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

Author

Listed:
  • 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)

Abstract

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.

Suggested Citation

  • Uwe Cantner & Sarah Kösters, 2009. "Picking the Winner? - Empirical Evidence on the Targeting of R&D Subsidies to Start-ups," Jena Economics Research Papers 2009-093, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2009-093
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    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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