The research money can’t buy: Sponsoring academic science in the shadow of reputational rewards

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Abstract: A wide range of organizations sponsor academic science to attract research to topics of strategic interest to the sponsor. Yet we know little about how effectively sponsoring organizations can steer the research direction of academic scientists. Academic scientists face a dual incentive structure. On one hand, incentives from a reputational reward system promote research in topics deemed most promising by the scientific community. On the other hand, incentives also emerge from differences in costs of conducting research on different topics. Sponsoring organizations aim to influence the latter. However, we argue that the exponentially skewed reputational rewards associated with promising scientific topics can limit the effectiveness of this channel. Consequently, sponsors may fail to induce a scientist to switch to research topics that are of interest to the sponsor but deemed less promising by the scientific community. We test our prediction by exploiting a policy change in funding for stem cell research in the United States in 2001. This reallocated resources from the topics deemed most promising to other areas of stem cell research. We find little evidence that U.S. scientists reallocated research efforts to those areas. In fact, we observe changes in scientific productivity, collaboration patterns, and mobility to industry that suggest U.S. scientists might have reduced their investments in the less promising areas to secure new sources of funding for research in the more promising areas. Our results provide novel insights into how scientists strategically respond to external incentives aimed at influencing their research direction.