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R&D Subsidies to Start-ups - Effective Drivers of Patent Activity and Employment Growth?

Author

Listed:
  • Uwe Cantner

    (Friedrich-Schiller-University Jena, Department of Economics, Chair of Economics/Microeconomics)

  • Sarah Kösters

    (Friedrich-Schiller-University Jena, Department of Economics, DFG RTG 1411 "The Economics of Innovative Change")

Abstract

The present paper investigates the effectiveness of R&D subsidies given to start-ups. Taking an aggregate view rather than evaluating a single program, we estimate the impact of R&D subsidies on start-ups' employment growth and their patent output. A unique data set on start-ups in the East German county of Thuringia allows us to focus on those start-ups that conduct R&D within the first three business years. We conduct propensity score matching to address the selection bias between subsidized and non-subsidized start-ups. We find that R&D subsidies lead to an increase in employment growth of about 66%. Furthermore, subsidized start-ups show a 2.8 times higher patent output. These estimates provide evidence for the additionality of R&D subsidies within the first three business years. Moreover, our analysis points to the special group of academic spin-offs which excels in the novelty of business ideas and patent activity. For some of these high-tech start-ups, no non-subsidized counterparts can be found. This might be attributed to the policy focus on academic spin-offs, which has led to a successful targeting of R&D support schemes.

Suggested Citation

  • Uwe Cantner & Sarah Kösters, 2009. "R&D Subsidies to Start-ups - Effective Drivers of Patent Activity and Employment Growth?," Jena Economics Research Papers 2009-027, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2009-027
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    File URL: https://oweb.b67.uni-jena.de/Papers/jerp2009/wp_2009_027.pdf
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    Citations

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    Cited by:

    1. Sarah Kösters, 2010. "Subsidizing Start-Ups: Policy Targeting and Policy Effectiveness," Journal of Industry, Competition and Trade, Springer, vol. 10(3), pages 199-225, September.
    2. Uwe Cantner & Sarah Kösters, 2012. "Picking the winner? Empirical evidence on the targeting of R&D subsidies to start-ups," Small Business Economics, Springer, vol. 39(4), pages 921-936, November.
    3. Rustem Baris Yesilay & Ilker Murat Ar & Serdal Temel, 2015. "The Relationship Between Direct Government Support for R&D and Patents in Emerging Economies: A Turkish Case Study," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 12(05), pages 1-20.

    More about this item

    Keywords

    R&D subsidies; start-ups; policy evaluation;
    All these keywords.

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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