Innovation Performance and Government Financing

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractExternal financing is important when inventors and small technology-based firms commercialize their inventions. However, the private information of inventors about the quality of their products causes information asymmetries and moral hazard problems. To help compensate for potentially non-existing capital markets, the Swedish Government has intervened by offering loans with different terms to firms and inventors. This paper analyzes the association between various forms of external financing and performance in profit-terms when patents are commercialized. The empirical work is based on a patent survey sent to Swedish inventors and small firms, where the response rate is 80 %. The estimations show that projects with soft government financing in the R&D-phase have a significantly inferior performance compared to projects without such financing, whereas those receiving government loans on commercial terms perform as the average. Distinguishing between governmental financing alternatives with different terms makes it possible to draw the conclusion that government failure primarily depends on bad financing terms, rather than bad project selection. A policy implication is therefore that public loans should be granted on commercial terms already in the R&D-phase of projects.

On the duality of political and economic stakeholder influence on firm innovation performance: Theory and evidence from Chinese firms

“…Governments can help firms overcome some of these resource barriers by providing government resources (Inoue et al, ; K. Z. Zhou et al, ) to accelerate the absorption and utilization of knowledge embedded in external innovativeness. Indeed, research has found that governments in different countries, ranging from developed to developing, play an important role in filling the gap between inventors and external financiers by directly providing financial assistance and loans to inventors (Siegel, Wessner, Binks, & Lockett, ; Svensson, ) or by facilitating the growth of private venture capital firms to support innovative firms (Gompers & Lerner, ). In addition, governments have been found to deal with technology market failures by sponsoring industry‐wide R&D consortia, which provides access to R&D expertise, technological intelligence, and technology transfer services, benefiting innovations of consortia members (Nakamura, Nelson, & Vertinsky, ).…”

New approach to the innovation process in emerging economies: The manufacturing sector case in Chile and Peru

“…Furthermore, funding projects at the stage of R&D have positive effects on performance. However, project success depends more on trade conditions and lending rather than project selection criteria (Svensson, 2008). Moreover, Zhu et al (2012) suggest five dimensions to explain factors that limit the potential for innovation and indicate a formal institutional constraint that has an impact on strategic decisions and is expected to adversely affect innovation and performance.…”

The impact of R&D collaboration on innovative performance in Korea: A Bayesian network approach

“…We introduced a variable, AGE, and tried to identify if these differences in an economic environment of older and younger firms had an influence on innovative performance. SVENSSON [2006] compared R&D projects financed by government with those by private capital in innovation performance. He also compared commercialization results for two different financing types of projects.…”