Title: On young innovative companies: Why they matter and how (not) to policy support them
Authors: Schneider, C├ędric
Veugelers, Reinhilde
Issue Date: Oct-2008
Publisher: K.U.Leuven - Faculty of Business and Economics
Series Title: FBE Research Report MSI_0807 pages:1-36
Abstract: Recent policy initiatives in the EU aim at supporting so-called Young Innovative Companies (YICs). This paper provides empirical evidence from German CIS data on the innovative performances of this specific type of firms, supporting why they matter. We first characterize YICs in the sample of innovation active firms.
We show that firms that combine newness, smallness and high R&D intensity, are rare in the sample of innovative firms, but achieve significantly higher innovative sales than other innovative firms, especially innovative sales that are new to the market. Not surprisingly, YICs view financial constraints, both internal and external, as an important factor hampering their innovation activities, significantly more so than other innovation active firms. This access to finance problem is an often used motive for government intervention. In our German sample, subsidies schemes for innovation are general and not particularly targeted at YICs. We empirically assess the effectiveness of these public funding schemes. We find that these are not effective to increase the innovative sales of YICs, unlike the average innovative firm in our sample.
Publication status: published
KU Leuven publication type: IR
Appears in Collections:Department of Managerial Economics, Strategy and Innovation (MSI), Leuven

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