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Matthew effects and R&D subsidies: knowledge cumulability in high-tech and low-tech industries

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  • Francesco Crespi
  • Cristiano Antonelli

Abstract

The paper explores the causes and effects of persistence in the discretionary allocation of public subsidies to R&D activities performed by private firms in high-tech and low-tech industries. It applies the distinction between virtuous Matthew-effects and vicious Matthew-effects. The former qualifies the persistence in the discretionary allocation of public subsidies in terms of sheer reputation based upon previous awards. The latter is identified by the role of the accumulation of competence stemming from past grants in current R&D activities. Virtuous Matthew effects are found in high-tech industries where knowledge cumulability is higher. In traditional industries, vicious Matthew effects prevail for the lower levels of knowledge cumulability. Here reputation-Matthew-effects can lead to substitution of private funds with public ones. The empirical analysis is based on Transition Probability Matrices, probit regressions and Propensity Score Matching on around 700 Italian firms in the years 1998-2003.

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Bibliographic Info

Paper provided by Department of Economics - University Roma Tre in its series Departmental Working Papers of Economics - University 'Roma Tre' with number 0140.

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Date of creation: Oct 2011
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Handle: RePEc:rtr:wpaper:0140

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Keywords: Innovation; R&D subsidies; Matthew effects; past dependence; path dependence;

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References

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  1. Raquel Ortega-Argilés & Mariacristina Piva & Lesley Potters & Marco Vivarelli, 2009. "Is Corporate R&D Investment in High-Tech Sectors More Effective?," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali dises0955, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
  2. Francesco Crespi & Mario Pianta, 2008. "Diversity in innovation and productivity in Europe," Journal of Evolutionary Economics, Springer, vol. 18(3), pages 529-545, August.
  3. Arvanitis, Spyros & Hollenstein, Heinz & Lenz, Stephan, 2002. " The Effectiveness of Government Promotion of Advanced Manufacturing Technologies (AMT): An Economic Analysis Based on Swiss Micro Data," Small Business Economics, Springer, vol. 19(4), pages 321-40, December.
  4. Xulia Gonz�lez & Jordi Jaumandreu & Consuelo Pazo, 2005. "Barriers to Innovation and Subsidy Effectiveness," RAND Journal of Economics, The RAND Corporation, vol. 36(4), pages 930-949, Winter.
  5. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
  6. Kauko, K., 1996. "Effectiveness of R & D subsidies -- a sceptical note on the empirical literature," Research Policy, Elsevier, vol. 25(3), pages 321-323, May.
  7. DUGUET Emmanuel, 2004. "Are R&D subsidies a substitute or a complement to privately funded R&D? Evidence from France using propensity score methods for non- experimental data," Public Economics 0411007, EconWPA.
  8. 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-.
  9. Antonelli,Cristiano & Crespi, Francesco & Scellato, Giuseppe, 2012. "Inside innovation persistence: New evidence from Italian micro-data," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201213, University of Turin.
  10. Bettina Peters, 2005. "Persistence of Innovation: Stylised Facts and Panel Data Evidence," Development and Comp Systems 0511021, EconWPA.
  11. Antonelli, Cristiano & Crespi, Francesco & Scellato, Giuseppe, 2013. "Path Dependent Patterns of Persistence in Productivity Growth," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201323, University of Turin.
  12. Blanes, J. Vicente & Busom, Isabel, 2004. "Who participates in R&D subsidy programs?: The case of Spanish manufacturing firms," Research Policy, Elsevier, vol. 33(10), pages 1459-1476, December.
  13. Conte, Andrea & Schweizer, Philip & Dierx, Adriaan & Ilzkovitz, Fabienne, 2009. "An analysis of the efficiency of public spending and national policies in the area of R&D," MPRA Paper 23549, University Library of Munich, Germany.
  14. Roper, Stephen & Hewitt-Dundas, Nola, 2008. "Innovation persistence: Survey and case-study evidence," Research Policy, Elsevier, vol. 37(1), pages 149-162, February.
  15. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
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Cited by:
  1. Marco Corsino & Roberto Gabriele & Anna Giunta, 2012. "R&D Incentives: The Effectiveness Of A Place-Based Policy," Departmental Working Papers of Economics - University 'Roma Tre' 0169, Department of Economics - University Roma Tre.
  2. Antonelli Cristiano, 2013. "The economics of technological congruence," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201306, University of Turin.
  3. 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.
  4. 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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