The differential effects of public RD support on firm RD: Theory and evidence from multi-country data

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This paper aims to evaluate the effects of various forms of public research and development (R&D) support on firms' incentives to invest in R&D. First, in order to identify potential channels through which public R&D support influences firm R&D, a formal model of firm R&D with public R&D support is developed and analyzed. Four potential channels are identified: the technological-competence-enhancing effect, the demand-creating effect, the R&D-cost-reducing effect and the (project) overlap (or duplication) effect. These multiple channels indicate that it is difficult to evaluate the aggregate effect of public R&D support and that there are differential effects of public R&D support on firm R&D, depending on various firm- or industry-specific characteristics. Second, the differential effects of public R&D support are empirically tested using unique firm-level data for nine industries across six countries. Public support tends to have a complementarity effect on private R&D for firms with low technological competence, for firms in industries with high technological opportunities and for firms facing intense market competition. In contrast, firms with high technological competence and firms that have enjoyed fast demand growth in recent years show a crowding-out effect, and firm size and age do not show any discernible differential effect. (C) 2011 Published by Elsevier Ltd.
Publisher
ELSEVIER SCIENCE BV
Issue Date
2011
Language
English
Article Type
Article
Keywords

DEVELOPMENT SUBSIDIES; DEVELOPMENT PROGRAMS; INNOVATION; INCENTIVES; STIMULATE; GERMANY

Citation

TECHNOVATION, v.31, no.5-6, pp.256 - 269

ISSN
0166-4972
URI
http://hdl.handle.net/10203/99917
Appears in Collection
MT-Journal Papers(저널논문)
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