Market failures and the additionality effects of public support to private R&amp;D: Theory and empirical implications

Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto

doi:10.1016/j.ijindorg.2013.02.002

Cited by 53 publications

(45 citation statements)

References 26 publications

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“…A more diversified set of information sources about potential financing opportunities is likely to enlarge the ability of the firm to secure external funding and, hence, to free up resources for innovation. In addition, in our context, using external sources of money can lead to spillovers that can alter firms' innovative performance (Takalo et al 2013).…”

Section: Role Of Financing Sourcesmentioning

confidence: 95%

The role of openness in explaining innovation performance in a regional context

et al. 2016

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We investigate the role of search strategy in shaping firms' innovation performance. Firms use a wide range of external actors and sources to help them achieve and sustain innovation. In particular, the extension (breadth) and the relevance (depth) of such sources determine firms' ability to extract and exploit knowledge and new ideas and, thus, to be innovative. Using a sample of firms in a regional context active in R&D, we built separate measures of breadth and depth for local (on a regional scale) and global (outside the regional context) search. This allows us to investigate whether localized or global knowledge spillovers are in place. We find that a wider set of partners increases coordination costs, while greater depth in search strategies contributes to innovation. We find that a more diversified search strategy at the local level (greater breadth of search) results in significant payoffs in terms of innovation, while diversifying the partnership with Italian partners has a smaller, although still positive, effect. In contrast, the benefits of depth of innovation are greatest at the global level. In addition, a broader set of information sources for R&D projects has a significant positive effect on innovation. Finally, firms that resort to R&D subsidies are less innovative.

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Section: Role Of Financing Sourcesmentioning

confidence: 95%

The role of openness in explaining innovation performance in a regional context

et al. 2016

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“…However, Aerts and Schmidt (2008) control for firm financial strength (cash flow for Flanders and a four-point Likert scale for Germany) and reject the hypothesis that public R&D subsidies crowd out private R&D investment in their samples. Takalo et al (2013b) model the interaction between public and private financiers of firm R&D and show that higher costs of external finance increase (decrease) the optimal subsidy rate at the extensive (intensive) margin. Finding evidence of subsidy additionality crucially depends on the size of subsidy spillover effects.…”

Section: Subsidies Financial Constraints and Innovationmentioning

confidence: 99%

Subsidies, financial constraints and firm innovative activities in emerging economies

Mateut

2017

Small Bus Econ

108

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This paper investigates the relationship between public subsidies and firm innovation in transition and developing economies, which are likely to have less developed financial markets. Innovation includes the introduction of new products or services and the upgrade of existing ones, which is of particular relevance for these economies. The results obtained using alternative measures of financial constraints and market competition, within a range of econometric techniques, suggesting a positive relation between public subsidies and the innovative activities of 11,998 firms across 30 Eastern Europe and Central Asian countries. This correlation is stronger for firms more likely to be financially constrained.

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“…Moreover, the amount of loan may come below the required optimal level. Conventional solutions like signal, reputation and financial intermediation may be of no avail to those innovation-intense enterprises (Takalo & Tanayama, 2011) [19].…”

Section: Literature Reviewmentioning

confidence: 99%

“…Combination of (18) and (19) shows that the bank needs to make out a loan contact: an enterprise proposes the expected amount of loan L , bank settles the rate r accordingly. As information between the bank and the enterprise is asymmetric, the bank cannot predict the actual probability of the enterprise innovation, which leads to a variant r when estimating innovation efficiency of the enterprise.…”

Section: Model 2: Indirect Financing Channelsmentioning

confidence: 99%

Financial Support for Technological Innovation of the Supply-Side Reform

Deng¹

2017

JSS

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Innovation is inseparable from the development of enterprise and the improvement of enterprises, and the improvement of innovation is inseparable from the supporting system. In the background of advocating supply-side reform in our country, this paper examines the adjustment of elements structure in the supply-side reform, by constructing models to analyze the need of money when enterprises decided to invest in innovation as well as how financial system affects their need. The result of the model shows that the interest rate of loan determinates whether the company decides to undertake technological innovation. Indirect financing market can stimulate enterprises' R&D through powering down the risk premium; direct financing market can promote R&D investment by adjusting the ratio between interest rate and riskless interest rate.

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Market failures and the additionality effects of public support to private R&D: Theory and empirical implications

Abstract: for discussions. We also wish to thank the EU Seventh Framework Programme funding for SIMPATIC and Tekes for financial support. The usual disclaimer applies.

Cited by 53 publications

References 26 publications

The role of openness in explaining innovation performance in a regional context

The role of openness in explaining innovation performance in a regional context

Subsidies, financial constraints and firm innovative activities in emerging economies

Financial Support for Technological Innovation of the Supply-Side Reform

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