IDEAS home Printed from https://ideas.repec.org/a/sae/envirc/v34y2016i8p1425-1452.html
   My bibliography  Save this article

The impact of innovation support programs on small and medium enterprises innovation in traditional manufacturing industries: An evaluation for seven European Union regions

Author

Listed:
  • Dragana Radicic
  • Geoffrey Pugh
  • Hugo Hollanders
  • René Wintjes
  • Jon Fairburn

Abstract

We evaluate the effect of innovation support programs on output innovation by small and medium enterprises in traditional manufacturing industry. This focus is motivated by a definition of traditional manufacturing industry that includes capacity for innovation, and by evidence of its continued importance in European Union employment. We conducted a survey in seven European Union regions to generate the data needed to estimate pre-published switching models by means of the copula approach, from which we derived treatment effects on a wide range of innovation outputs. We find that for participants the estimated effects of innovation support programs are positive, typically increasing the probability of innovation and of its commercial success by around 15%. Yet, we also find that a greater return on public investment could have been secured by supporting firms chosen at random from the population of innovating traditional sector small and medium enterprises. These findings indicate the effectiveness of innovation support programs while suggesting reform of their selection procedures.

Suggested Citation

  • Dragana Radicic & Geoffrey Pugh & Hugo Hollanders & René Wintjes & Jon Fairburn, 2016. "The impact of innovation support programs on small and medium enterprises innovation in traditional manufacturing industries: An evaluation for seven European Union regions," Environment and Planning C, , vol. 34(8), pages 1425-1452, December.
    • Handle: RePEc:sae:envirc:v:34:y:2016:i:8:p:1425-1452
    DOI: 10.1177/0263774X15621759
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0263774X15621759
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0263774X15621759?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Anu Tokila & Mika Haapanen, 2009. "Evaluating Project Deadweight Measures: Evidence from Finnish Business Subsidies," Environment and Planning C, , vol. 27(1), pages 124-140, February.
    2. Alberto Marzucchi, 2011. "Multi-level innovation policy in southern EU countries.An additionality evaluation of the Italian and Spanish public interventions," Openloc Working Papers 1110, Public policies and local development.
    3. James Foreman-Peck, 2013. "Effectiveness and efficiency of SME innovation policy," Small Business Economics, Springer, vol. 41(1), pages 55-70, June.
    4. David, Paul A. & Hall, Bronwyn H. & Toole, Andrew A., 2000. "Is public R&D a complement or substitute for private R&D? A review of the econometric evidence," Research Policy, Elsevier, vol. 29(4-5), pages 497-529, April.
    5. Blundell, Richard & Griffith, Rachel & Van Reenen, John, 1995. "Dynamic Count Data Models of Technological Innovation," Economic Journal, Royal Economic Society, vol. 105(429), pages 333-344, March.
    6. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 701-728.
    7. Czarnitzki, Dirk & Lopes-Bento, Cindy, 2013. "Value for money? New microeconometric evidence on public R&D grants in Flanders," Research Policy, Elsevier, vol. 42(1), pages 76-89.
    8. John P A Ioannidis, 2005. "Why Most Published Research Findings Are False," PLOS Medicine, Public Library of Science, vol. 2(8), pages 1-1, August.
    9. Helena Lenihan & Mark Hart, 2004. "The Use of Counterfactual Scenarios as a Means to Assess Policy Deadweight: An Irish Case Study," Environment and Planning C, , vol. 22(6), pages 817-839, December.
    10. Giovanni Cerulli, 2010. "Modelling and Measuring the Effect of Public Subsidies on Business R&D: A Critical Review of the Econometric Literature," The Economic Record, The Economic Society of Australia, vol. 86(274), pages 421-449, September.
    11. Michael Lokshin & Elena Glinskaya, 2009. "The Effect of Male Migration on Employment Patterns of Women in Nepal," The World Bank Economic Review, World Bank, vol. 23(3), pages 481-507, November.
    12. Katrin Hussinger, 2008. "R&D and subsidies at the firm level: an application of parametric and semiparametric two-step selection models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(6), pages 729-747.
