Evaluating the impact of public policies on large firms: A synthetic control approach to science-industry transfer policies

Abstract

In most countries, large companies receive the majority of public research and development (R&D) funding. Due to methodological difficulties, however, assessments on the effect of government-funded R&D programs mainly focus on small- and medium-sized enterprises. To evaluate the impact of a specific innovation policy on large companies, this article suggests using the synthetic control method (SCM), initially developed by Abadie et al. (2010). This method is applied to evaluate the impact of a recent French science-industry transfer initiative, inspired by other foreign policy tools, and to demonstrate the relevance of the SCM compared to other evaluation methods for large companies. The SCM has the advantage of providing an individual assessment of the impact of a policy on each company, revealing highly heterogeneous results both on R&D inputs and companies’ cooperative behavior. This study shows that the SCM offers new perspectives for assessing the impact of policies at company level.JEL classification: C23, D22, O36, O38.