Page 3 - IDEA Study 8 2017 Direct subsidies and R&D output in firms

Study 8 / 2017 Do direct subsidies stimulate new R&D outputs in firms? A comparison of the IMPULS, TIP and ALFA programmes 1 JUNE 2017 Oleg Sidorkin and Martin Srholec Summary ● This study compares output additionality effects of the IMPULS, TIP and ALFA programmes, which provided direct public support of R&D to business enterprises in the Czech Republic. Using a large and rich firm-level dataset we employ a non-parametric propensity score matching estimator to find out whether these subsidy programmes stimulated additional R&D output in terms of applications for formal intellectual property (IP) protection, such as patents of invention and utility models, which would not be produced, if the subsidy was not provided. ● The results indicate additionality effects for IP protection in the Czech context. Business enterprises participating in the subsidy programmes are estimated to have been significantly more likely to apply for Czech IP protection within three years after the start of funding than their comparable non-participating counterparts. In contrast, however, the subsidy programmes do not seem to have made much difference to the firms' propensity to apply for international IP protection. Hence, the subsidies did not stimulate R&D outputs that were sufficiently novel to warrant IP protection abroad. Overall, the impacts appear to be lower for IMPULS than for TIP and ALFA. It should be emphasized that the results for ALFA, and in part TIP, must be interpreted as preliminary due to delays in data availability. ● Admittedly, the subsidy programmes were justified on the grounds of promoting competitiveness and growth of firms. The Czech market is quite small, with limited room 1 This study received support from the research programme Strategy AV21 of the Czech Academy of Sciences and GA ČR project no 17-09265S on “Frontiers of empirical research on public financing of business R&D and innovation”. We would like to thank Matěj Bajgar, Petr Horák and Daniel Münich for their valuable comments and Jan Hanousek for facilitating access to firm-level micro data from Bureau Van Dijk’s Amadeus dataset. Any ambiguities, omissions or errors are the authors' responsibility. 1