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Picking the winner? Empirical evidence on the targeting of R&D subsidies to start-ups

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  • Uwe Cantner
  • Sarah Kösters

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 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. Although the ambitions and patent stock of the founder(s) do not decide the receipt of R&D subsidies, team start-ups and the initial capital of a start-up tend to affect this decision positively. Hence, we cannot exclude a “picking the winner” strategy in targeting R&D subsidies to start-ups. More generally, however, the problems of policy targeting question the massive subsidization of private R&D. Copyright Springer Science+Business Media, LLC. 2012

Suggested Citation

  • Uwe Cantner & Sarah Kösters, 2012. "Picking the winner? Empirical evidence on the targeting of R&D subsidies to start-ups," Small Business Economics, Springer, vol. 39(4), pages 921-936, November.
    • Handle: RePEc:kap:sbusec:v:39:y:2012:i:4:p:921-936
    DOI: 10.1007/s11187-011-9340-9
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    More about this item

    Keywords

    Start-ups; R&D subsidies; Subsidy allocation; O38; L26; L52;
    All these keywords.

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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