Best Practices for Research Quality Based Stimulation
Programs to increase the quality of R&D and innovation outputs are as necessary as new programs to support R&D, innovation, and entrepreneurship. Since R&D and innovation are one of the main drivers of countries' future growth, prosperity, and wellbeing, it is important to ensure that money is invested in projects with the greatest potential to return effective and quality research outputs . Since universities are one of the main pillars of the innovation ecosystem, increasing the quality of research outputs in the university research environment has been receiving much attention as a policy focus. One of the policy tools that have been introduced are performance-based research funding systems . Overall, best practices to stimulate the quality of research outputs in the innovation system can be classified under the topics of performance-based funding schemes for universities, schemes to increase publication quality in researchers, and performancebased schemes for fast-growing, innovative firms.
Performance-Based Funding Schemes for Universities
One of the oldest performance-based research funding systems is the Research Assessment Exercise (RAE) in the UK . Since its launch in 1986, many countries have followed suit and introduced performance-based research funding schemes. Such widespread adoption of performance-based funding schemes for universities has also represented shifts in the quality of research outputs, since universities are so central in many innovation systems. According to international best practices, one of the most important tools of performance-based research funding to foster R&D facilities in universities is project overhead. Numerous countries exert project overhead. Recently, however, a fixed project overhead rate has been widely deemed to be less effective than varying project overhead rate based on performance. This change in methodology allows a boost in R&D in universities since it fosters increased competition.
Countries that implement varying project overhead rate include the US, the UK, Sweden, and Ireland. The efficiency factor implementation in the UK is one of the leading examples. This practice, initiated in 2011, allows Research Councils UK (RCUK) to evaluate the funded money based on performance. This reduces amounts allocated, if needed, when there are decreases in performance . In this methodology, every university determines a project overhead rate and applies to RCUK annually. At a later date, RCUK uses the method of defining efficiency groups that provides the research organization with the autonomy to make minimal impact savings. This aids in removing uncertainty and does not require the research organization to collect huge amounts of data or RCUK to build expensive monitoring systems.
In the UK, research organizations are categorized into five efficiency groups A to E. The efficiency group A represents the most efficient and E the least efficient. The association with an efficiency group is based on a research organization's absolute indirect cost rates and the relative change in the rate compared with the previous year. Higher Education Institutes (HEIs) in the least efficient group would be subject to increased scrutiny and pressure to reduce their indirect cost rates. The assignment of research organizations to efficiency groups is also subject to annual review. Furthermore, it is important that in the revised methodology to calculate the current rate, the previous year's rate is duly taken into consideration. This allows accounting for the growth rate as the percentage change for higher performing universities.
Some countries continue to exert fixed project overhead rate for universities. At the same time, the possibility of changing to the varying project overhead rate methodology is becoming increasingly up for debate. In Finland, the fixed rate is exerted, namely 46 % for TEKES and 12.5 % for the Academy of Finland. In Ireland, this rate is up to 35 % and there are aims in place for increasing it further . An average of 52 % overhead is used in Sweden, which further plans to implement UK's efficiency factor model in the coming few years. Within the context of the EU Framework Programs, different models are applied with 20 % fixed rate and 60 %, conditionally.
Since 2004, a fixed overhead rate at 10 % has been exerted in Turkey for every project. In the new implementation of project overhead, the aim is to raise the rate of R&D funds in university budgets to 25 % from its current rate of 2 %. Therefore, the practice of fixed project overhead rate has been changed and increased from 10 to 50 % based on universities' performance that will be assessed annually based on objective criteria. According to new practice, the project overhead will vary from university to university depending on their performance. A higher level of performance will lead to a higher project overhead for universities. This also means an additional R&D budget for universities that compete to raise their level of performance.
Another example of a performance-based funding scheme for universities is awarding successful R&D outputs, such as publications and patents, and providing incentives based on their success. Recently, such revisions have been implemented in the Czech Republic . The Czech Republic aims to motivate HEIs to increase the quality and the number of students as well as to affect the universities' annually allocated budgets. The revision includes all categories of the R&D outputs that are measured by awarding them with a certain defined amount. System indicators include several types of publications, e.g., Jimp—article in an impacted periodical, Jneimp—a critical article in an international database such as SCOPUS or ERIH, patents and other results of applied research. The proportion of points that are gained by various categories of research institutions varies according to levels of success in these categories.