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On Young Innovative Companies: Why they matter and how (not) to policy support them

  • Schneider, Cedric

    (Department of Economics, Copenhagen Business School)

  • Veugelers, Reinhilde

    (Department of Economics, Copenhagen Business School)

Recent policy initiatives in the EU aim at supporting so-called Young Innovative Companies (YICs). This paper provides empirical evidence from German CIS data on the innovative performances of this specific type of firms, supporting why they matter. We first characterize YICs in the sample of innovation active firms. We show that firms that combine newness, smallness and high RD intensity, are rare in the sample of innovative firms, but achieve significantly higher innovative sales than other innovative firms, especially innovative sales that are new to the market. Not surprisingly, YICs view financial constraints, both internal and external, as an important factor hampering their innovation activities, significantly more so than other innovation active firms. This access to finance problem is an often used motive for government intervention. In Germany, subsidies schemes for innovation are general and not particularly targeted at YICs. When assessing the effectiveness of these public funding schemes for our sample firms, we find that they are not effective to increase the innovative sales of YICs, unlike the average innovative firm in our sample.

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File URL: http://openarchive.cbs.dk/cbsweb/handle/10398/7663
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Paper provided by Copenhagen Business School, Department of Economics in its series Working Papers with number 04-2008.

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Length: 35 pages
Date of creation: 01 Jan 2008
Date of revision:
Handle: RePEc:hhs:cbsnow:2008_004
Contact details of provider: Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark
Phone: 38 15 25 75
Fax: 38 15 34 99
Web page: http://www.cbs.dk/departments/econ/
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