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Do R&D subsidies matter? Evidence for the German service sector

Author

Listed:
  • Czarnitzki, Dirk
  • Fier, Andreas
Abstract
In recent times the service sector is often called the driving force of today?s economies. This paper analyses the innovative activities of German service firms. We investigate whether firms that receive public subsidies for innovation projects engage more in innovative activities than others. Additionally, we test the hypothesis that innovative firms are more likely to get public grants in the future. Empirically, it turns out that public grants raise the firms? privately financed innovative activities. The more grants a firm has received in the past, the more it invests in current innovation projects. Furthermore, innovating firms are more likely to have future access to public grants. Additionally, the share of university graduates of firms' total employees is an important factor for future participation in public R&D schemes.

Suggested Citation

  • Czarnitzki, Dirk & Fier, Andreas, 2001. "Do R&D subsidies matter? Evidence for the German service sector," ZEW Discussion Papers 01-19, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:5374
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    File URL: https://www.econstor.eu/bitstream/10419/24439/1/dp0119.pdf
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    References listed on IDEAS

    as
    1. Ebling, Günther & Janz, Norbert, 1999. "Export and innovation activities in the German service sector: empirical evidence at the firm level," ZEW Discussion Papers 99-53, ZEW - Leibniz Centre for European Economic Research.
    2. Klette, Tor Jakob & Moen, Jarle & Griliches, Zvi, 2000. "Do subsidies to commercial R&D reduce market failures? Microeconometric evaluation studies1," Research Policy, Elsevier, vol. 29(4-5), pages 471-495, April.
    3. Isabel Busom, 2000. "An Empirical Evaluation of The Effects of R&D Subsidies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(2), pages 111-148.
    4. David, Paul A. & Hall, Bronwyn H. & Toole, Andrew A., 2000. "Is public R&D a complement or substitute for private R&D? A review of the econometric evidence," Research Policy, Elsevier, vol. 29(4-5), pages 497-529, April.
    5. Tor Jakob Klette & Jarle Møen & Zvi Griliches, 1999. "Do Subsidies to Commercial R&D Reduce Market Failures? Microeconomic Evaluation Studies," NBER Working Papers 6947, National Bureau of Economic Research, Inc.
    6. Klette, T.J. & Moen, J. & Griliches, Z., 1999. "Do Subsidies to Commercial R&D Reduce Market Failures? Microeconometric Evaluation Studies," Papers 16/99, Norwegian School of Economics and Business Administration-.
    7. Richard R. Nelson, 1959. "The Simple Economics of Basic Scientific Research," Journal of Political Economy, University of Chicago Press, vol. 67(3), pages 297-297.
    8. Dominique Guellec & Bruno Van Pottelsberghe De La Potterie, 2003. "The impact of public R&D expenditure on business R&D," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(3), pages 225-243.
    9. Holemans, Benni & Sleuwaegen, Leo, 1988. "Innovation expenditures and the role of government in Belgium," Research Policy, Elsevier, vol. 17(6), pages 375-379, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Piekkola, Hannu, 2005. "Public Funding of R&D and Growth: Firm-level Evidence from Finland," Discussion Papers 996, The Research Institute of the Finnish Economy.
    2. Dominique Guellec & Bruno Van Pottelsberghe De La Potterie, 2003. "The impact of public R&D expenditure on business R&D," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(3), pages 225-243.
    3. Heshmati, Almas & Loof, Hans, 2005. "The Impact of Public Funds on Private R&D Investment: New Evidence from a Firm Level Innovation Study," Discussion Papers 11862, MTT Agrifood Research Finland.
