Instrument policy mix and firm size: is there complementarity between R&D subsidies and R&D tax credits?

Petrin, Tea (author), Radičić, Dragana (author)

Nowadays, a rising number of evaluations investigates a multifaceted concept of the policy mix. Our study specifically focuses on the mix of two most frequently used supply-side instruments–R&D subsidies and R&D tax credits. Drawing on the longitudinal sample of Spanish manufacturing firms, we investigate whether there is a complementary interaction between these policy instruments with respect to product and process innovations. Moreover, by employing a dynamic random-effects probit estimator, we account for the persistence of innovation and endogeneity of public support. The results, that are separately estimated for SMEs and large firms, uniformly show evidence of no interplay between two policy instruments either in SMEs or large firms. However, among factors that influence the propensity to product and process innovations, by far, the largest effect is generated by true state dependence. These findings provide some policy implications for fostering product and process innovations in the long run.

• Language: English
• Keywords: instrument policy mix, R&D subsidies, R&D tax credits, persistence of innovation, SMEs, Spanish manufacturing
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: EF - School of Economics and Business
• Publication status: In print
• Publication version: Version of Record
• Year: 2021
• PID: 20.500.12556/RUL-134917
• UDC: 658
• ISSN on article: 0892-9912
• DOI: 10.1007/s10961-021-09908-8
• COBISS.SI-ID: 88831491
• Publication date in RUL: 11.02.2022

Record is a part of a journal

• Title: The Journal of technology transfer
• Shortened title: J. technol. transf.
• Publisher: Springer
• ISSN: 0892-9912
• COBISS.SI-ID: 5981212

Licences

• License: CC BY 4.0, Creative Commons Attribution 4.0 International
• Link: http://creativecommons.org/licenses/by/4.0/
• Description: This is the standard Creative Commons license that gives others maximum freedom to do what they want with the work as long as they credit the author.
• Licensing start date: 07.12.2021