Public Support of Private R&D–Effects on Economic Sustainability

Abstract

A substantial part of contemporary R&D policy in developed countries is focused on the support of R&D in the private sector. Such intervention is theoretically justified by a higher propensity to innovation and consequently to higher competitiveness, which promotes sustainable economic growth. Most of the empirical research done so far focuses mainly on the leverage effect, the effect on innovation activity or on estimating the crowding out effect of public support. Although the outcomes of this research are quite contradictory, only a few studies focus on the effect of public support of private R&D on the private bodies’ performance indicators, which are naturally connected with a company’s economic sustainability. In this article we use counterfactual design and show that the R&D policy of supporting the private sector leads to higher innovation activity, but it does not lead to higher value added and productivity for supported subjects, at least in the short run. Such a finding suggests a possible flaw in R&D policy implementation—it is questionable if higher innovation activity is truly effective if it is not followed by a positive effect on production (value added) and productivity, and if it does not have a positive effect on competitiveness or lead to sustainable economic growth.

Does the Mixed-Ownership Reform Affect the Innovation Strategy Choices of Chinese State-Owned Enterprises?

“…Table 6 further examines the impact of heterogeneous shareholdings on innovation strategies of SOEs. Columns (1)- (2) show that the relationships between private shareholding ratio and exploratory innovation investment or exploitative innovation investment are not significant. The main reason is that the mean value of private shareholding is only 2.8% and the median is 0, which means that the ownership and discourse rights of private shareholders in most SOEs are not up to their expectations, and they are unable to conduct effective checks and balances on state-owned shareholders; there is also a lack of motivation to supervise executives, thus failing to make a substantial impact on the innovative strategy choices of SOEs.…”

“…The diversity of mixed shareholders, the depth of mixed equity, and the control of mixed equity are positively correlated with exploratory innovation investment, and the regression coefficients are 0.074, 0.478, and 2.313. Columns (2), (5), and (8) are the regression results of Formula (2). The diversity of mixed shareholders, the depth of mixed equity, and the control of mixed equity are positively correlated with the proportion of directors, supervisors, and executives with professional R&D backgrounds.…”

“…Innovation is an important galvanic force for national economic growth and sustainability [1,2]. Currently, China is in a crucial moment of economic transformation and upgrading.…”

The Impact of Public Grants on Firm-Level Productivity: Findings from the Czech Food Industry

“…We also believe that it would be very appropriate to extend the time period of the analysis as more data become available, and to investigate the effects of investment subsidies on firms' productivity in the long term (3-4 years after the end of programme), because benefits from such innovation-targeting schemes are likely to be expected over a longer time frame [35,116,117]. The empirical analysis could also include a broader set of firms across different industries and regions to contribute to the existing knowledge in a more general context.…”

The Impact of R&D Expenditures on Corporate Performance: Evidence from Slovenian and World R&D Companies

“…Nowadays, research and development (R&D) investment is becoming a critical element of generating the (sustainable) competitive advantage of companies and economies, causing them to invest persistently in R&D activities [1][2][3][4][5][6][7]. This stems from the global economy shifting from an economy based on industry to one based on knowledge, which has drastically altered both the business environment and how different stakeholders function.…”