Public selection and financing of R&D cooperative projects: Credit versus subsidy funding

Abstract

a b s t r a c tIn this article we develop an analytical model of the selection process for R&D cooperative projects, to study the factors that motivate public project selection and corresponding funding, using two different financial instruments: subsidies and credits. For this purpose, we propose a three stage empirical strategy to analyse the differential individual effects of several factors on the decisions taken by the public agency. This analysis is based on project level data from cooperative R&D project calls under the Spanish PROFIT initiative, for the period 2000-2003. The main results show that the public agency uses the two financial instruments to address different objectives. First, some projects close to the market are well supported through credits, while basic research projects receive only selective support in the form of subsidies. Second, there is significant diversity in the selection and funding of technological areas. Third, regarding the explicit goal of fostering cooperation, the public agency selectively favours partnerships with universities and technology institutes through the award of subsidies. However, there seems to be less incentive for large consortia. Fourth, there are significant regional differences among financed projects and, also, our data show sharp yearly fluctuations.

Assessing the influence of differentiation strategy and R&D subsidies on R&D cooperation

“…It seems clear that the establishment of many R&D cooperation agreements in the context of the Spanish manufacturing sector occurs as a result of the stimulus that many companies receive from the government (regional, national, and European). In this regard, in Spain, the share of public funds in the development of private R&D reaches the quota of 40% (Santamaría, Barge-Gil, and Modrego 2010).…”

Policy, entrepreneurship, creativity and sustainability: The case of ‘Principi Attivi’ (‘Active Ingredients’) in Apulia Region (southern Italy)

“…More specifically, on the supply side, we focus on understanding whether the existence of creative and sustainable business ideas may affect the outcome of the selection of project proposals. There is an increasing body of literature on the allocation of external sources for start-ups (Santamaría et al 2010;Nofsinger and Wang, 2011). This also includes funding allocation for research projects in environmental sciences (Wellington and Lewis, 2016) and creativity (Feder and Katz-Gerro, 2012;Schnädelbach et al 2016).…”

Emerging forms of cross-sector collaboration in the Spanish innovation system

“…Research has shown that cooperation is not a determining aspect in project selection or funding (Santamaría et al, 2010), but plays a secondary role in supporting selection. In consequence, the concerted projects programme did not foster large consortia and often posed the problem of the free-riding behaviour of firms (Joost, 2003).…”