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Output Additionality of Public Support for Innovation: Evidence for Irish Manufacturing Plants

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  • Nola Hewitt-Dundas
  • Stephen Roper

Abstract

Public support for private R&D and innovation is part of most national and regional innovation support regimes. In this article, we estimate the effect of public innovation support on innovation outputs in Ireland and Northern Ireland. Three dimensions of output additionality are considered: extensive additionality, in which public support encourages a larger proportion of the population of firms to innovate; improved product additionality, in which there is an increase in the average importance of incremental innovation; new product additionality, in which there is an increase in the average importance of more radical innovation. Using an instrumental variable approach, our results are generally positive, with public support for innovation having positive, and generally significant, extensive, improved and new product additionality effects. These results hold both for all plants and indigenously owned plants, a specific target of policy in both jurisdictions. The suggestion is that grant aid to firms can be effective in both encouraging firms to initiate new innovation and improve the quality and sophistication of their innovation activity. Our results also emphasize the importance for innovation of in-house R&D, supply-chain linkages, skill levels and capital investment, all of which may be the focus of complementary policy initiatives.

Suggested Citation

  • Nola Hewitt-Dundas & Stephen Roper, 2009. "Output Additionality of Public Support for Innovation: Evidence for Irish Manufacturing Plants," European Planning Studies, Taylor & Francis Journals, vol. 18(1), pages 107-122, September.
    • Handle: RePEc:taf:eurpls:v:18:y:2009:i:1:p:107-122
    DOI: 10.1080/09654310903343559
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    References listed on IDEAS

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    1. Hans Loof & Almas Heshmati, 2006. "On the relationship between innovation and performance: A sensitivity analysis," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(4-5), pages 317-344.
    2. Manuel Trajtenberg, 2000. "R&D Policy in Israel: An Overview and Reassessment," NBER Working Papers 7930, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Marcel Bednarz & Tom Broekel, 2019. "The relationship of policy induced R&D networks and inter-regional knowledge diffusion," Journal of Evolutionary Economics, Springer, vol. 29(5), pages 1459-1481, November.
    2. Hasan Bakhshi & John Edwards & Stephen Roper & Judy Scully & Duncan Shaw & Lorraine Morley & Nicola Rathbone, 2013. "An Experimental Approach to Industrial Policy Evaluation: The case of Creative Credits," Research Papers 0004, Enterprise Research Centre.
    3. Kiman Kim & Sang Ok Choi & Sooyeon Lee, 2021. "The Effect of a Financial Support on Firm Innovation Collaboration and Output: Does Policy Work on the Diverse Nature of Firm Innovation?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(2), pages 645-675, June.
    4. Priit Vahter & James H. Love & Stephen Roper, 2014. "Openness and Innovation Performance: Are Small Firms Different?," Industry and Innovation, Taylor & Francis Journals, vol. 21(7-8), pages 553-573, November.
    5. Stephen Roper & Helen Xia, 2014. "Innovation, innovation strategy and survival," Research Papers 0017, Enterprise Research Centre.
    6. Stephen Roper & Nola Hewitt-Dundas, 2017. "Investigating a neglected part of Schumpeter’s creative army: what drives new-to-the-market innovation in micro-enterprises?," Small Business Economics, Springer, vol. 49(3), pages 559-577, October.
    7. Roper, Stephen & Vahter, Priit & Love, James H., 2013. "Externalities of openness in innovation," Research Policy, Elsevier, vol. 42(9), pages 1544-1554.
    8. Roper, Stephen & Hewitt-Dundas, Nola, 2015. "Knowledge stocks, knowledge flows and innovation: Evidence from matched patents and innovation panel data," Research Policy, Elsevier, vol. 44(7), pages 1327-1340.
    9. Roper, Stephen & Arvanitis, Spyros, 2012. "From knowledge to added value: A comparative, panel-data analysis of the innovation value chain in Irish and Swiss manufacturing firms," Research Policy, Elsevier, vol. 41(6), pages 1093-1106.
    10. Roper, Stephen & Tapinos, Efstathios, 2016. "Taking risks in the face of uncertainty: An exploratory analysis of green innovation," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 357-363.
    11. Bakhshi, Hasan & Edwards, John S. & Roper, Stephen & Scully, Judy & Shaw, Duncan & Morley, Lorraine & Rathbone, Nicola, 2015. "Assessing an experimental approach to industrial policy evaluation: Applying RCT+ to the case of Creative Credits," Research Policy, Elsevier, vol. 44(8), pages 1462-1472.
    12. Alicia Mas-Tur & Domingo Ribeiro Soriano, 2014. "The level of innovation among young innovative companies: the impacts of knowledge-intensive services use, firm characteristics and the entrepreneur attributes," Service Business, Springer;Pan-Pacific Business Association, vol. 8(1), pages 51-63, March.
    13. Bourke, Jane & Roper, Stephen, 2017. "Innovation, quality management and learning: Short-term and longer-term effects," Research Policy, Elsevier, vol. 46(8), pages 1505-1518.
    14. Mas-Tur, Alicia & Simón Moya, Virginia, 2015. "Young innovative companies (YICs) and entrepreneurship policy," Journal of Business Research, Elsevier, vol. 68(7), pages 1432-1435.
    15. Bourke, Jane & Roper, Stephen, 2016. "AMT adoption and innovation: An investigation of dynamic and complementary effects," Technovation, Elsevier, vol. 55, pages 42-55.

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