SUMMARYThis study focuses on the impact of innovation policies and R&D collaboration in Germany and Finland. We consider collaboration and subsidies as heterogeneous treatments, and perform an econometric matching to analyze R&D and patent activity at the firm level. In general, we find that collaboration has positive effects. In Germany, subsidies for individual research do neither exhibit a significant impact on R&D nor on patenting, but the innovative performance could be improved by additional incentives for collaboration. For Finnish companies, public funding is an important source of finance for R&D. Without subsidies, recipients would show less R&D and patenting activity, whilst those firms not receiving subsidies would perform significantly better if they were publicly funded.

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Die Discussion Papers dienen einer möglichst schnellen Verbreitung von neueren Forschungsarbeiten des ZEW. Die Beiträge liegen in alleiniger Verantwortung der Autoren und stellen nicht notwendigerweise die Meinung des ZEW dar.Discussion Papers are intended to make results of ZEW research promptly available to other economists in order to encourage discussion and suggestions for revisions. The authors are solely responsible for the contents which do not necessarily represent the opinion of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp0324.pdf Non-technical SummaryAt the European Council in Lisbon in March 2000, heads of state and governments set the European Union the ambitious goal of becoming "the most competitive and dynamic knowledge-based economy in the world by the end of the decade". Two years later the Council reaffirmed this goal in Barcelona and added it to a more specific but equally ambitious target of raising EU spending on research and development to 3% of GDP by 2010 -with two thirds of this spend by the business sector.From the perspective of innovation, public R&D spending is an input factor which should strengthen the European Union's competitiveness in future technologies. In this context, the question arises, whether public R&D spending enlarges the welfare of societies. An analysis of such a question requires an identification of input-output relationships between publicly funded R&D activities and their results, like patent outcome or commercialized products and services as well as cost reducing processes. In this paper we investigate patent applications of firms. As the stimulation of R&D cooperations and networks has become very popular in technology policies of the EU, we focus our analysis especially on R&D collaborations at the firm level.First, we describe the history of public R&D funding in Germany and the development of measures encouraging collaborative R&D activities among firms and public research institutions. Afterwards, we investigate empirically the impact of such measures on patenting activity at the firm level. The main issue of our analysis is to distinguish three different groups of firms: (i) non-collaborating companies, (ii) collaborating firms which are involved in publicly funded R&D consortia, (iii) firms with only privately financed R&D collaborations.We use a sample of 4,132 observations on German firms from the 1990s and apply Probit estimations on the propensity to patent as well as a count data model on the number of granted patents. In a further step, we carry out a non-parametric kernel-based matching to take account of a possible self-selection bias in the sample of publicly funded firms. The microeconometric results show that collaborating firms are more likely to patent than non-collaborating firms. This points to the existence of knowledge flows which generate positive spillover effects among network partners. Within the group of collaborating firms, participants in publicly sponsored R&D consortia exhib...

NON-TECHNICAL SUMMARYIn recent years, much of the debate of policy makers, business academics and practitioners alike has centred on the nature and implications of the increasing importance of trans -and multi-national, ec onomic activity. Globalisation, the phenomenon of increasing economic interdependence across n ational borders, is believed to be particularly pertinent to hightechnology industries. These sectors are commonly characterised by high costs for research and development, decreasing product and technology life cycles and strong competition from foreign firms. Strategies that large multinationals have followed to react to the 'forces' of globalisation have included, for example, international expansion to achieve economies of scale and simultaneous product launches in several countries in order to maximise international r eturns in dynamic markets subject to fierce and immediate competitor responses. Each of these strategies requires large managerial and financial resources. Therefore, the question arises as to how can high-tech start-ups, the smallest players in the high-technology sectors, cope with these challenges? Can these firms sustain resource-intensive entry modes in order to establish an international presence? Acting in technological niches, the expansion into foreign markets can be a way to increase sales and to thus to recover initial sunk costs over a shorter time frame.Our research, based on survey data for British and German high-tech startups, examines whether internationalisation leads to faster growth among high-tech start-ups. Results show that firms with international sales have higher sales growth than firms that sell only domestically. We find that technological sophistication of products and the experience of entrepreneurs has a positive impact on growth. In addition, intense competition and shorter windows of opportunity increase the pressure to grow rapidly to appropriate the returns from innovation. The findings suggest that high tech firm founders should be more determinedly international in their vision and strategies from the very start of their business to increase the economic success of their efforts. Abstract: For firms acting in technological niches the expansion into foreign markets can be a way to increase sales and to thus to recover initial sunk costs over a shorter time frame. Our research, based on survey data for nearly 600 British and German high-tech start-ups, examines whether internationalisation leads to faster growth among high-tech start-ups. Results show that firms with international sales have higher sales growth than firms that sell only domestically. We find that technological sophistication of products and the experience of entrepreneurs has a positive impact on growth. In addition, intense competition and shorter windows of opportunity increase the pressure to grow rapidly to appropriate the returns from innovation. The findings suggest that high tech firm founders should be more determinedly international in their vision and strategies from the...

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