infonet-economy

Policy makers have an increasing interest in designing appropriate public R&D policy programs to stimulate national innovativeness and competitiveness. First, this study investigates the effects of public R&D subsidies on firms’ R&D investments accounting for the collaboration pattern of the subsidized firms. Second, this representative analysis further puts light on the effectiveness of the publicly induced R&D investment, and examines if the policy-induced investments translate into higher innovation performance, thereby disentangling between radical and incremental innovation. The treatment effects analysis uses firm level data from five waves (1999, 2002, 2005, 2008, and 2011) of the Swiss innovation survey. The findings show that on average the receipt of an R&D subsidy translate into higher firm R&D investments. While the results do not exhibit any additional systemic positive support for collaboration in the presence of a subsidy, the publicly induced R&D investment mainly foster radical innovation output.