Economies of scale and scope at the research project level

The objective of this study was to assess empirically whether economies of scale and scope with respect to innovation outputs exist at the research project level. The assumption underlying European Union research and innovation policy - and for that matter many national policies - appears to be that such economies exist, hence the emphasis placed in recent years on the 'critical mass' of research and development (R&D) projects. Overall, the results of this analysis do not support a simple assumption that 'bigger is better' in the context of the European Framework Programmes (FPs). Instead, for a large number of observations, the relation between scale and innovation outputs are statistically not significant. Where statistically significant relations could be observed, they could both be positive or negative, depending on the measure of scale (absolute, relative size), type of output (e.g. behavioural or direct commercial) and context (moderating and mediating variables). Consequently, some of the basic assumptions underlying the change in the general orientation of the FPs towards larger projects should be carefully reconsidered. Thus, many factors must be taken into account when analysing the relation between scale, scope and performance. For this purpose, an elaborate analytical framework was employed, in which three sets of factors mediate the relation between project scale and performance: (a) the pool of available resources; (b) the learning process (absorptive capacity); and (c) transaction costs. In turn, three additional sets of factors moderate the relation between project scale and the mediating factors above: (a) partner's contribution to the project; (b) project characteristics (such as scope of activities); and (c) project management. Finally, industry and market environment(s) relevant to the research project under question were also taken into account.