inefficiencies and stress. R&D management and public policy implications are suggested for improving economic performance of public research organizations in turbulent markets.