The impact of public funding on science valorisation: an analysis of the ERC Proof-of-Concept Programme

Governments and public agencies are increasingly keen to support the translation of scientific discoveries into commercial and societal applications through science valorisation funding, as a way to enhance progress and inclusive growth. In this paper, we use grant-level data from the European Research Council Proof-of-Concept (PoC) programme, in order to assess the impact of public funding on a broad set of science valorisation outcomes, including licensing, spinoff formation, R&D collaborations, consulting and access to follow-on funding. We employ an instrumental variable approach to compare the valorisation outcomes of projects that obtained an ERC PoC grant to a group of projects that applied to the PoC scheme but were not funded. We find that the programme was effective in fostering the early valorisation of scientific discoveries by all measures of success that we employed. Overall, thus, our findings speak in favour of this type of policy instrument as a catalyst to accelerate the transition of scientific breakthroughs towards practical applications

The Challenges of Nonprofit Governance

The stakes for proper nonprofit governance are extremely high. Over 1.5 million nonprofits are registered with the Internal Revenue Service (IRS), collectively employing twelve million people and accounting for 5.6% of U.S. gross domestic profit. Yet whereas for-profit companies have significant checks on the behavior of boards and management, nonprofit firms lack many of the same types of internal and external governance control mechanisms. COVID-19 is just the latest shock to expose the lack of preparedness and capability of many nonprofit boards in fulfilling their essential governance functions. This Article contributes to the corporate governance literature by identifying aspects of nonprofit governance that create unnecessary risk to nonprofit entities and to society overall. Currently many governance failures that would be corrected in traditional for-profit entities go unaddressed among nonprofits. We make unique contributions to addressing these governance shortcomings by suggesting an enforcement reorientation by both public and private actors. Our novel solutions encompass disclosure, certification, oversight by state attorneys general, and federal actors

Crisis, Crisis, Read All About It! Investigating the Direct and Joint Effects of Crisis Response Strategies, Crisis History and Strategic Actions on the Tone of Media Coverage

Crisis management research has focused on how crisis stricken firms protect their reputation by communicating appropriate messages to evaluators and employing strategic actions that favorably shape public opinion about the stricken firm. Developing conversations have addressed how a firm’s crisis history may impact current crisis management efforts. However, little is known about how these factors jointly and directly influence what is said about a crisis stricken firm and subsequently impact evaluators’ perceptions. Primarily guided by the tenets of attribution and situational crisis communication theories, I studied the interactive and main effects of crisis response strategies (accommodative, reframing and defensive), crisis history (first time offenders and repeat offenders) and strategic action (ceremonial and technical) on the tone of media coverage about a crisis stricken firm. I theorized that there would be significant differences in the tone of media coverage about the stricken firm given the 1) the diverse reactions by evaluators to each category of response strategy, 2) differences in perceptions of current crisis responsibility as a result of crisis history and 3) the relative impact of strategic actions on a stricken firm’s crisis management efforts. I examined these relationships in the context of 63 high impact crises by analyzing 11,715 relevant articles and press releases to capture the tone of media coverage and code the crisis response strategies and strategic actions employed. A series of two way ANOVAs and ANCOVAs controlling for initial crisis attribution and organizational ranking indicated that relative to crisis history and strategic actions, crisis response strategies had the strongest effect on the tone of media coverage about a stricken firm. Further, the relationship between strategic actions and crisis response strategies revealed stronger effects on the tone of media coverage in conditions where stricken firms used reframing and defensive strategies, while employing technical actions and a combination of both technical and ceremonial actions respectively. Surprisingly, a statistically significant interaction between strategic actions and crisis history indicated a more favorable tone for repeat offender firms which did not announce strategic actions. I discuss the theoretical and practical implications of these findings and present suggestions for future research

EU Horizon 2020 subsidy instruments in Finnish unlisted green high-technology SMEs : utilization, impacts and experiences of grants from the case companies’ perspectives

