Public Support to Innovation Strategies

This study investigates whether the receipt of public R&D funding determines firm's R&D strategy selection. Using the Community Innovation Survey (CIS) dataset including more than 3000 Italian manufacturing companies, we adopt a multinomial logit model after controlling for sample selection and endogeneity issues which arise when dealing with CIS data. The main finding is that public R&D funding in uences whether firms select the make, the buy or the make&buy strategy and in particular firms, after receiving public support, prefer the composite strategy rather than the single strategies. This result turns out to be good news given that government support, correcting for the market failures which characterize the combined strategy, favors the strategy which seems to enhance a positive synergy between in house R&D and external sourcing.