    13. Aamir Rafique Hashmi, 2013. "Competition and Innovation: The Inverted-U Relationship Revisited," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1653-1668, December.
    14. Aschhoff, Birgit, 2009. "The effect of subsidies on R&D investment and success: do subsidy history and size matter?," ZEW Discussion Papers 09-032, ZEW - Leibniz Centre for European Economic Research.
    15. González, Xulia & Pazó, Consuelo, 2008. "Do public subsidies stimulate private R&D spending?," Research Policy, Elsevier, vol. 37(3), pages 371-389, April.
    16. Murray D. Smith, 2003. "Modelling sample selection using Archimedean copulas," Econometrics Journal, Royal Economic Society, vol. 6(1), pages 99-123, June.
    17. Aerts, Kris & Czarnitzki, Dirk, 2004. "Using Innovation Survey Data to Evaluate R&D Policy: The Case of Belgium," ZEW Discussion Papers 04-55, ZEW - Leibniz Centre for European Economic Research.
    18. Alecke Björn & Reinkowski Janina & Mitze Timo & Untiedt Gerhard, 2012. "Does Firm Size make a Difference? Analysing the Effectiveness of R&D Subsidies in East Germany," German Economic Review, De Gruyter, vol. 13(2), pages 174-195, May.
    19. Leamer, Edward E & Leonard, Herman B, 1983. "Reporting the Fragility of Regression Estimates," The Review of Economics and Statistics, MIT Press, vol. 65(2), pages 306-317, May.
    20. CZARNITZKI Dirk & LOPES BENTO Cindy, 2010. "Evaluation of public R&D policies: A cross-country comparison," LISER Working Paper Series 2010-31, Luxembourg Institute of Socio-Economic Research (LISER).
    21. Clarysse, Bart & Wright, Mike & Mustar, Philippe, 2009. "Behavioural additionality of R&D subsidies: A learning perspective," Research Policy, Elsevier, vol. 38(10), pages 1517-1533, December.
    22. Catozzella, Alessandra & Vivarelli, Marco, 2011. "Beyond Additionality: Are Innovation Subsidies Counterproductive?," IZA Discussion Papers 5746, Institute of Labor Economics (IZA).
    23. Reinhard Hujer & Dubravko Radić, 2005. "Evaluating The Impacts Of Subsidies On Innovation Activities In Germany," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(4), pages 565-586, September.
    24. Garcia, Abraham & Mohnen, Pierre, 2010. "Impact of government support on R&D and innovation," MERIT Working Papers 2010-034, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    25. Isabel Busom, 2000. "An Empirical Evaluation of The Effects of R&D Subsidies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(2), pages 111-148.
    26. Tang, Jianmin, 2006. "Competition and innovation behaviour," Research Policy, Elsevier, vol. 35(1), pages 68-82, February.
    27. Aakvik, Arild & Heckman, James J. & Vytlacil, Edward J., 2005. "Estimating treatment effects for discrete outcomes when responses to treatment vary: an application to Norwegian vocational rehabilitation programs," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 15-51.
    28. Maarten Cornet & Björn Vroomen & Marc van der Steeg, 2006. "Do innovation vouchers help SMEs to cross the bridge towards science?," CPB Discussion Paper 58, CPB Netherlands Bureau for Economic Policy Analysis.
    29. Aerts, Kris & Schmidt, Tobias, 2008. "Two for the price of one?: Additionality effects of R&D subsidies: A comparison between Flanders and Germany," Research Policy, Elsevier, vol. 37(5), pages 806-822, June.
    30. Michael Lokshin & Zurab Sajaia, 2011. "Impact of interventions on discrete outcomes: Maximum likelihood estimation of the binary choice models with binary endogenous regressors," Stata Journal, StataCorp LP, vol. 11(3), pages 368-385, September.
    31. Helena Lenihan & Mark Hart & Stephen Roper, 2007. "Industrial Policy Evaluation: Theoretical Foundations and Empirical Innovations: New Wine in New Bottles," International Review of Applied Economics, Taylor & Francis Journals, vol. 21(3), pages 313-319.
    32. Hujer, Reinhard & Radić, Dubravko, 2005. "Evaluating the Impacts of Subsidies on Innovation Activities in Germany," ZEW Discussion Papers 05-43, ZEW - Leibniz Centre for European Economic Research.
    33. Takuya Hasebe, 2013. "Copula-based maximum-likelihood estimation of sample-selection models," Stata Journal, StataCorp LP, vol. 13(3), pages 547-573, September.
