The impact of public R&D subsidy on small firm productivity: evidence from Korean SMEs

Beom Cheol Cin (), Young Jun Kim () and Nicholas S. Vonortas ()
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Beom Cheol Cin: Kyonggi University
Young Jun Kim: Korea University
Nicholas S. Vonortas: The George Washington University

Small Business Economics, 2017, vol. 48, issue 2, No 7, 345-360

Abstract: Abstract This paper explores the effects of R&D promotion policy on SME performance. We use a large panel data set on public R&D subsidies to Korean manufacturing firms. We control for counterfactual outcomes employing the DID (difference in differences) estimation procedure as well as for the endogeneity of the R&D investment and the R&D subsidy using the 2-stage Tobit/Logit DPD (dynamic panel data) procedure. We find significant evidence for positive effects of the public R&D subsidy on both the R&D expenditure and the value added productivity of Korean manufacturing SMEs. The policy thus appears to have been successful in fostering technological advancement and in promoting economic growth.

Keywords: SMEs; R&D; Research subsidy; Productivity (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (54)

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DOI: 10.1007/s11187-016-9786-x

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