Economic Drivers of Research at Research Universities

I thought it might be useful to review what I see as the three primary economic drivers of basic and applied research at research universities, with the notion that this might be useful for driving discussions of how to grow research at our own university.

The first driver is clearly the indirect cost recovery from on-going sponsored research. Most research institutions use these funds to build out and invest in their research enterprise. This is fundamentally the driver behind the success of established institutions–they have the seed money to increase their research footprint into new areas.

The second driver is, interestingly enough, land assets held by the institution. Institutions with valuable land assets have historically leveraged these holdings to create the necessary income to build out research infrastructure and to hire in selective areas. Generally these assets are used in a hybrid fashion: some of them are used to generate income, other assets are used to site new capital infrastructure necessary for supporting the new areas of research.

The third driver is intellectual property. The institutions that do this well are often just plain lucky–only some IP is really valuable. Licensing a faculty member’s invention produces a revenue stream which can be re-invested in research. The best institutions often have a large portfolio of such intellectual property, each of which is generating licensing income. Sometimes these dollars can be enormous.

Just a final thought: the data shows that institutions with medical schools have, in general, an order of magnitude more sponsored research–this is the classical rationale for institutions acquiring a medical school in order to build out their research.

Jim