    4. Basit Shoaib Abdul & Kuhn Thomas & Ahmed Mumtaz, 2018. "The Effect of Government Subsidy on Non-Technological Innovation and Firm Performance in the Service Sector: Evidence from Germany," Business Systems Research, Sciendo, vol. 9(1), pages 118-137, March.
    5. Marino, Marianna & Lhuillery, Stephane & Parrotta, Pierpaolo & Sala, Davide, 2016. "Additionality or crowding-out? An overall evaluation of public R&D subsidy on private R&D expenditure," Research Policy, Elsevier, vol. 45(9), pages 1715-1730.
    6. Bogner, Kristina, 2015. "The effect of project funding on innovative performance: An agent-based simulation model," Hohenheim Discussion Papers in Business, Economics and Social Sciences 10-2015, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    7. H. Piekkola, 2007. "Public Funding of R&D and Growth: Firm-Level Evidence from Finland," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(3), pages 195-210.
    8. Kerda Varaku & Robin Sickles, 2023. "Public subsidies and innovation: a doubly robust machine learning approach leveraging deep neural networks," Empirical Economics, Springer, vol. 64(6), pages 3121-3165, June.
    9. Andreas Fier & Dietmar Harhoff, 2002. "Die Evolution der bundesdeutschen Forschungs– und Technologiepolitik: Rückblick und Bestandsaufnahme," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 3(3), pages 279-301, August.
    10. Fier, Andreas & Heger, Diana & Hussinger, Katrin, 2005. "Die Wirkungsanalyse staatlicher Förderprogramme durch den Einsatz von Matching- und Selektionsmodellen am Beispiel der Fertigungstechnik," ZEW Discussion Papers 05-09, ZEW - Leibniz Centre for European Economic Research.
    11. Giovanni Cerulli & Roberto Gabriele & Bianca Potì, 2016. "The role of firm R&D effort and collaboration as mediating drivers of innovation policy effectiveness," Industry and Innovation, Taylor & Francis Journals, vol. 23(5), pages 426-447, July.
    12. Giebe, Thomas & Grebe, Tim & Wolfstetter, Elmar, 2006. "How to allocate R&D (and other) subsidies: An experimentally tested policy recommendation," Research Policy, Elsevier, vol. 35(9), pages 1261-1272, November.
    13. Filiz Giray & Mehmet Çinar & Simla Güzel, 2015. "R&D IN FUNCTION OF DIRECT PUBLIC SUPPORTS TO SMEs: AN EXPLORATORY STUDY IN TURKEY," Economic Review: Journal of Economics and Business, University of Tuzla, Faculty of Economics, vol. 13(1), pages 29-36, May.
    14. Ben Zina, Tarek & Ben Zina, Naceur, 2006. "Complementarity or substitutability between private and public investment in R&D: An empirical study," MPRA Paper 3929, University Library of Munich, Germany, revised 28 Jan 2007.
    15. Meuleman, Miguel & De Maeseneire, Wouter, 2012. "Do R&D subsidies affect SMEs’ access to external financing?," Research Policy, Elsevier, vol. 41(3), pages 580-591.
    16. Yuhan Zhao & Xuguang Song, 2018. "How Should the Chinese Government Invest R&D Funds: Enterprises or Institutions?," Computational Economics, Springer;Society for Computational Economics, vol. 52(4), pages 1089-1112, December.
    17. Marino, Marianna & Parrotta, Pierpaolo & Sala, Davide, 2010. "New Perspectives on the Evaluation of Public R&D Funding," Working Papers 11-2, University of Aarhus, Aarhus School of Business, Department of Economics.
    18. Schmidt, Gabriela & Trofimenko, Natalia, 2010. "Linkages between technology choice and exporting: Evidence from Argentina," Kiel Working Papers 1620, Kiel Institute for the World Economy (IfW Kiel).
    19. Uwe Cantner & Sarah Kösters, 2012. "Picking the winner? Empirical evidence on the targeting of R&D subsidies to start-ups," Small Business Economics, Springer, vol. 39(4), pages 921-936, November.
    20. World Bank, 2015. "Republic of Armenia Export-led Industrial Development Strategy," World Bank Publications - Reports 22273, The World Bank Group.

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    More about this item

    Keywords

    Innovation; Public R&D Subsidies; Service Sector; Policy Evaluation;
    All these keywords.

    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General

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