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Assessing the Impact of Public Support on Innovative Productivity

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  • Alessandra Catozzella

    (DISCE, Università Cattolica del Sacro Cuore)

  • Marco Vivarelli

    (DISCE, Università Cattolica del Sacro Cuore)

Abstract

Previous policy evaluation literature mainly aimed at estimating the additional effect of public support on either firms’ innovative inputs or innovative outputs. This paper is an attempt to move one step further, combining the two (input and output) dimensions of innovation into a unique efficiency perspective. To this aim, the impact of public support on the ratio between innovative sales and innovative expenditures (innovative productivity) is estimated using a sample of firm-level data drawn from the third Italian Community Innovation Survey (CIS). A bivariate endogenous switching model has been developed in order to free the analysis of any ex ante sources of sample selection and firm heterogeneity, at the same time getting rid of the two sources of endogeneity potentially affecting the results, i.e. the possible simultaneity between subsidy allocation and the qualitative composition of the innovative output, as well as the endogeneity of public support with respect to innovative performance. Results show that innovative productivity is negatively affected by the public support ; far from ‘doing better’ as a result of government intervention, supported firms appear to exhaust their advantage through merely increasing their innovative expenditures.

Suggested Citation

  • Alessandra Catozzella & Marco Vivarelli, 2011. "Assessing the Impact of Public Support on Innovative Productivity," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali dises1177, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    • Handle: RePEc:ctc:serie2:dises1177
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    References listed on IDEAS

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    Cited by:

    1. Dezhina, I. & Simachev, Yu., 2013. "Matching Grants for Stimulating Partnerships between Companies and Universities in Innovation Area: Initial Effects in Russia," Journal of the New Economic Association, New Economic Association, vol. 19(3), pages 99-122.
    2. Dezhina, Irina & Simachev, Yuri, 2012. "Partnering universities and companies in Russia: effects of new government initiative," MPRA Paper 43622, University Library of Munich, Germany.
    3. Nevenka Čučković & Valentina Vučković, 2021. "The Effects Of Eu R&I Funding On Sme Innovation And Business Performance In New Eu Member States: Firm-Level Evidence," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 66(228), pages 7-42, January –.
    4. Nevenka Cuckovic & Valentina Vuckovic, 2018. "EU R&D Funding as a Way of Incentivizing Innovation of SMEs: A Review of Impacts," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 20(2), pages 97-127, December.
    5. Yuri Simachev & Mikhail Kuzyk & Vera Feygina, 2015. "Public Support for Innovation in Russian Firms: Looking for Improvements in Corporate Performance Quality," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(1), pages 13-31, March.

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    More about this item

    Keywords

    innovation subsidy; policy evaluation; product innovation; bivariate endogenous switching model;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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