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Financing Patterns of Innovative SMEs and the Perception of Innovation Barriers in Germany

Heike Belitz and Anna Lejpras ()

No 1353, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: We analyze the role of public support in the financing pattern of R&D in German SMEs and their assessment of financing conditions in the context of other framework conditions for innovation. In Germany, there is a diversity of overall well-funded technology-neutral and technology-specific programs providing grants to R&D and innovation projects. Different types of SMEs access public funding for R&D and innovation activities to varying degrees. Using an extensive sample of 2,700 German SMEs that participated in public R&D promotion programs during the 2005-2010 period, we identify four groups of companies with different patterns of public and private sources of R&D finance, such as own capital, grants, private and subsidized loans. The firms in our sample are generally positive about public financing of R&D in Germany in 2010. Despite the different funding patterns, we find only slight variations in this assessment across the four groups of subsidized SMEs. Nevertheless, medium-sized R&D companies (often with external equity investment) that have to finance the market introduction of innovations without a track record, appear to suffer from deficiencies in the provision of loans. Further, the companies perceive obstacles to innovation primarily in the non-financial sphere, namely the supply of skilled personnel, market regulation and competition conditions. Therefore, future work on innovation policies for SMEs should put greater emphasis on the non-financial external framework conditions for firm R&D and innovative activities.

Keywords: R&D promotion; financing of R&D; small and medium sized enterprises; barriers to innovation (search for similar items in EconPapers)
JEL-codes: L20 O14 O25 O38 (search for similar items in EconPapers)
Pages: 26 p.
Date: 2014
New Economics Papers: this item is included in nep-cse, nep-ent, nep-eur, nep-ind, nep-ino, nep-knm, nep-ppm, nep-sbm and nep-tid
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