Effect of basic research and applied research on the universities’ innovation capabilities: the moderating role of private research funding

This paper explores the impacts of basic research and applied research on the universities’ innovation capabilities and examines the role of private research funding. First, this paper divides universities’ innovation capabilities into scientific innovation capabilities and technological innovation capabilities according to the Pasteur’s quadrant paradigm. Second, based on a survey of 61 universities directly under the jurisdiction of the Ministry of Education of China, this study conducts an empirical analysis using the partial least squares path model. The results indicate that the complementary or substitutable effect of basic research and applied research on the promotion of universities’ innovation capabilities is different in the two dimension. Furthermore, the private research funding negatively moderates the effect of applied research on universities’ innovation capabilities, as well as the two dimensions. The paper provides quantitative evidence for Chinese practice from universities’ perspective and proposes recommendations for future development.