How Public R&D Support Affects Research Activity of Enterprises: Evidence from the Czech Republic

Abstract

Public support for research and development (R&D) in business sector is usually justified by the argument about market failure. New knowledge produced by research and development has some features of public good, which causes underinvestment in private R&D activities. From the social development point of view, it is desirable to produce and diffuse new knowledge. The article seeks to answer the question what impact a change in the amount of public support for R&D has on research activities of private enterprises. This paper tries to bridge a gap in the literature dealing with impact of R&D policy in emerging innovation systems in Central Europe. Our research is carried out on the example of the Czech Republic and its regions. We evaluate direct and indirect R&D support in the period 2007–2015, and we pay attention to three variables representing R&D in businesses: business expenditures on R&D, number of R&D employees in businesses and number of R&D workplaces in businesses. We calculate year-on-year changes in all the observed variables, and the relation between the public support and research activities of enterprises is assessed through descriptive statistics, measures of association and regression models. Our analyses proved a positive impact of R&D support on companies’ own expenditures on R&D and the number of employees. The relation between R&D support and number of workplaces seems to be quite weak. The paper also discusses limitations of the research and implications for public policy.