The research and development activities are vital for economic development, although those are not at a socially optimal level. The issue is more severe in novel green high-technology small and medium-sized enterprises, which are resource-constrained and might find investing in their research and development unappealing since it is challenging for green companies to reap the full benefits of their products due to externalities and spillovers. Therefore, the economic environment for these companies could be mitigated by public subsidization. However, subsidization might be controversial as it might not attract or incentivize green SMEs to allocate and invest their own funds in innovation activities and could also lead to deadweight or crowding effects. As pecking order theory addresses the green high-technology SMEs might encounter financial barriers because of insufficient turnover and uncertainty related to their technologies. Moreover, being less-established actors, the green SMEs face legitimacy challenges that can be difficult to overcome. The EU has approached these obstacles and alleviated the underinvestment with its Horizon 2020 framework program that offers funding for innovative projects. As the H2020 funding is granted by a respectable body, the certification could be leveraged by the companies to attract resources and network with consortium or industry partners. The objective of this thesis is to examine Finnish unlisted green high-technology SMEs and the EU’s H2020 framework program. The study pursues to answer for the objectives by addressing the SMEs’ motives to apply for the H2020 subsidies, how the SMEs have utilized the instruments and what type of impacts have been realized. Also, reporting and cooperation in the H2020 program are studied. The empirical part of the thesis was conducted by interviewing 10 case companies in the green sector. The study finds that funds and networking by the H2020 are the primary factors to apply for the subsidies whereas, surprisingly, the EU certification was not important and occasionally recognised as disadvantageous. Moreover, although the H2020 subsidy was leveraged when obtaining external capital, the resource constraints prevented investing additional internal funds. However, the H2020 projects can be quite large in relation to the size of the SMEs and thus, tie up companies’ resources, creating a forced crowding-in effect.Tutkimus- ja kehitystoiminta ovat talouden kehityksen kannalta elintärkeitä, mutta eivät ole tällä hetkellä sosiaalisesti optimaalisella tasolla. Erityisesti vihreät korkean teknologian pk-yritykset ovat resursseiltaan rajoittuneempia sekä saattavat nähdä investoimisen vähemmän houkuttelevampana, koska niiden on haastavaa saada tuotteistaan täysimääräinen hyöty ulkoisvaikutusten vuoksi. Tästä johtuen, kyseisten yritysten taloudellista toimintaympäristöä voidaan parantaa julkisten tukien avulla. Kuitenkin, tukeminen saattaa olla ristiriitaista, sillä se ei välttämättä houkuttele tai kannusta vihreitä yrityksiä allokoimaan ja investoimaan varojaan innovaatiotoimintoihin ja voi johtaa myös rahoituksen syrjäytymisvaikutuksiin. Kuten rahoituksen nokkimisjärjestyksen teoria esittää, vihreät korkean teknologian pk-yritykset saattavat kohdata rahoituksellisia rajoitteita riittämättömän liikevaihdon tai teknologiaan kohdistuvan epävarmuuden takia. Lisäksi vähemmän vakiintuneina toimijoina vihreät pk-yritykset kohtaavat legitimiteettihaasteita, joita voi olla vaikea ylittää. EU on lähestynyt aihetta ja tukenut ali-investointeja Horisontti 2020 -puiteohjelmalla, joka tarjoaa rahoitusta lupaaville innovatiivisille projekteille. Koska H2020-tukirahoituksen myöntää huomionarvoinen taho antaa sertifiointi yrityksille erinomaisen mahdollisuuden houkutella yritykseen muita resursseja ja verkostoitua konsortioiden sekä toimialan kumppaneiden kanssa. Tämän työn tavoitteena on tutkia suomalaisia listaamattomia vihreitä korkean teknologian pk-yrityksiä ja EU:n H2020 -puiteohjelmaa. Tutkimus pyrkii vastaamaan työn tavoitteisiin käsittelemällä pk-yritysten motiiveja hakea H2020-tukia, kuinka pk-yritykset ovat hyödyntäneet tuki-instrumentteja ja millaisia vaikutuksia tuilla on ollut. Lisäksi tarkastellaan raportointia ja yhteistyötä H2020-puiteohjelmassa. Tutkimuksen empiirinen osa suoritetaan haastattelemalla 10 vihreällä sektorilla operoivaa pk-yritystä. Tutkimuksessa havaitaan, että H2020-ohjelman tarjoamat varat ja verkostoituminen ovat ensisijaisia syitä tukien hakemiseen, kun taas yllättäen EU-sertifikaattia ei koettu arvokkaaksi ja todettiin toisinaan jopa epäsuotuisaksi. Lisäksi, vaikka H2020-tukea hyödynnettiin ulkoisen pääoman hankkimisessa, resurssirajoitukset estivät pääosin yritysten sisäisten lisävarojen vivutuksen. Kuitenkin, H2020-hankkeet voivat olla niin suuria verrattuna pk-yritysten kokoon, että ne sitovat yritysten resursseja hankkeeseen luoden välttämättömän vipuvaikutuksen

Non-Market Intermediaries and Government Financial Support as Innovation Catalysts

