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Do companies benefit from public research organizations? The impact of the Fraunhofer Society in Germany

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Listed:
  • Comin, Diego
  • Licht, Georg
  • Pellens, Maikel
  • Schubert, Torben
Abstract
Among available policy levers to boost innovation, investment in applied research organisations has received little empirical attention. In this paper, we analyse the case of the Fraunhofer Society, the largest public applied research organization in Germany. We analyse whether project interaction with Fraunhofer affects the performance and strategic orientation of firms. To that end, we assemble a unique dataset based on the confidential Fraunhofer-internal project management system and merge it with the German contribution to the Community Innovation Survey (CIS), which contains panel information on firm performance. Using instrumental variables that exploit the scale heteroscedasticity of the independent variable (Lewbel, 2012), we identify the causal effects of Fraunhofer interactions on firm performance and strategies. We find a strong, positive effect of project interaction on growth in turnover and productivity. In particular, we find that a one percent increase in the size of the contracts with FhG leads to an increase in growth rate of sales by 1.3 percentage points, and to an increase in the growth rate of productivity by 0.8 percentage points in the short-run. We also provide evidence of considerable long-run effects accumulating to 18% growth in sales and 12% growth in productivity over the course of 15 years. More detailed analyses reveal, amongst others, that the performance effects become stronger the more often firms interact with Fraunhofer and that interactions aiming at generation of technology have a stronger effect than interactions aiming merely at the implementation of existing technologies. Finally, we provide evidence on the macroeconomic productivity effects of Fraunhofer interactions on the German economy. Our results indicate that doubling Fraunhofer revenues from industry (+€ 0.68 bn.) would increase overall productivity in the German economy by 0.55%.

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  • Comin, Diego & Licht, Georg & Pellens, Maikel & Schubert, Torben, 2019. "Do companies benefit from public research organizations? The impact of the Fraunhofer Society in Germany," ZEW Discussion Papers 19-006, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:19006
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Giannopoulou, Eleni & Barlatier, Pierre-Jean & Pénin, Julien, 2019. "Same but different? Research and technology organizations, universities and the innovation activities of firms," Research Policy, Elsevier, vol. 48(1), pages 223-233.
    2. Bianchi, Francesco & Comin, Diego & Kung, Howard & Kind, Thilo & Matusche, Alexander, 2019. "Slow recoveries through fiscal austerity: New insights in the effects of fiscal austerity," ZEW policy briefs 2/2019, ZEW - Leibniz Centre for European Economic Research.
    3. Corinne Autant-Bernard & Ruben Fotso & Nadine Massard, 2022. "Evaluating the impact of public policies on large firms: a synthetic control approach to science-industry transfer policies," Revue d'économie industrielle, De Boeck Université, vol. 0(4), pages 9-50.
    4. Grant, Allan & Figus, Gioele & Schubert, Torben, 2022. "Understanding the macroeconomic effects of public research: An application of a regression-microfounded CGE-model to the case of the Fraunhofer-Gesellschaft in Germany," Discussion Papers "Innovation Systems and Policy Analysis" 72, Fraunhofer Institute for Systems and Innovation Research (ISI).
    5. Sara Amoroso & Simone Vannuccini, 2019. "Teaming up with Large R&D Investors: Good or Bad for Knowledge Production and Diffusion?," SPRU Working Paper Series 2019-20, SPRU - Science Policy Research Unit, University of Sussex Business School.
    6. Quentin Plantec & Pascal Le Masson & Benoit Weil, 2019. "The role of participating in user-driven research projects on scholar's academic performances: a model through C-K design theory," Post-Print hal-02165721, HAL.
    7. Thomas H. W. Ziesemer, 2021. "The Effects of R&D Subsidies and Publicly Performed R&D on Business R&D: A Survey," Hacienda Pública Española / Review of Public Economics, IEF, vol. 236(1), pages 171-205, March.
    8. Francesco Manaresi & Carlo Menon & Pietro Santoleri, 2021. "Supporting innovative entrepreneurship: an evaluation of the Italian “Start-up Act” [The effects of entry on incumbent innovation and productivity]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 30(6), pages 1591-1614.
    9. Krieger, Bastian & Licht, Georg & Pellens, Maikel, 2018. "New perspectives in European innovation policy," ZEW policy briefs 7/2018, ZEW - Leibniz Centre for European Economic Research.
    10. Patrick Lehnert & Curdin Pfister & Dietmar Harhoff & Uschi Backes-Gellner, 2020. "Innovation Effects and Knowledge Complementarities in a Diverse Research Landscape," Economics of Education Working Paper Series 0164, University of Zurich, Department of Business Administration (IBW), revised Jan 2022.
    11. Gelsomina Catalano & Gaston García López & Alejandro Sánchez & Silvia Vignetti, 2021. "From scientific experiments to innovation: Impact pathways of a Synchrotron Light Facility," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 92(3), pages 447-472, September.

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    More about this item

    Keywords

    innovation; R&D; diffusion; applied research; Fraunhofer;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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