The Interactive Effect of Government Financial Support and Firms’ Innovative Efforts on Company Growth: A Focus on Climate-Tech SMEs in Korea

DaEun Kim, Sungchan Yeom and Myeong Chul Ko
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DaEun Kim: Institute of Governmental Studies, Korea University, Seoul 02841, Korea
Sungchan Yeom: Green Technology Center, Seoul 04554, Korea
Myeong Chul Ko: Department of Public Policy, Hanbat National University, DeaJeon 34158, Korea

Sustainability, 2020, vol. 12, issue 22, 1-12

Abstract: Given the growing importance of climate technology and its early stage of industrial development, the Korean government has supported climate-tech small- and medium-sized enterprises (SMEs) through various policy measures, including credit guarantees. Although the extant literature argues that government financial support plays an important role in the growth of high-tech firms, research has been limited on the impacts of government financial support on company growth in the context of the climate-related industry. Using a sample of 582 climate-tech SMEs in Korea, this study explores the moderating effects of credit guarantees on the relationship between patents and firms’ sales growth as well as their direct effects on growth. This study found that credit guarantees and patent registration have positive effects on the increase in sales volume. Additionally, credit guarantees appear to weaken the relationship between patent registration and the sales growth rate. Based on these findings, we propose that, to develop the climate-technology industry, the voluntary innovation efforts of enterprises should be encouraged and credit guarantees should be provided for SMEs. In terms of managerial interventions, the government should especially avoid providing excessive benefits.

Keywords: climate-tech SMEs; credit guarantee; climate-technology industry; innovative effort; company growth (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
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