The efficiency of public support of innovation activities of foreign-owned companies

Abstract

The analysis aims at the different innovation activities of foreign-owned enterprises in the Czech economy. Data comes from the Czech Community Innovation Surveys of 2010, 2012, and 2014. This paper evaluates new-to-the-market innovation activities at the firm level. The analyzed sample consists of observations about innovators and companies that did not engage in new-to-the-market innovation activities in the last three years. This paper explores the relationship between public support and innovation activities of multinationals. The first results suggest public support (local government funds, national government funds, EU funds, EU Framework, and Horizon funds) is not always statistically significant in terms of R&D expenditures in comparison to unsupported firms. The additional contribution of public support for innovation output is again not always statistically significant. Results suggest that local government funds (grant projects) are beneficial for foreign-owned new-to-the-market innovators. Those local government funds are contributing both to innovation input (R&D expenditures) and innovation output (sales of innovated goods and services). Other public support variables indicate a crowding-out effect of private R&D&I investment. Globalization tendencies are supported by governments and future research should aim at a more complex analysis of multinationals’ behavior in this area.