The Effect of Government Subsidy on Non-Technological Innovation and Firm Performance in the Service Sector: Evidence from Germany

Abstract

Background: To enhance the innovation activities at the firm level, government subsidies plays an important role. Objectives: The objective of the study is to explore whether firms in service sector that receive government subsidies engage more in marketing and organizational innovation activities than their counterparts. Second, focusing on the subsidized firms in the service sector, the impact of innovations (marketing as well as organizational) on firm performance—measured as the probability of submitted copyright applications by firms, has been analyzed. Methods/Approach: The propensity score matching approach and probit model have been used to analyze the innovation activities of subsidized and non-subsidized firms. The empirical analysis is based on the micro level data from Mannheim Innovation Panel, covering the Community Innovation Survey of 2011. Results: Empirical results show that public subsidy has a significant positive effect on marketing and organizational innovation. In addition, within the firms that have received government subsidy, the impact of only marketing innovation is found to be significant on firm performance. Conclusions: These findings employ that subsidized firms are more likely to perform better than their counterparts. Furthermore, public subsidy programs increase the probability of applying for a copyright in small and medium firms.

The Impact of Absorptive Capacity on Innovation in Peru

“…In this case, the lack of a dependent relationship can be explained. Now, regarding the finding itself of an insignificant relationship between innovation subsidy and innovation, this contrasts the existing literature (Basit, Kuhn, & Ahmed, 2018;Guo, Guo, & Jiang, 2016).…”

“…In this sense, this variable measures the perception of effectiveness of the subsidy from the SMEs perspective. This variable is validated in the studies of impact of innovation subsidy on innovation (Basit, Kuhn, & Ahmed, 2018;Hall, Lotti, & Mairesse, 2009;López-Acevedo & Tinajero-Bravo, 2013;Yao, Xu, Jiang, & Zhang, 2015).…”

“…For example, innovation has been found to affect performance in Chile and Peru (Heredia Perez, Geldes, Kunc, & Flores, 2018). Moreover, SMEs that have received innovation subsidies have been found to achieve superior firm performance (Basit, Kuhn, & Ahmed, 2018).…”

Substantive Innovation or Strategic Innovation? Research on Multiplayer Stochastic Evolutionary Game Model and Simulation

“…Cheng et al carried out research from the perspective of political connection and believed that political connection helps enterprises to obtain tax incentives and government subsidies [36]. Basit et al studied innovation subsidy in service industry and found that enterprises can significantly improve their performance through marketing innovation [37]. Some scholars also paid attention to the problem of corporate fraud for subsidy.…”

Incidencia de la innovación en marketing en el rendimiento empresarial: una aplicación basada en modelamiento con ecuaciones estructurales

“…Así las cosas, los esfuerzos de innovación tecnológica deben ser apoyados por la innovación en marketing y organizativa (González-Blanco, Coca-Pérez y Guisado-González, 2019; Nieves y Diaz-Meneses, 2016; Vrcelj, 2013;Xu, Wu y Ren, 2012). No obstante, los investigadores están descuidando las innovaciones organizativas o en marketing, que son a la par fundamentales para el crecimiento, rendimiento y funcionamiento efectivo (Abdul, Kuhn y Ahmed, 2018;Chung y Kim, 2017;Damanpour, 1991;Damanpour y Evan, 1984). Actualmente, son escasos los estudios sobre las innovaciones enfocadas al marketing (Gunday, Ulusoy, Kilic y Alpkan, 2011;Quaye y Mensah, 2019;Reiner, Reimann y Vitkauskaite, 2016;Zakerian et al, 2017), a pesar de que la innovación en marke-ting como estrategia empresarial permite a las organizacio-nes establecer una relación más estrecha con sus clientes hasta convertirlos en promotores de la propia empresa (Kotler y Keller, 2006).…”