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The Effectiveness of R&D&I Subsidies to Young Innovative Companies in Belgium

Diego Andres Olaya Lasso, Caroline Buts


Keywords: Innovation, Subsidy, R--amp--D, Young Innovative Company, Count Models

Innovation is of crucial importance in modern knowledge and information driven economies. Small and medium-sized enterprises (SMEs) are relatively dynamic and thus essential in the generation of inventions. However, SMEs’ innovative performance is not uniform and a particularly interesting subgroup has been identified: Young Innovative Companies (YICs). While YICs’ favourably influence also the macroeconomic competitiveness of a country, little research has been carried out regarding the effects of diverse support policies. This article hence aims to contribute to the literature by examining the role of subsidies on the innovative performance of YICs. We build a dataset of all Belgian companies and monitor firm level microdata from 2010 until 2015. The empirical analysis aims, in a first stage, to identify the population of YICs in Belgium and the main industries where they operate. In a second phase, we then evaluate whether YICs have a superior innovative performance relative to other types of businesses and especially whether support policies have been effective in stimulating their innovations. From the negative binomial model, we conclude that subsidies prove to be an essential policy instrument favouring the creation of inventions by YICs. It is important for policy to promote and support YICs’ entrepreneurship before as well as during their way towards innovation.
Keywords: Innovation; Subsidy; R&D; Young Innovative Company; Count Models.

Diego Andres Olaya Lasso is PhD student at the Department of Business, Technology and Operations – Research Unit Data Analytics Laboratory. Caroline Buts is professor at the Department of Applied Economics. Both authors are at the faculty of Social Sciences and Solvay Business School of the Vrije Universiteit Brussel.


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