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.
Catozzella, A., Vivarelli, M., The Possible Adverse Impact of Innovation Subsidies: Some Evidence from Italy, <<INTERNATIONAL ENTREPRENEURSHIP AND MANAGEMENT JOURNAL>>, 2016; (12): 351-368. [doi:10.1007/s11365-014-0342-3] [http://hdl.handle.net/10807/94903]
The Possible Adverse Impact of Innovation Subsidies: Some Evidence from Italy
Catozzella, AlessandraPrimo
;Vivarelli, MarcoUltimo
2016
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.
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