Why not all ‘winners’ are successful: Explaining project performance of publicly funded innovation consortia

This study contributes to understanding the effectiveness of competitive public funding for innovation by studying the conditions and processes influencing project performance of publicly funded innovation consortia. Whereas prior research aimed to explain the selection of projects that receive funding (‘winners’) and the consequences of receiving funding for organizations and societies, we investigate project-level performance in ‘winning’ innovation consortia. We build on research on inter-firm and multi-stakeholder collaboration to identify governance challenges and strategies affecting performance of collaborative innovation projects. Using a mixed method design, we conducted inductive analyses of quantitative and qualitative data of 132 publicly funded consortia within the Netherlands to explore the conditions shaping a consortium's project performance. Our empirical findings provide multiple insights into the impact of relational and structural governance on project performance. First, relational governance is more important than structural governance in explaining project performance. Second, the three stages in publicly funded innovation projects (i.e. application, selection, and execution) are interdependent and conditions in each stage – rather than only the execution stage – ultimately affect project performance. Third, external stakeholders affect project performance; the involvement of end-users promotes project performance, while consultants and funding authorities may enhance or hinder project performance depending on the roles they undertake (i.e. supporting versus leading for consultants, and supporting versus controlling for funding authorities). • Publicly funded projects have specific conditions that affect their performance. • Steering groups promote the performance of publicly funded projects. • Early stage characteristics impact performance of publicly funded innovation projects. • Depending on their roles, external parties promote or hinder project performance.