The Effect of Government Subsidy on Non-Technological Innovation and Firm Performance in the Service Sector: Evidence from Germany

Basit Shoaib Abdul (), Kuhn Thomas () and Ahmed Mumtaz ()
Additional contact information
Basit Shoaib Abdul: Faculty of Economics and Business Administration, Technische Universität Chemnitz, Germany
Kuhn Thomas: Faculty of Economics and Business Administration, Technische Universität Chemnitz, Germany
Ahmed Mumtaz: Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan

Business Systems Research, 2018, vol. 9, issue 1, 118-137

Abstract: Background: To enhance the innovation activities at the firm level, government subsidies plays an important role.Objectives: The objective of the study is to explore whether firms in service sector that receive government subsidies engage more in marketing and organizational innovation activities than their counterparts. Second, focusing on the subsidized firms in the service sector, the impact of innovations (marketing as well as organizational) on firm performance—measured as the probability of submitted copyright applications by firms, has been analyzed.Methods/Approach: The propensity score matching approach and probit model have been used to analyze the innovation activities of subsidized and non-subsidized firms. The empirical analysis is based on the micro level data from Mannheim Innovation Panel, covering the Community Innovation Survey of 2011.Results: Empirical results show that public subsidy has a significant positive effect on marketing and organizational innovation. In addition, within the firms that have received government subsidy, the impact of only marketing innovation is found to be significant on firm performance.Conclusions: These findings employ that subsidized firms are more likely to perform better than their counterparts. Furthermore, public subsidy programs increase the probability of applying for a copyright in small and medium firms.

Keywords: marketing and organizational innovation; firm performance; subsidy; propensity score matching; kernel matching; nearest neighbor matching; radius matching (search for similar items in EconPapers)
JEL-codes: O3 O30 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.2478/bsrj-2018-0010 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bit:bsrysr:v:9:y:2018:i:1:p:118-137:n:10

DOI: 10.2478/bsrj-2018-0010

Access Statistics for this article

Business Systems Research is currently edited by Mirjana Pejić Bach

More articles in Business Systems Research from Sciendo
Bibliographic data for series maintained by Peter Golla ().