    34. H Lenihan, 1999. "An Evaluation of a Regional Development Agency's Grants in Terms of Deadweight and Displacement," Environment and Planning C, , vol. 17(3), pages 303-318, June.
    35. Leiponen, Aija & Byma, Justin, 2009. "If you cannot block, you better run: Small firms, cooperative innovation, and appropriation strategies," Research Policy, Elsevier, vol. 38(9), pages 1478-1488, November.
    36. Giovanni Cerulli & Bianca Poti', 2008. "Evaluating the Effect of Public Subsidies on firm R&D activity: an Application to Italy Using the Community Innovation Survey," CERIS Working Paper 200809, CNR-IRCrES Research Institute on Sustainable Economic Growth - Torino (TO) ITALY - former Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY.
    37. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, vol. 87(2), pages 178-183, May.
    38. Wintjes, R. & Douglas, D. & Fairburn, J. & Hollanders, H. & Pugh, G., 2014. "The impact of innovation support programmes on SME innovation in traditional manufacturing industries: an evaluation for seven EU regions," MERIT Working Papers 2014-033, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eleftherios K. Soleas, 2020. "Leader strategies for motivating innovation in individuals: a systematic review," Journal of Innovation and Entrepreneurship, Springer, vol. 9(1), pages 1-28, December.
    2. Chrystalla Kapetaniou & Soo Hee Lee, 2019. "Geographical proximity and open innovation of SMEs in Cyprus," Small Business Economics, Springer, vol. 52(1), pages 261-276, January.
    3. Adel Ben Khalifa, 2018. "Government Supports and Technology Adoption: Evidence from Tunisia," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 43(4), pages 41-70, December.
    4. Greco, Marco & Germani, Francesca & Grimaldi, Michele & Radicic, Dragana, 2022. "Policy mix or policy mess? Effects of cross-instrumental policy mix on eco-innovation in German firms," Technovation, Elsevier, vol. 117(C).
    5. Roth Cardoso, Hugo Henrique & Dantas Gonçalves, Adriana & Dambiski Gomes de Carvalho, Gustavo & Gomes de Carvalho, Hélio, 2020. "Evaluating innovation development among Brazilian micro and small businesses in view of management level: Insights from the local innovation agents program," Evaluation and Program Planning, Elsevier, vol. 80(C).
    6. Gustavo Dambiski Gomes de Carvalho & Luis Mauricio Martins de Resende & Joseane Pontes & Hélio Gomes de Carvalho & Leozenir Mendes Betim, 2021. "Innovation and Management in MSMEs: A Literature Review of Highly Cited Papers," SAGE Open, , vol. 11(4), pages 21582440211, October.
    7. Mehmet Akif Demircioglu & David B Audretsch & Timothy F Slaper, 2019. "Sources of innovation and innovation type: firm-level evidence from the United States," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(6), pages 1365-1379.
    8. Stojčić, Nebojša, 2021. "Social and private outcomes of green innovation incentives in European advancing economies," Technovation, Elsevier, vol. 104(C).
    9. Florencia Fiorentin & Mariano Pereira & Diana Suárez, 2020. "The relationship between public funds, innovation and employment among Argentinean manufacturing firms," Journal of Evolutionary Economics, Springer, vol. 30(3), pages 773-791, July.
    10. Becker, Lasse & Bizer, Kilian, 2015. "Federalism and innovation support for small and medium-sized enterprises: Empirical evidence in Europe," University of Göttingen Working Papers in Economics 245, University of Goettingen, Department of Economics.
    11. Ivan Novak, 2020. "Comparative analysis of innovation performance of European Union countries," Notitia - journal for economic, business and social issues, Notitia Ltd., vol. 1(6), pages 1-11, December.
    12. El¿bieta Roszko-Wójtowicz & Jacek Bia³ek, 2016. "The goal of this research is to propose a procedure of innovativeness measurement, taking Summary Innovation Index methodology as a starting point. In contemporary world, innovative activity is percei," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 34(2), pages 443-479.
    13. Beynon, Malcolm J. & Jones, Paul & Pickernell, David, 2023. "Evaluating EU-Region level innovation readiness: A longitudinal analysis using principal component analysis and a constellation graph index approach," Journal of Business Research, Elsevier, vol. 159(C).
