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Picking the Winner? - Empirical Evidence on the Targeting of R&D Subsidies to Start-ups

  • Uwe Cantner

    ()

    (Department of Economics, Friedrich Schiller University of Jena)

  • Sarah Kösters

    ()

    (DFG RTG 1411 "The Economics of Innovative Change", Friedrich Schiller University of Jena)

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 a unique data set of 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. On the other hand, the ambitions and the patent stock of the founder(s) do not decide the receipt of R&D subsidies. These insights into the overall allocation of R&D subsidies are important since they have implications for policy effectiveness and efficiency. The implied difficulties of policy targeting fundamentally question the massive subsidization of private R&D.

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File URL: http://www.wiwi.uni-jena.de/Papers/jerp2009/wp_2009_093.pdf
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Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2009-093.

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Date of creation: 09 Nov 2009
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Handle: RePEc:jrp:jrpwrp:2009-093
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  1. Bronwyn H. Hall, 2003. "The Financing of Research and Development," Finance 0303003, EconWPA.
  2. Aschhoff, Birgit, 2009. "Who Gets the Money? The Dynamics of R&D Project Subsidies in Germany," ZEW Discussion Papers 08-018 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Tuomas Takalo & Tanja Tanayama, 2010. "Adverse selection and financing of innovation: is there a need for R&D subsidies?," The Journal of Technology Transfer, Springer, vol. 35(1), pages 16-41, February.
  4. Alexander Eickelpasch & Michael Fritsch, 2005. "Contests for Cooperation: A New Approach in German Innovation Policy," Discussion Papers of DIW Berlin 478, DIW Berlin, German Institute for Economic Research.
  5. Bassi, Laurie J, 1984. "Estimating the Effect of Training Programs with Non-Random Selection," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 36-43, February.
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  7. J. Vicente Blanes & Isabel Busom, 2004. "WHO PARTICIPATES IN R&D SUBSIDY PROGRAMS?. The case of Spanish Manufacturing Firms," Working Papers wpdea0407, Department of Applied Economics at Universitat Autonoma of Barcelona.
  8. Chaminade, Cristina & Edquist, Charles, 2005. "From theory to practice: the use of systems of innovation approach in innovation policy," Papers in Innovation Studies 2005/2, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
  9. Scott Shane, 2009. "Why encouraging more people to become entrepreneurs is bad public policy," Small Business Economics, Springer, vol. 33(2), pages 141-149, August.
  10. Heike Belitz & Frank Fleischer & Andreas Stephan, 2001. "Staatliche Förderung von Forschung und Entwicklung in der ostdeutschen Wirtschaft: eine Bilanz," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 68(35), pages 537-544.
  11. Luukkonen, Terttu, 2000. "Additionality of EU framework programmes1," Research Policy, Elsevier, vol. 29(6), pages 711-724, June.
  12. Johan Wiklund & Dean Shepherd, 2003. "Aspiring for, and Achieving Growth: The Moderating Role of Resources and Opportunities," Journal of Management Studies, Wiley Blackwell, vol. 40(8), pages 1919-1941, December.
  13. Uwe Cantner & Sarah Kösters, 2009. "R&D Subsidies to Start-ups - Effective Drivers of Patent Activity and Employment Growth?," Jena Economic Research Papers 2009-027, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  14. Santarelli, Enrico & Vivarelli, Marco, 2006. "Entrepreneurship and the Process of Firms’ Entry, Survival and Growth," IZA Discussion Papers 2475, Institute for the Study of Labor (IZA).
  15. Michael Fritsch, 2008. "How does new business formation affect regional development? Introduction to the special issue," Small Business Economics, Springer, vol. 30(1), pages 1-14, January.
  16. Lundvall, Bengt-Ake & Johnson, Bjorn & Andersen, Esben Sloth & Dalum, Bent, 2002. "National systems of production, innovation and competence building," Research Policy, Elsevier, vol. 31(2), pages 213-231, February.
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