Abstract
In this paper, we examine the effects of EU policy schemes that support innovation in small and medium-sized enterprises. Since the effectiveness of innovation schemes can be expected to differ across Europe as entrepreneurship and innovation tend to be more intense in more developed regions, we postulate that the effect of EU instruments on additionality increases with the level of development. We offer a multi-country perspective using two waves of Community Innovation Survey data (CIS 2008 and CIS 2012). We find that the impact of EU funding depends on the level of country’s innovativeness: both national and EU public schemes exhibit smaller additionality in less developed countries, while crowding-out is observed only in recently joined EU members.
Highlights
All countries have national public policy schemes to help companies innovate
Considering national and European Union (EU) instruments, we find that almost the same variables are significant for both outcomes, which leads to the conclusion that the European and national agencies have similar selection criteria, as Czarnitzki and Lopes-Bento [10] found for Germany
Considering the added effect of EU funding on top of national policies, the results suggest that in NewEU, they may be used as substitutes for own funding
Summary
All countries have national public policy schemes to help companies innovate. While a non-efficient outcome is when firms substitute the public money for their own investments, the desired outcome is that recipients invest even more of their own resources in innovation development, augmenting the effect of the public instrument and creating input additionality. For EU countries, in addition to a variety of national policies, there are EU instruments operated by the EU agencies. While national funding schemes differ from country to country, the EU mechanisms are either the same or very similar in form and implementation across the whole EU. Effectiveness of any innovation scheme can be expected to differ across countries and regions, as entrepreneurship and innovation are linked to overall level of development [3,4]. There is a lack of studies on cross-country comparison of public instruments in general, and those existing ones make comparisons on the basis of a small number of countries [5,6,7,8,9]
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