Do funding agencies select and enable novel research : evidence from ERC

Veugelers, Reinhilde and Wang, Jian and Stephan, Paula (2025) Do funding agencies select and enable novel research : evidence from ERC. Economics of Innovation and New Technology. pp. 1-18. ISSN 1043-8599

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Abstract

Concern exists that public funding of science is insufficiently supportive of pioneering research that has the potential for generating the future breakthroughs. Funders have addressed this concern by launching specially designed programs. The European Commission established in 2007 the European Research Council (ERC) to support ‘high-risk/high-gain pioneering’ research. This paper sets out to study whether the ERC selected researchers with a track record of conducting highly novel research. We measure novelty in the publication records of applicants before and after the application. Our analysis shows that applicants with a history of highly novel research are less likely to be selected for funding than those without such a history, especially for early career applicants, and if they are located in non-top host environments. This selection penalty for novelty also holds among those applicants with a history of excellent publications. Testing whether receiving a long and generous prestigious ERC grant promotes the production of highly novel research, we only find for early career grantees a significant positive novelty treatment effect. This positive treatment effect is in part due to unsuccessful applicants cutting back on highly novel research. We cautiously interpret this as a ‘lesson learned’ that novelty is not rewarded.