(International) R&D collaboration and SMEs: The effectiveness of targeted public R&D support schemes

Abstract

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Non-technical summaryIt is today widely acknowledged that innovation constitutes one of the most important drivers of economic growth and competitiveness (see e.g. Solow, 1957;Griliches, 1979Griliches, , 1992Hall, 1996). Private sector firms' investment in R&D plays a crucial role in this process not only for the discovery of new technologies, but also for their diffusion.Because of various well-known market failures though, it is unlikely that left alone, firms would invest the socially optimal amount in R&D. For this reason, governments design various policy schemes to stimulate investment in R&D. In Flanders, the northern part of Belgium, the government has spent 628 million euros on direct support for R&D and innovation for a total of 3,019 projects between 2002 and 2008. Thereby Flanders employs regional-specific policy design -i.e. a dual policy focusing on small and medium-sized firms (SMEs) on the one hand and (international) collaboration, on the other.The present research aims, on the one hand at evaluating whether these targeted measures are efficient in terms of input additionality, and, on the other hand, whether they translate into innovation output. With respect to input, we find that subsidies accelerate R&D spending in the private sector. When analyzing the impact of the specific policy features on the treatment effect, we find evidence for the efficacy of the policy currently in use. In particular, we find that SMEs have a larger treatment effect than larger-sized firms. We further find that internationally collaborating SMEs have a larger treatment effect than internationally collaborating larger firms or non-internationally collaborating SMEs.Further, we implement the results of the treatment effects analysis into a series of innovation output models, where R&D is disentangled into purely privately financed R&D (i.e. R&D expenditures that the firm would have spent in any case) and subsidy induced R&D expenditure. We find that both types have a significant positive effect on firms'innovativeness measured by their share of sales from market novelties. Further, when interacting both types of R&D investment with the specific policy features of the funding scheme under review, we find that the policy-triggered effect on market novelties is highest for internationally collaborating firms. Das Wichtigste in KürzeForschung und Entwicklung (F&E) und die daraus resultierenden Innovationen leisten einen wesentlichen Beitrag zu Wirtschaftswachstum und We...

The effects of public support schemes on small and medium enterprises

“…Thus far not much empirical evidence has been provided with respect to the effectiveness of R&D instruments on small and medium-sized firms (Romero-Jordán et al, 2014;Czarnitzki and Lopes-Bento, 2013;Reinkowski et al, 2010;Herrera et al, 2010). The closest to our paper is the study by Hottenrott and Lopes-Bento (2014), which demonstrates that R&D subsidies aimed at incentivizing collaboration in SMEs improve innovation performance. As compared to Hottenrott and Lopes-Bento (2014), in our paper we examine the effects of R&D subsidies used alone or with tax incentives on innovation output.…”

Co-owner relationships conducive to high quality joint patents

“…Hottenrott and Lopes-Bento (2014) find that public policies-such as R&D subsidies-statistically increase the number of international collaborations, as well as the innovative output derived from these international collaborations. Coupling my results with those of Hottenrott and Lopes-Bento's might suggests that R&D subsidies (and similar public policies) to support international R&D collaboration could effectively increase the likelihood that the resulting joint patents stimulate ongoing cumulative innovation in the future.…”

R&D Partnerships and Innovation Performance: Can There Be Too Much of a Good Thing?

“…For instance, gains from collaboration are potentially highest for firms with limited internal resources, such as small and medium-sized firms (SMEs), younger firms or firms that are overall financially constrained (Czarnitzki and Hottenrott 2011a;Lavie et al 2010;Beckman et al 2004). Moreover, SMEs or young firms may particularly benefit from collaboration through access to a broader and more diversified knowledge base (Hottenrott and Lopes-Bento 2014a). On the downside, SMEs and younger firms tend to be more resource constrained and may be required to budget managerial attention and available internal financial resources carefully.…”