Know when to fold ‘em: An empirical description of risk management in public research funding
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ssrn-3252548.pdf
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Author(s)
Goldstein, Anna P.
Kearney, Michael
Date Issued
January 2, 2020
Journal
Research Policy
Publisher
Elsevier B.V.
Citation
Goldstein, Anna P. and Kearney, Michael. 2020. "Know when to fold ‘em: An empirical description of risk management in public research funding." Research Policy, 49 (1).
Version
Author's final manuscript
Abstract
Public research funding programs typically make grants with minimal intervention by program staff, rather than using a hands-on approach to project management, which is more common in the private sector. In contrast, program staff at the US Department of Energy's Advanced Research Projects Agency – Energy (ARPA-E) are given a set of real options with which to manage funded projects: abandon, contract or expand project budgets or timelines. Using internal data from ARPA-E, we show that active project management enables risk mitigation across a portfolio of research projects. We find that program staff modify projects frequently, especially project timelines, and these changes are more sensitive to poor performance than to strong performance. We also find that projects with a shortened timeline or reduced budget are less likely to generate short-term research outputs, compared to those of ultimately similar size. This evidence suggests that the practice of active project management, when combined with high upfront risk tolerance, can be used to enhance the productivity of mission-oriented public research funding.
MIT Department
Sloan School of Management
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1016/j.respol.2019.103873
