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Effectiveness and Efficiency of SME Innovation Policy

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Abstract

This paper assesses UK innovation policy impact on a large, population weighted, sample of both service and manufacturing SMEs. By focussing on self-reported innovation the study achieves a wider coverage of the effects of SME innovation policy than possible with more traditional indicators. Propensity score matching indicates that SMEs receiving UK state support for innovation were more likely to innovate than unsupported comparable enterprises. Innovating enterprises are shown to have grown significantly faster over the years 2002-4 when other growth influences are appropriately controlled. Combining these two results and comparing the outlays on SME innovation policy with the estimated effects suggests that policy was efficient as well as effective. There is evidence that SME tax credits were expensive compared with earlier support instruments. But the overall high returns estimated suggest that, even in times of public spending cuts, persisting with SME innovation policy would be prudent.

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  • Foreman-Peck, James, 2012. "Effectiveness and Efficiency of SME Innovation Policy," Cardiff Economics Working Papers E2012/4, Cardiff University, Cardiff Business School, Economics Section.
  • Handle: RePEc:cdf:wpaper:2012/4
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    Cited by:

    1. Brink, Siegrun & Kriwoluzky, Silke & Bijedic, Teita & Ettl, Kerstin & Welter, Friederike, 2014. "Gender, Innovation und Unternehmensentwicklung," IfM-Materialien 228, Institut für Mittelstandsforschung (IfM) Bonn.
    2. Nicholas Crafts & Alan Hughes, 2013. "Industrial Policy for the Medium to Long-term," Working Papers wp455, Centre for Business Research, University of Cambridge.
    3. Massimo FLORIO & Aleksandra PARTEKA & Emanuela SIRTORI, 2016. "The Role of EU Policy in Supporting Technological Innovation in SMEs - a Bayesian Network Analysis of Firm-Level Data from Poland," Departmental Working Papers 2016-13, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    4. Li, Kui-Wai, 2015. "Analyzing the TFP Performance of Chinese Industrial Enterprises," MPRA Paper 67844, University Library of Munich, Germany.
    5. Viktor Prokop & Jan Stejskal, 2015. "Determinants of machinery firms' innovation activity - case study from the Czech Republic," ERSA conference papers ersa15p1111, European Regional Science Association.
    6. Nuno Campos Pereira & Nuno Araújo & Leonardo Costa, 2016. "A counting multidimensional innovation index for SMEs," Working Papers de Economia (Economics Working Papers) 01, Católica Porto Business School, Universidade Católica Portuguesa.
    7. Pahnke, André & Kay, Rosemarie & Schlepphorst, Susanne, 2017. "Unternehmerisches Verhalten im Zuge der Unternehmensnachfolge," IfM-Materialien 254, Institut für Mittelstandsforschung (IfM) Bonn.
    8. Hajduová Zuzana & Lacko Roman & Mildeová Stanislava & Stričík Michal, 2015. "Case Study In The Field Of Innovation In Selected Companies In Slovak Republic," Scientific Annals of Economics and Business, De Gruyter Open, pages 103-119.
    9. Isabel Busom & Beatriz Corchuelo & Ester Martínez-Ros, 2014. "Tax incentives… or subsidies for business R&D?," Small Business Economics, Springer, pages 571-596.
    10. Branka Ahlin & Mateja Drnovšek & Robert Hisrich, 2014. "Entrepreneurs’ creativity and firm innovation: the moderating role of entrepreneurial self-efficacy," Small Business Economics, Springer, pages 101-117.

    More about this item

    Keywords

    Innovation; State Aid; SME; Policy Evaluation;

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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