    14. Pełka Marcin, 2018. "Analysis of Innovations in the European Union Via Ensemble Symbolic Density Clustering," Econometrics. Advances in Applied Data Analysis, Sciendo, vol. 22(3), pages 84-98, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kiman Kim & Sang Ok Choi & Sooyeon Lee, 2021. "The Effect of a Financial Support on Firm Innovation Collaboration and Output: Does Policy Work on the Diverse Nature of Firm Innovation?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(2), pages 645-675, June.
    2. Brüggemann, Julia & Proeger, Till, 2017. "The effectiveness of public subsidies for private innovations: An experimental approach," University of Göttingen Working Papers in Economics 266, University of Goettingen, Department of Economics, revised 2017.
    3. Ugur, Mehmet & Trushin, Eshref & Solomon, Edna, 2015. "UK and EU subsidies and private R&D investment: Is there input additionality?," MPRA Paper 68009, University Library of Munich, Germany, revised 16 Nov 2015.
    4. Syoum Negassi & Jean-Francois Sattin, 2014. "Evaluation of Public R&D Policy: A Meta-Regression Analysis," Working Papers 14-09, University of Delaware, Department of Economics.
    5. Dragana Radicic & Geoffrey Pugh & David Douglas, 2020. "Promoting cooperation in innovation ecosystems: evidence from European traditional manufacturing SMEs," Small Business Economics, Springer, vol. 54(1), pages 257-283, January.
    6. Hud, Martin & Hussinger, Katrin, 2015. "The impact of R&D subsidies during the crisis," Research Policy, Elsevier, vol. 44(10), pages 1844-1855.
    7. Brüggemann Julia & Proeger Till, 2017. "The Effectiveness of Public Subsidies for Private Innovations. An Experimental Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(4), pages 1-21, October.
    8. Thomas H. W. Ziesemer, 2021. "The Effects of R&D Subsidies and Publicly Performed R&D on Business R&D: A Survey," Hacienda Pública Española / Review of Public Economics, IEF, vol. 236(1), pages 171-205, March.
    9. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.
    10. Sergio Afcha & Jose García-Quevedo, 2016. "The impact of R&D subsidies on R&D employment composition," Industrial and Corporate Change, Oxford University Press, vol. 25(6), pages 955-975.
    11. Boeing, Philipp, 2016. "The allocation and effectiveness of China’s R&D subsidies - Evidence from listed firms," Research Policy, Elsevier, vol. 45(9), pages 1774-1789.
    12. Czarnitzki, Dirk & Lopes-Bento, Cindy, 2013. "Value for money? New microeconometric evidence on public R&D grants in Flanders," Research Policy, Elsevier, vol. 42(1), pages 76-89.
    13. Aboal, Diego & Garda, Paula, 2015. "Does public financial support stimulate innovation and productivity? An impact evaluation," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    14. Giovanni Cerulli & Roberto Gabriele & Bianca Potì, 2016. "The role of firm R&D effort and collaboration as mediating drivers of innovation policy effectiveness," Industry and Innovation, Taylor & Francis Journals, vol. 23(5), pages 426-447, July.
    15. LOPES BENTO Cindy & CZARNITZKI Dirk, 2012. "Value for money? New microeconomic evidence on public R&D grants in Flanders," LISER Working Paper Series 2012-19, Luxembourg Institute of Socio-Economic Research (LISER).
    16. Dimos, Christos & Pugh, Geoff, 2016. "The effectiveness of R&D subsidies: A meta-regression analysis of the evaluation literature," Research Policy, Elsevier, vol. 45(4), pages 797-815.
    17. Sergio Afcha & Jose García-Quevedo, 2016. "The impact of R&D subsidies on R&D employment composition," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 25(6), pages 955-975.
    18. Beom Cheol Cin & Young Jun Kim & Nicholas S. Vonortas, 2017. "The impact of public R&D subsidy on small firm productivity: evidence from Korean SMEs," Small Business Economics, Springer, vol. 48(2), pages 345-360, February.
    19. Boeing, Philipp, 2014. "China's R&D subsidies: Allocation and effectiveness," ZEW Discussion Papers 14-103, ZEW - Leibniz Centre for European Economic Research.
    20. Marco Mariani & Fabrizia Mealli, 2018. "The Effects of R&D Subsidies to Small and Medium-Sized Enterprises. Evidence from a Regional Program," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 4(2), pages 249-281, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:envirc:v:34:y:2016:i:8:p:1425-1452. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.