This study uses panel data to examine the relationship between faculty employment and external R&D expenditures at research and doctoral institutions over a 15-year period of time. Not surprisingly, full-time faculty that are tenured or on tenure-tracks is the main category of faculty that generates external R&D funding. On the other hand, our results suggest that an increasing usage of part-time faculty, holding constant the institution’s full-time faculty size boosts an institution’s external R&D expenditures, probably through reducing teaching responsibilities for the full-time faculty. Increases in graduate student enrollments are associated with increases in external R&D expenditures. Finally, an institution’s external R&D expenditures are significantly influenced by both the amount of its own institutionally financed research expenditures and the level of federal funding for research.