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European cooperative R&D and firm performance: Evidence based on funding differences in key actions

Author

Listed:
  • Luis Aguiar

    (European Commission [Brussels])

  • Philippe Gagnepain

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

Abstract

The Framework programmes created by the European Union are the main financial tools used to support cooperative R&D activities in the EU. Unlike previous empirical studies, this paper suggests that their impact on firms' competitiveness is significant. We analyze industry-oriented research joint ventures supported by the Fifth European Framework Programme between 1998 and 2002. A key feature of this Programme is that funding is available to the firms based on social and economic concerns instead of pure performance criteria, which guarantees that financial support is not granted conditional on technological opportunities. This allows us to identify the causal effect of the programme on firms' performance using the funding available to the firms in their respective industries as a source of exogenous variation in the decision to participate in the programme. Our results suggest that participation in research projects may raise labor productivity by at least 44.4% while it has very limited effect on profit margin.

Suggested Citation

  • Luis Aguiar & Philippe Gagnepain, 2017. "European cooperative R&D and firm performance: Evidence based on funding differences in key actions," PSE-Ecole d'économie de Paris (Postprint) halshs-01630665, HAL.
  • Handle: RePEc:hal:pseptp:halshs-01630665
    DOI: 10.1016/j.ijindorg.2016.12.007
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    References listed on IDEAS

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    2. Klessova, Svetlana & Engell, Sebastian & Thomas, Catherine, 2022. "Assessment of the advancement of market-upstream innovations and of the performance of research and innovation projects," Technovation, Elsevier, vol. 116(C).
    3. Hünermund, Paul & Czarnitzki, Dirk, 2019. "Estimating the causal effect of R&D subsidies in a pan-European program," Research Policy, Elsevier, vol. 48(1), pages 115-124.
    4. Giebel, Marek & Kraft, Kornelius, 2021. "Subsidies and innovation in the recent financial crisis," ZEW Discussion Papers 21-097, ZEW - Leibniz Centre for European Economic Research.
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    6. Gruber, Harald, 2019. "Proposals for a digital industrial policy for Europe," Telecommunications Policy, Elsevier, vol. 43(2), pages 116-127.
    7. Enrico Vanino & Stephen Roper & Bettina Becker, 2020. "Knowledge to Money: Assessing the Business Performance Effects of Publicly Funded R&D Grants," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(04), pages 20-24, January.
    8. Bettina Becker, 2020. "The Impact of Innovation Policy on Firm Innovation and Performance: A Review of Recent Research Developments," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(04), pages 10-15, January.
    9. Meda Andrijauskiene & Daiva Dumciuviene & Alina Stundziene, 2021. "EU framework programmes: positive and negative effects on member states' innovation performance," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 16(3), pages 471-502, September.
    10. Szücs, Florian, 2020. "Do research subsidies crowd out private R&D of large firms? Evidence from European Framework Programmes," Research Policy, Elsevier, vol. 49(3).
    11. Thomas H. W. Ziesemer, 2021. "The Effects of R&D Subsidies and Publicly Performed R&D on Business R&D: A Survey," Hacienda Pública Española / Review of Public Economics, IEF, vol. 236(1), pages 171-205, March.
    12. Riccardo Crescenzi & Guido de Blasio & Mara Giua, 2020. "Cohesion Policy incentives for collaborative industrial research: evaluation of a Smart Specialisation forerunner programme," Regional Studies, Taylor & Francis Journals, vol. 54(10), pages 1341-1353, October.
    13. Sara Amoroso & Simone Vannuccini, 2019. "Teaming up with Large R&D Investors: Good or Bad for Knowledge Production and Diffusion?," SPRU Working Paper Series 2019-20, SPRU - Science Policy Research Unit, University of Sussex Business School.
    14. Svetlana Klessova & Sebastian Engell & Catherine Thomas, 2022. "Assessment of the advancement of market-upstream innovations and of the performance of research and innovation projects," Post-Print hal-03636260, HAL.
    15. Daniel Nepelski & Vincent Roy & Annarosa Pesole, 2019. "The organisational and geographic diversity and innovation potential of EU-funded research networks," The Journal of Technology Transfer, Springer, vol. 44(2), pages 359-380, April.
    16. Francesco Aiello & Paola Cardamone & Lidia Mannarino & Valeria Pupo, 2021. "Does external R&D matter for family firm innovation? Evidence from the Italian manufacturing industry," Small Business Economics, Springer, vol. 57(4), pages 1915-1930, December.
    17. Federico Fantechi & Ugo Fratesi, 2023. "Border Effects on firm's productivity: The role of peripherality and territorial capital," Papers in Regional Science, Wiley Blackwell, vol. 102(3), pages 483-506, June.
    18. Mulier, Klaas & Samarin, Ilia, 2021. "Sector heterogeneity and dynamic effects of innovation subsidies: Evidence from Horizon 2020," Research Policy, Elsevier, vol. 50(10).
    19. Ramsza Michał & Karbowski Adam, 2020. "Product R&D Coopetition and Firm Performance," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 20(2), pages 1-9, June.
    20. Kim, Sangil & Park, Keon Chul, 2021. "Government funded R&D collaboration and it's impact on SME's business performance," Journal of Informetrics, Elsevier, vol. 15(3).
    21. Sonja Radas & Andrea Mervar & Bruno Škrinjarić, 2020. "Regional Perspective on R&D Policies for SMEs: Does Success Breed Success?," Sustainability, MDPI, vol. 12(9), pages 1-25, May.
    22. Paul Hünermund & Dirk Czarnitzki, 2020. "Innovation Policy and Causality," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(04), pages 03-06, January.
    23. Sonja Đuričin & Isidora Beraha & Olivera Jovanović & Marija Mosurović Ružičić & Marija Lazarević-Moravčević & Mihailo Paunović, 2022. "The Efficiency of National Innovation Policy Programs: The Case of Serbia," Sustainability, MDPI, vol. 14(14), pages 1-14, July.

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    More about this item

    Keywords

    R&D cooperation; Firm performance; EU framework programme; Policy evaluation;
    All these keywords.

    JEL classification:

    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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