Financing Patterns of Innovative SMEs and the Perception of Innovation Barriers in Germany
AbstractWe analyze the role of public support in the financing pattern of R&D in German SMEs and their assessment of financing conditions in the context of other framework conditions for innovation. In Germany, there is a diversity of overall well-funded technology-neutral and technology-specific programs providing grants to R&D and innovation projects. Different types of SMEs access public funding for R&D and innovation activities to varying degrees. Using an extensive sample of 2,700 German SMEs that participated in public R&D promotion programs during the 2005-2010 period, we identify four groups of companies with different patterns of public and private sources of R&D finance, such as own capital, grants, private and subsidized loans. The firms in our sample are generally positive about public financing of R&D in Germany in 2010. Despite the different funding patterns, we find only slight variations in this assessment across the four groups of subsidized SMEs. Nevertheless, medium-sized R&D companies (often with external equity investment) that have to finance the market introduction of innovations without a track record, appear to suffer from deficiencies in the provision of loans. Further, the companies perceive obstacles to innovation primarily in the non-financial sphere, namely the supply of skilled personnel, market regulation and competition conditions. Therefore, future work on innovation policies for SMEs should put greater emphasis on the non-financial external framework conditions for firm R&D and innovative activities.
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1353.
Length: 26 p.
Date of creation: 2014
Date of revision:
R&D promotion; financing of R&D; small and medium sized enterprises; barriers to innovation;
Find related papers by JEL classification:
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
- O25 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
- O38 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Government Policy
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-02 (All new papers)
- NEP-CSE-2014-02-02 (Economics of Strategic Management)
- NEP-ENT-2014-02-02 (Entrepreneurship)
- NEP-EUR-2014-02-02 (Microeconomic European Issues)
- NEP-IND-2014-02-02 (Industrial Organization)
- NEP-INO-2014-02-02 (Innovation)
- NEP-KNM-2014-02-02 (Knowledge Management & Knowledge Economy)
- NEP-PPM-2014-02-02 (Project, Program & Portfolio Management)
- NEP-SBM-2014-02-02 (Small Business Management)
- NEP-TID-2014-02-02 (Technology & Industrial Dynamics)
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