Abstract
Innovation has become an essential source of sustainable growth for most firms, especially small- and medium-sized enterprises (SMEs). Governments around the world widely implement innovation vouchers to promote innovation in SMEs. This study empirically explores the effects of innovation vouchers in stimulating patentable innovation and ultimately enhancing firms’ financial performance. Using a panel of 1274 listed SMEs from the Small and Medium Enterprise Board (SMEB) and the Growth Enterprise Board (GEB), we find that innovation vouchers lead firms to utilize knowledge-intensive services and significantly increase their financial performance. We further document that patentable innovations mediate the relationship between innovation vouchers and firms’ financial performance. We report that the effects of innovation vouchers on financial performance are more prominent for SMEs with limited external informational resources. We believe that our study yields novel evidence and sheds further light on the important policy implications of innovation vouchers to facilitate the sustainable growth of SMEs.
Highlights
Governments have implemented innovation vouchers to fund short-term collaborative projects to solve innovation problems for small and medium-sized enterprises (SMEs)
We propose that innovation vouchers could increase financial performance in high-tech SMEs
We use the patents applied as the measure for innovation, and the results indicate that innovation vouchers have a significantly positive effect on innovation
Summary
Governments have implemented innovation vouchers to fund short-term collaborative projects to solve innovation problems for small and medium-sized enterprises (SMEs). This policy has become an increasingly popular way to boost innovation in many. According to official government documents, innovation vouchers are defined as credit notes, allowing high-tech SMEs to purchase innovation consultant services and collaboration services with universities or research institutions that provide knowledge-intensive services. An innovation voucher is one kind of credit note for a research–industry collaboration Resource constraints, such as internal financial constraints and knowledge deficits, may impede innovation and growth in high-tech SMEs [6]. The Netherlands’ government first launched innovation vouchers in 1998; the vouchers were assigned to local small firms to purchase industry–university collaboration [1]
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