An Investigation into the Advisability of Using Concessional Taxation to Galvanize Innovation-Driven Economic Development

Dosmanbetova, A.S.; Kenenova, K.A.; Makenova, A.A.

doi:10.35808/ersj/1082

Cited by 2 publications

(1 citation statement)

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“…This is then reflected in the lower overall cost of financing R&D activity (Takalo et al, 2013;Rupeika-Apoga and Saksonova, 2018). On the other hand, R&D tax incentives reduce the cost of R&D activity by lowering the tax liability (Baldacchino et al, 2019;Dosmanbetova et al, 2018;Gashi et al, 2018;Liu, 2013;Vokshi, 2018;Yulianto and Chariri, 2019). Yet, the benefits of R&D tax incentives depend on the existence of a positive tax base, which is a necessary precondition to claim them (Bernstein, 1986;Solovjova et al, 2018).…”

Section: Theoretical Foundationsmentioning

confidence: 99%

The Impact of Public R&D Subsidies and Tax Incentives on Business R&D Expenditures

Ravšelj¹,

Aristovnik²

2020

IJEBA

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Purpose: Private R&D investment in the business sector is often subject to market failures, such as positive externalities, information asymmetries, uncertainty and risk, making it often less than socially desirable. This is the primary reason that governments promote private R&D investment. Accordingly, the main aim of this paper is to investigate the impact of public R&D policy on business R&D expenditures. Design/methodology/approach: Applying panel data regression analysis on a sample of 3,113 company-year observations, covering Slovenian companies for the period 2012-2016. Findings: The empirical results show that public support for R&D investment plays an important role in firms' R&D expenditures. As to R&D subsidies, the empirical results reveal they are generally ineffective since they displace firms' R&D expenditures. Yet they do become effective when used in combination with R&D tax incentives and received by companies that are growing. On the contrary, the empirical results also show that R&D tax incentives are always effective when companies have a sufficient tax base. Practical Implications: The overall findings suggest that R&D tax incentives are more effective than R&D subsidies in Slovenia. However, R&D subsidies are still attractive especially for smaller companies without a sufficient tax base. It is hence important to consider both public policy instruments as two parallel ways of supporting firms' R&D expenditures. Originality/value: Utilising a comprehensive dataset covering Slovenian companies made by merging multiple data sources, namely R&D survey, tax, balance-sheet and incomestatement data, representing the main originality and value of the paper.

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Section: Theoretical Foundationsmentioning

confidence: 99%

The Impact of Public R&D Subsidies and Tax Incentives on Business R&D Expenditures

Ravšelj¹,

Aristovnik²

2020

IJEBA

View full text Add to dashboard Cite

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The Use of Internal Resources for the Creation of Innovation: An Empirical Analysis of Portuguese Companies Benefiting From Tax Incentives for Research and Development

Walter

Au‐Yong‐Oliveira

Ferasso

et al. 2022

Int. J. Innovation Technol. Management

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Comparing companies solely based on tax incentives for R&D activities can be misleading. Hence, this research aims to assess how Portuguese companies that make use of tax incentives for R&D activities on an ongoing basis behave in terms of promoting and appropriating value through innovation. From an initial population of 3,156 companies, a final database with 339 Portuguese companies that made use of fiscal credits from 2013 to 2016 was analyzed. The tax incentive program targeted was the Fiscal Incentive System supporting R&D in Enterprises (SIFIDE). Using the analysis of variance (one-way ANOVA), the main results suggest that, considering the internal resources, there are no statistically significant differences between the promotion and appropriation of value through innovation according to the size and age of companies. The data indicate that good management regarding the generation and implementation of innovations may occur independently of size and age of firms, in the Portuguese case. Albeit the averages of the indicators of value appropriation of the intangible (e.g. patents, trademarks, and new processes), and the efficiencies of assets and liabilities for the promotion of the intangible are different according to the level of technological intensity. These results point to the need to reevaluate the tax incentives for R&D activities, since its generic nature may not meet the different innovation needs arising from the distinctive characteristics of these enterprises and their technological dynamics. Implications and future research directions are provided.

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An Investigation into the Advisability of Using Concessional Taxation to Galvanize Innovation-Driven Economic Development

Cited by 2 publications

References 0 publications

The Impact of Public R&D Subsidies and Tax Incentives on Business R&D Expenditures

The Impact of Public R&D Subsidies and Tax Incentives on Business R&D Expenditures

The Use of Internal Resources for the Creation of Innovation: An Empirical Analysis of Portuguese Companies Benefiting From Tax Incentives for Research and Development

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