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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.

Suggested Citation

  • Schneider, Cedric & Veugelers, Reinhilde, 2008. "On Young Innovative Companies: Why they matter and how (not) to policy support them," Working Papers 04-2008, Copenhagen Business School, Department of Economics.
  • Handle: RePEc:hhs:cbsnow:2008_004

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    Cited by:

    1. Giovanni Cerulli & Bianca Potì, 2014. "The Impact of Public Support Intensity on Business R&D: Evidence from a Dose-Response Approach," ERSA conference papers ersa14p625, European Regional Science Association.
    2. Gabriele Pellegrino & Mariacristina Piva & Marco Vivarelli, 2009. "How do young innovative companies innovate?," Jena Economic Research Papers 2009-055, Friedrich-Schiller-University Jena.
    3. Ansgar Belke & Florian Verheyen, 2013. "Finance Access of SMEs: What Role for the ECB?," ROME Working Papers 201311, ROME Network.
    4. Giovanni Cerulli & Bianca Poti', 2016. "Explaining firm sensitivity to R&D subsidies within a dose-response model: The role of financial constraints, real cost of investment, and strategic value of R&D," DEM Working Papers 2016/09, Department of Economics and Management.
    5. Hanna Hottenrott & Bronwyn H. Hall & Dirk Czarnitzki, 2016. "Patents as quality signals? The implications for financing constraints on R&D," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(3), pages 197-217, April.
    6. D'Este,Pablo & Rentocchini,Francesco & Vega Jurado,Jaider M., 2012. "The role of human capital in lowering barriers to engage in innovation: evidence from the Spanish innovation survey," INGENIO (CSIC-UPV) Working Paper Series 201206, INGENIO (CSIC-UPV), revised 03 Aug 2012.
    7. Massimo Colombo & Philippe Mustar & Mike Wright, 2010. "Dynamics of Science-based entrepreneurship," The Journal of Technology Transfer, Springer, vol. 35(1), pages 1-15, February.
    8. H. T. Tran & E. Santarelli, 2013. "Revisiting Italian Emigration Before the Great War: A Test of the Standard Economic Model," Working Papers wp909, Dipartimento Scienze Economiche, Universita' di Bologna.
    9. Cassiman, Bruno & Vanormelingen, Stijn, 2013. "Profiting from Innovation: Firm Level Evidence on Markups," CEPR Discussion Papers 9703, C.E.P.R. Discussion Papers.
    10. Paulo Nunes & Marco Gonçalves & Zélia Serrasqueiro, 2013. "The influence of age on SMEs’ growth determinants: empirical evidence," Small Business Economics, Springer, vol. 40(2), pages 249-272, February.
    11. repec:wsi:ijimxx:v:15:y:2011:i:06:n:s136391961100374x is not listed on IDEAS
    12. Dirk Czarnitzki & Julie Delanote, 2013. "Young Innovative Companies: the new high-growth firms?," Industrial and Corporate Change, Oxford University Press, vol. 22(5), pages 1315-1340, October.
    13. repec:zbw:rwirep:0430 is not listed on IDEAS
    14. Ansgar Belke, 2013. "Finance Access of SMEs: What Role for the ECB?," Ruhr Economic Papers 0430, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    15. Simona Bovha-Padilla & Joze P. Damijan & Jozef Konings, 2009. "Financial Constraints and the Cyclicality of R&D Investment:Evidence from Slovenia," LICOS Discussion Papers 23909, LICOS - Centre for Institutions and Economic Performance, KU Leuven.

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    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)


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