The Impact of Direct Support to R&D and Innovation in Firms

This paper is part of the Compendium of Evidence on the Effectiveness of Innovation Policy Intervention. It examines the evidence on schemes that aim to promote or enhance the performance of R&D activities within companies. More specifically, in order to avoid overlaps with other reports in this series, coverage is restricted to supply-side measures which provide finance, specifically in the form of grants or loans, to support R&D undertaken by firms alone. Overall, the available evidence on the operation of direct measures seems to focus on a number of outcomes and effects, including rationales, user characteristics, governance aspects, input additionality, output additionality and behavioural additionality effects. This set of outcomes and effects is used to structure the analysis of the evidence. The report notes that the impact of policy intervention exhibits a skewed distribution – the ‘average’ success of a programme tends to be based on a small number of successful cases which is accompanied by a long ‘tail’ of less or non- successful cases, and that most of the studies reviewed consider one point in time and do not examine the longer time frame, thus the persistence of effects arising from the policy interventions was not generally measured. Two further main findings are that much of the academic literature focus on the issues of input and, to a lesser extent, output additionality, whereas policy evaluations tend to focus on the continued relevance of the rationale of intervention and on its implementation performance. The report concludes with a number of key lessons for policy makers.