The Effect of Subsidies on R&D Investment and Success – Do Subsidy History and Size Matter?

Abstract

This study provides insights into the effects of public R&D grants on R&D input and output of firms from Germany. Previous research has shown that the allocation of R&D project grants is rather stable regarding the pool of beneficiaries. The question is whether this participation pattern can be justified by its realized effects. In addition, the impact of the grant size on the effects is investigated. Therefore, I allow to a certain extent for heterogeneous treatment effects in these two dimensions. Using a sample of about 8,500 observations, a non-parametric matching approach with multiple treatments is applied to estimate the effects of public R&D grants on firm's R&D input. The results show that particularly frequently given grants as well as medium and large grants are suitable to increase the scope of firm-financed R&D plans. For the analysis of the effects on firm's R&D output the R&D expenditures are disentangled in R&D which would have been spent in the absence of the grant and publicly induced R&D, including the grant and the effect on private R&D expenditures. Basically both types of R&D are equally productive in terms of innovative output. For the statement that a rather stable pattern of program participation leads to a lower effectiveness of the instrument no evidence has been found.

Systemic aspects of R&D policy subsidies for R&D collaborations and their effects on private R&D

“…Frequently funded firms showed a higher increase in R&D indicators than firms funded for the first time regarding total R&D spending, private R&D spending as well as internal R&D expenditures. The pattern confirms findings of Aschhoff (2009). In addition to that, we conclude that repeated funding helps the firms to build up and stabilize their research capabilities.…”

Partnering Universities and Companies in Russia: Effects of New Government Initiative

“…At the same time the authors have discovered that the learning effect becomes less important with the growing number of projects implementedby the company with the support from the federal budget. This somewhat contradicts to the conclusions of other experts who generally positively assessed the influence of repeated support procedures (Falk, 2006;Aschhoff, 2009). …”

The Impact of Innovation Support Programmes on SME Innovation in Traditional Manufacturing Industries: An Evaluation for Seven EU Regions

“…A few studies use innovative sales as a proxy for innovation output (e.g. Cerulli and Potí, 2008;Hussinger, 2008;Aschhoff, 2009;Garcia and Mohnen, 2010;Schneider and Veugelers, 2010;Hewitt-Dundas and Roper;2010;Marzucchi, 2011;Herrera and Sánchez-Gonzáles, 2012), the introduction of product innovation (e.g. Hujer Like evaluations focused on input additionality, those investigating output additionality yield heterogeneous results (Merito et al, 2010; for review see Antonioli and Marzucchi, 2012;Cunningham et al, 2012).…”