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The possible adverse impact of innovation subsidies: some evidence from Italy

Author

Listed:
  • Alessandra Catozzella

    (Università Cattolica del Sacro Cuore)

  • Marco Vivarelli

    (Università Cattolica del Sacro Cuore
    University of Sussex
    Institute for the Study of Labour (IZA))

Abstract

The impact of public funding on innovative productivity is estimated using a sample of Italian firm-level data (CIS3). A bivariate endogenous switching model is developed in order to free the analysis of the sources of sample selection and firm heterogeneity, the possible simultaneity between subsidy allocation and the qualitative composition of the innovative output, as well as the endogeneity of public support with respect to innovative performance. Results show that innovative productivity is negatively affected by the subsidy; as a result of government intervention, supported firms appear to exhaust their advantage through merely increasing their innovative expenditures.

Suggested Citation

  • Alessandra Catozzella & Marco Vivarelli, 2016. "The possible adverse impact of innovation subsidies: some evidence from Italy," International Entrepreneurship and Management Journal, Springer, vol. 12(2), pages 351-368, June.
    • Handle: RePEc:spr:intemj:v:12:y:2016:i:2:d:10.1007_s11365-014-0342-3
    DOI: 10.1007/s11365-014-0342-3
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    References listed on IDEAS

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    More about this item

    Keywords

    Innovation subsidy; Policy evaluation; Product innovation; Bivariate endogenous switching model;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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