Evaluating the Effect of Public Subsidies on firm R&D activity: an Application to Italy Using the Community Innovation Survey

WP 09/2008; The aim of the paper is twofold: to verify a full policy failure of public support on private R&D effort, when in presence of a potential plurality of public incentives; to compare the most recent econometric methods used for the analysis of the input additionality. Compared to previous studies our work wants to trace out an advance in two directions: adding more robustness by comparing results from various econometric techniques and providing an analysis of the R&D policy effect behind the average results. A by-product of the paper is a taxonomy of the econometric methods used in the literature, according to the structure of the models, the type of dataset and the available policy information. We exploit the third wave of the Community Innovation Survey for Italy (1998-2000) with a sample size of 1,221 supported and 1,319 non-supported firms. Given the used type of data, the article presents two main limits: first, we do not know the level of the subsidy, so that we can control only for the presence of a total crowding-out; second, we can check only the short-run effect of the supporting policy, while an increase in the private R&D effort could be more likely in the medium term. Our results suggest that: 1. the main factors influencing the probability to participate to the incentive policy are R&D experience, human skills, liquidity constraints, but also foreign capital ownership; 2. on average, the total substitution of private funding by the public one is excluded for Italy as a whole, although some cases of total crowding-out are found: low knowledge intensive services, very small firms (10-19 employees) and the auto-vehicle industry. We get, on average, 885 additional thousand Euros of R&D expenditure per firm with a ratio equal to 4.62: it means that if a generic control unit does 1 thousand Euros of R&D expenditure a matched treated does 4.62 thousand Euros. The additionality for the R&D intensity is about 0.014 with a ratio of about 2.67

Measuring Intersectoral Knowledge Spillovers: an Application of Sensitivity Analysis to Italy

R&D spillovers are unanimously considered as one of the main driving forces of technical change, innovation and economic growth. This paper aims at measuring inter-industrial R&D spillovers, as a useful information for policy-makers. We apply an “uncertainty-sensitivity analysis” to the Italian input-output table of intermediate goods split into 31 economic sectors for the year 2000. The value added of using this methodology is the opportunity of distinguishing (separately) between spillover effects induced by productive linkages (the Leontiev forward multipliers) and those activated by R&D investments, capturing also the uncertain and non-linear nature of the relations between spillovers and factors affecting them.R&D spillovers, Input-output models, Sensitivity analysis, Monte Carlo simulations

Government R&D funding: new approaches in the allocation policies for public and private beneficiaries

The objective of this paper is to perform a first experiment of quantitative assessment on changes in allocation mechanisms and in their underlying delegation models, using the quantitative information and the descriptions of national funding systems produced in the PRIME project funding activity. Delegation has been explored through changes in instrument portfolios and in evaluation modes, as proofs of an evolution in research governance. Some common trends can be identified: the reinforcing of both priority setting and peer review processes. The general result of our analysis is that some change in delegation modes took place, but there is not a simple transition from one delegation regime to another, while a "contract" delegation model (the NPM reform) is not detectable through project funding analysis.R/D funding, allocation policy, project funding, research governance, evaluation modes, delegation models

Heterogeneity of innovation strategies and firms’ performance

This work deals with two main issues: first, the possibility of identifying differences in firm economic returns (operating profit margins) for different groups of innovation strategy and second, the possibility of checking for factors explaining the probability of being within the best performers for each group of innovation strategy. It is an empirically based analysis using descriptive statistics (first part) and a probit econometric analysis (second part) where data are collected at firm level from two CIS surveys matched with economic accountability data for 902 Italian manufacturing firms for the period 1998-2000. The distribution analysis of profit margins by different populations of firms shows a better economic performance for groups characterized by more complex innovation strategies. Unexpectedly, the risk associated to economic returns is lower for groups where returns’ mean is higher. In this case skewness is higher too suggesting that reaching “excellence” is more difficult. The probit regressions account for the role played by different (market and firm) factors on the probability of being the best positioned for each firm population. This work gives two main messages: first, when studying the impact of R&D activity (both on firm productivity or competitiveness) it is worth to distinguish among different kinds of innovation strategy rather than limiting the analysis to aggregated results and second, it appears quite clear that competition awards more complex innovation strategies than simple R&D intra-muros activity.profitability, strategic heterogeneity, R&D and innovation, probit regression

The role of R/D expenditure: a critical comparison of the two (R&S and CIS) sources of data

The paper explores the relation between two data sources (R&D and CIS surveys) in the aim of better representing the roles of R/D activity in relation with innovation processes. This paper starts with controlling the relation between the R/D expenditure in the two surveys (R&D and CIS) for a same group of firms and for the same year (2000) and deals with the question of how much we know at present of the different components of the industrial R/D activity and how we can use the frame of the two surveys for arriving to gain this knowledge. The final aim is that of getting finest grained indicators for studies on the impact of industrial investment on R/D.Industrial R/D, R/D survey, CIS survey