This dissertation aims to improve our understanding of innovation catalysts. Past studies have identified that a variety of industry actors and policy measures can work as innovation catalysts (e.g., David, Hall, & Tool, 2000; Howells, 2006; McDermott, Corredoira, & Kruse, 2009). However, they are still limited in clarifying their roles in boosting innovation, which makes it difficult to understand how their support assists in firms' innovation activities. In this dissertation, I re-examine support programs that are designed to catalyse innovation to improve our understanding of innovation catalysts. I particularly focus on examining non-market intermediaries and government financial support. As these programs are often established by public funding to boost innovation, asking about their actual roles in helping innovation is a fundamental question. To explore these subjects, separate studies for (1) non-market intermediaries and (2) government financial support are conducted. In the first study, I focus on the emergence of non-market intermediaries, asking where they come from and how they emerge in relation to the roles of innovation catalysts. Past studies have thus far been interested in identifying the effect of non-market intermediaries after their inception, treating them as exogenous variables. However, this perspective can mislead our understanding of their actual roles. By investigating the process of their inception, this study explains (1) how non-market intermediaries emerge, (2) how their roles evolve over time and (3) how different intermediaries can influence firm innovation in unique ways. I use a qualitative methodology to examine the emergence of non-market intermediaries in the Australian advanced manufacturing industry. My second study focuses on identifying the causal effect of government financial support on firm innovation. Despite a number of scholarly efforts, empirical evidence on this is mixed. This is partly due to econometric identification challenges. Hence, in this study, I aim to provide evidence that is based on estimates that address the relevant econometric challenges. I focus on specifying how potential sources of bias - endogeneity and sample selection - can mislead the interpretation of the causal effect of government financial support. Using an econometric approach suggested by Semykina and Wooldridge (2010), I estimate the causal effect of Australian government financial incentives on firm innovation. I use the Business Longitudinal Data of the Australian Bureau of Statistics. My research empirically shows particular roles played by non-market intermediaries and government financial support. More specifically, the first study demonstrates that non-market intermediaries are endogenous actors, showing (1) a process model of sequentially interconnected phases through which intermediaries emerge, (2) the evolution of roles that intermediaries play at different stages of the industry and (3) the different functions of intermediaries in stimulating innovation. The second study, addressing econometric identification challenges, provides empirical evidence from which useful implications can be drawn regarding the effectiveness of government financial support and to what extent government financial support helps the innovation of firms. Taken together, this dissertation contributes to clarifying the roles of innovation catalysts

Climate change and firm strategies

My dissertation explores the overarching question: how do firms respond to climate change? Chapter 1 is entitled “Climate Change Exposure and Firm’s Adaptation Strategies”. In this chapter, I build a novel dataset that compiles information on the adaptation strategies of publicly traded companies globally and merge it with climate science data. Using these data, I examine whether, how, and under which conditions firms adapt to physical climate change exposures. I find that most firms don’t adapt to different climate change exposures. Firms take a targeted approach to adaptation – responding more to those aspects of climate exposures that are likely to affect them directly. Also, I show that firms with better ESG ratings are more responsive to varying climate exposures. I then report evidence that perception and capabilities may provide the mechanisms for different adaptation rates and strategies. The 2nd chapter, titled “Assessing the Climate Change Exposure of Foreign Direct Investment" (published in Nature Communications in 2022 and coauthored with Kevin Gallagher) explores the climate change exposure of foreign direct investments. Despite the increasing impact of physical climate risks on firms and facilities globally, little is known about how multinational companies incorporate such risks into their overseas investment decisions. This chapter examines the climate change exposures of multinational companies’ overseas investments. Globally, foreign investments are significantly exposed to lower physical climate risks, compared with local firms across countries. Within countries, however, the differences of physical climate risks between foreign and local facilities are small. We also examine China, as it is rapidly becoming one of the largest sources of outward foreign investment across the globe. We find that foreign investment from China is significantly more exposed to water stress, floods, hurricanes, and typhoon risks across countries, compared with other foreign facilities. Within host countries, however, the physical climate risks of Chinese overseas facilities are comparable to those of non-Chinese foreign investments. Chapter 3 is titled “Competing or Complementary Labels? Estimating Spillovers in Chinese Green Building Certification” (published in the Strategic Management Journal, 2021). I and Tim Simcoe examine the spillovers in the adoption of “competing” green building certifications, one important climate change mitigation strategy. In this chapter, we argue that there can be positive spillovers in the adoption of “competing” certifications and propose a framework for understanding how such spillovers arise through three channels: suppliers, adopters, and users of various labels. Our empirical analysis demonstrates these effects in the context of Chinese green-building certification. Specifically, we measure spillovers from adoption of the Chinese Green Building Evaluation Label (GBEL) to adoption of the alternative LEED standard within the same city. To isolate the causal impact of GBEL on LEED adoption, we use local government subsidies as an instrumental variable. We find evidence of market-level spillovers through the supplier and user channels, but little evidence of building-level scope economies