The contribution of innovation actors into business R&D funding – does the substitution effect of public support work in the EU?

Abstract

Innovation and R&D are becoming a prominent part of policies of countries and transnational unions such as the European Union. This is shown in strategy "Europe 2020" established by EU which prompts member states to invest 3 % of their GDP in R&D. R&D expenditure is an important indicator of innovation performance of a country. However, it is not only important to look at R&D expenditure as one aggregate indicator, but to also consider the contributions of various innovation actors to R&D funding. Since fi rms are known to be the main innovation actor that creates the biggest amount of innovation in national innovation system, the paper is focused on fi nancing of business R&D. The aim of the paper is to examine business R&D funding from resources of main innovation actors and to analyze the impact of public support of R&D on private R&D investment in EU member states. The research is based on descriptive statistics as well as panel regression and correlation analysis and cluster analysis of 28 EU member states. Our results suggest that the main source used to fund business R&D comes from business sector, followed by public support and resources from abroad. The cluster analysis resulted in four clusters based on the structure of business R&D fi nancing in the EU countries. The analysis of substitution effect of public support of R&D suggests that public support has a positive effect on private investment in business R&D, with the raise of public support for business R&D of 0.1011 % GDP resulting in 1 % increase in business funded R&D expenditure.

TAX SUPPORT EVALUATION FOR R&D ACTIVITIES OF COMPANIES

“…The hypothesis of linking companies with innovation and economic growth has been confirmed by a number of authors (e.g. Bronzini & Iachini, 2014;Pisár et al, 2020) and is now fully respected. At present, the expert polemics focuses more on the area of R&D financing and efficiency of use of individual sources.…”

The impact of tax gap on macroeconomic stability: Assessment using panel VEC approach

“…Modern scientific research empirically confirms that social (Nelson, 2017;Kharazishvili et al, 2020;Hanić & Jevtić, 2020), environmental (Lyulyov et al, 2019;Miskiewicz, 2018;Pimonenko et al, 2020), cultural (Zandi et al, 2020), political (Yelnikova & Barhaq, 2020), institutional (Dkhili, 2018;Chygryn et al, 2018;Shkolnyk et al, 2020), financial Djalilov et al, 2015;Melnyk et al, 2018;Sanusi et al, 2017;Kuek et al, 2021), innovation and investment (Vasylieva & Kasyanenko, 2013;Povolná & Švarcová, 2017;Zakharkina et al, 2018;Pisár et al, 2020;Rutkauskas & Stasytytė, 2020;Petroye et al, 2020), marketing (Harust & Melnyk, 2019Bondarenko et al, 2020;Shymon et al, 2020) factors in various combinations could both significantly strengthen and reduce the current level of macroeconomic stability of the national economy and its economic growth. Scholars also argue that the level of shadowing of the economy by increasing tax gaps affects the country's investment attractiveness, increases barriers to the country's entry into trade unions, promotes the outflow of labor and capital from the country, which directly affects the macroeconomic stability of the national economy (Kasztelnik, 2020;Nguyen & Luong, 2020;Ostrowska-Dankiewicz & Simionescu, 2020).…”

A decision support approach for financial policy measures selection

“…2.1 Business expenditure on R&D and public policy measures R&D expenditures are the most critical drivers of innovation and productivity (Diaconu, 2019) and the amount of the expenditures is one of the most important indicators for evaluating countries' innovative efforts (OECD, 2012). Therefore, enhancing business R&D has always been an essential part in policy packages of the countries (Pis ar et al, 2020). There are different policy measures (or instruments) influencing the amount of BERD.…”