Persistent fast growth and profitability

Working Paper Ircres-CNR 10/2020. Fast growth firms are a recent political objective given their impact on economic dynamics. Notwithstanding this, there is no unanimity in the literature on their determinants and impact and many aspects remain open questions. Several analyses consider growth and fast growth a random event, without possibility of prediction and policy action. This paper intends to contribute to the current large debate, looking at the characters of growth episodes (spell), type and persistence, and how they impact on firms’ profitability. We focus on a sample of medium-sized firms included in CHEETAH database, whose main characteristics is to have experienced at least one episode of fast growth, according to the OECD definition, in at least one of the cohorts of three years considered of 2008-2011, 2009-2012 and 2010-2013. We develop a descriptive analysis of how firms evolve over time from their starting level of turnover growth and the estimation of how different trajectories of growth (more persistent versus episodic) influence firm’s profitability through a panel regression. Our hypothesis that fast growth persistence makes a positive difference in terms of firms’ profitability is confirmed

Changing patterns in the steering of the University in Italy: funding rules and doctoral programmes

WP 11/2005; The paper aim is to highlight the transformation of the state-university relationships in Italy, because of the introduction of the autonomy-accountability principles for the university government. The focus is on funding rules and procedures and doctoral programmes as examples of changes of the university steering. The analysis is carried out taking into account two different government theories, namely the New Public Management (NPM) and the Network-based governance system (NBG). The work is based both on the literature related to the steering of the Italian Universities, and on the Government’s acts (laws and related official documents). The paper is the first deliverable of the Project “The steering of Universities. A comparative research on the impact of new rules and actors on University governance” – SUN, developed within PRIME - Network of Excellence (VI EU Framework Program)

Heterogeneity of innovation strategies and firms' performance

WP 06/2007; This work deals with two main issues: first, the possibility of identifying differences in firm economic returns (operating profit margins) for different groups of innovation strategy and second, the possibility of checking for factors explaining the probability of being within the best performers for each group of innovation strategy. It is an empirically based analysis using descriptive statistics (first part) and a probit econometric analysis (second part) where data are collected at firm level from two CIS surveys matched with economic accountability data for 902 Italian manufacturing firms for the period 1998-2000. The distribution analysis of profit margins by different populations of firms shows a better economic performance for groups characterized by more complex innovation strategies. Unexpectedly, the risk associated to economic returns is lower for groups where returns’ mean is higher. In this case skewness is higher too suggesting that reaching “excellence” is more difficult. The probit regressions account for the role played by different (market and firm) factors on the probability of being the best positioned for each firm population. This work gives two main messages: first, when studying the impact of R&D activity (both on firm productivity or competitiveness) it is worth to distinguish among different kinds of innovation strategy rather than limiting the analysis to aggregated results and second, it appears quite clear that competition awards more complex innovation strategies than simple R&D intra-muros activity

The patenting regime in the Italian public research system. What motivates public inventors to patent

WP 10/2005; The paper deals with two aspects: the public ownership of intellectual property rights and the holding of the title (individuals vs institutions) for the public financed research. A key problem in the past and still now in Europe has been the low transfer of results coming from public research to industrial users. Recently a new trend developed which favours the patenting of the scientific results of public actors. This change partly comes from the modification of the public funding mechanism of allocation and goes with changes in the regulation and regime related to the ownership of intellectual property rights. The paper is built on a pilot study, which controlled if and how the modification in national regulation affected the actors’ behaviour. It is based on a survey of public inventors, in two public institutions (Cnr and Roma 1 University) who disclosed their inventions to the institutions in the last three years; on interviews with the responsible persons of the patent offices in the two institutions and on some data from the Cnr 2005 patent portfolio. This pilot study on public patenting in Italy seems to confirm the persistence of the academic incentives in the patenting activities of the public research institutions, even in presence of the 2001 patenting regime, aimed to assign IPR title to the public inventors. Furthermore the results highlight the presence of a relation between public institutions and firms that are not completely captured by the patenting indicators. Patents are only the emerging part of a more large hidden area of relationships between public institutions and industrial firms

New Tools for the Governance of the Academic Research in Italy: the Role of Research Evaluation

WP 13/2005; Evaluation has been put on the agenda of most Governments as a central process to enhance the public research institutions’ performance (Geuna, 1999, Geuna and Martin, 2003, Shapira and Kuhlman, 2003). New agencies or intermediate bodies have been settled up, both at the Government and at the institutions’ level, aiming to assess the quality of research and its impact on the socio-economic environment. In Italy, the pressure for a greater accountability of the public research institutions started at the beginning of nineties, but the system was deeply modified in 1999. Moreover, the Government at the beginning of 2004 launched a formalised evaluation exercise (the VTR), aimed to assess the research performance of all the public institutions (Universities and public research agencies) across scientific fields, for a three-years period. The modification recently introduced in the Government criteria for the core funding allocation to the Universities would assure the impact of VTR results on funding decisions. Different key interested groups, both from academics (Conference of Rectors) and from stakeholders (mainly Industrial Associations), contributed to the development of the described process, by interacting with the Government and with the intermediate bodies in charge for establishing the evaluation procedures. The aim of the paper is to investigate how the new evaluation procedures, even at this early stage, have been implemented by the public research institutions, and how these procedures are changing the internal models of research direction and organisation. The paper was prepared for the Sociology of the Sciences Yearbook Conference on “Changing Knowledge Production through Evaluation” Bielefeld, 9-11 June 200