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Picking the Winner? - Empirical Evidence on the Targeting of R&D Subsidies to Start-ups

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Author Info

  • Uwe Cantner

    ()
    (Department of Economics, Friedrich Schiller University of Jena)

  • Sarah Kösters

    ()
    (DFG RTG 1411 "The Economics of Innovative Change", Friedrich Schiller University of Jena)

Abstract

This paper investigates the allocation of R&D subsidies given to start-ups. Considering the coexistence of various R&D project schemes, we take an aggregate view and analyze the determinants of the receipt of (any) R&D subsidies within the first three business years of the start-ups. We argue that policymakers and funding authorities follow a strategy of "picking the winner". Analyzing a unique data set of start-ups in the East German state of Thuringia, we conduct logistic regressions and find ambiguous support. R&D subsidies are given to start-ups with innovative business ideas, especially academic spin-offs. On the other hand, the ambitions and the patent stock of the founder(s) do not decide the receipt of R&D subsidies. These insights into the overall allocation of R&D subsidies are important since they have implications for policy effectiveness and efficiency. The implied difficulties of policy targeting fundamentally question the massive subsidization of private R&D.

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Bibliographic Info

Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2009-093.

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Date of creation: 09 Nov 2009
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Handle: RePEc:jrp:jrpwrp:2009-093

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Keywords: Start-ups; R&D subsidies; Subsidy allocation;

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Cited by:
  1. Simachev, Yuri & Kuzyk, Mikhail & Ivanov, Denis, 2012. "Fostering innovation in Russian companies in the post-crisis period: Opportunities and constraints," MPRA Paper 41284, University Library of Munich, Germany.

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