Direct Public Support of R&D and Innovation in Czech Firms
Unintended Consequences and Possible Peltzman Effect
DOI:
https://doi.org/10.62374/fwwv1e79Abstract
This paper examines the complex relationship between direct public support for innovation projects, the capacity to continuously innovate, and turnover growth, with a particular emphasis on the potential for a Peltzman effect. The objective of the quantitative analysis is to ascertain whether companies that are incentivized by direct subsidies tend to favour safer projects over riskier, groundbreaking innovations. To this end, the 2014 Czech innovation dataset has been employed, together with an extensive literature review. The findings indicate a correlation between firms that receive public funding and those that engage in continuous or occasional innovation activities. However, the impact on turnover growth is not positive, implying that, on average, public subsidies do not significantly contribute to turnover growth. The study raises concerns about potential market distortions, inefficient resource allocation, and the dynamics of collaboration among large firms in publicly funded projects. While acknowledging the exploratory nature of the models, the study emphasizes the importance of ongoing scrutiny and refinement of innovation policies to ensure their effectiveness in promoting genuine innovation while mitigating unintended consequences.
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