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Improving access to finance for young innovative enterprises with growth potential: Evidence of impact of R&D grant schemes on firms' outputs

Author

Listed:
  • Giuseppina Testa
  • Katarzyna Szkuta
  • Paul N Cunningham

Abstract

Responding to the lack of in-depth research into the effects of R&D grants for scale-ups, this article examines how they impact upon firms' employment, firm economic and innovative performance, and firm innovative activities. Drawing on both policy evaluations and empirical literature relating to R&D programmes and firms' outputs, it contributes by discussing and comparing different types of R&D programmes and analyzing the wider policy implications. Overall, positive outcomes are found on employment, total sales and share of innovative sales (effects which can persist for several years), and companies' innovation capacities. Moreover, the effects for R&D grants for scale-ups are larger than the effects of both generic R&D grants and R&D subsidies. In terms of policy implications, R&D grants stimulate and prepare companies for growth and targeted funding (technology focused) delivers better results for disruptive innovations, whereas generic grants for small and medium-sized enterprises are better suited for knowledge diffusion. Despite the positive effects of milestone-based selection mechanisms and phased funding, they are still under-used. Competitive R&D grants help companies to attract follow up (especially equity) funding. When coupled with complementary services (e.g. networking, advice), there is a longer lasting effect. Lastly, tax incentives and grants are complementary as regards to their impact on firm growth and innovation activities.

Suggested Citation

  • Giuseppina Testa & Katarzyna Szkuta & Paul N Cunningham, 2019. "Improving access to finance for young innovative enterprises with growth potential: Evidence of impact of R&D grant schemes on firms' outputs," Research Evaluation, Oxford University Press, vol. 28(4), pages 355-369.
    • Handle: RePEc:oup:rseval:v:28:y:2019:i:4:p:355-369.
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    File URL: http://hdl.handle.net/10.1093/reseval/rvz016
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    Citations

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    Cited by:

    1. Ondřej Dvouletý & Stjepan Srhoj & Smaranda Pantea, 2021. "Public SME grants and firm performance in European Union: A systematic review of empirical evidence," Small Business Economics, Springer, vol. 57(1), pages 243-263, June.
    2. Tea Petrin & Dragana Radicic, 2023. "Instrument policy mix and firm size: is there complementarity between R&D subsidies and R&D tax credits?," The Journal of Technology Transfer, Springer, vol. 48(1), pages 181-215, February.
    3. Oleg Sidorkin & Martin Srholec, 2022. "Do Direct Subsidies Stimulate New R&D Outputs in Firms? Evidence from the Czech Republic," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(3), pages 2203-2229, September.
    4. Aristovnik, Aleksander & Yang, Guo-liang & Song, Yao-yao & Ravšelj, Dejan, 2023. "Industrial performance of the top R&D enterprises in world-leading economies: A metafrontier approach," Socio-Economic Planning Sciences, Elsevier, vol. 89(C).
    5. Peter Grajzl & Jaka Cepec & Barbara Mörec, 2023. "Weaned off public money: The effect of discontinued reception of public cash on firm outcomes," Kyklos, Wiley Blackwell, vol. 76(1), pages 41-76, February.

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