Impact of public support on the innovation probability in Chilean firms

ABSTRACT

This research evaluates the impact of public funding on the probability of performing various innovative activities in Chilean firms during the period of 2007–2014, using binary choice models applied to a pseudo-data panel. The results indicate that public support for innovation has a positive and statistically significant effect on internal and external Research and Development (R&D) and also increases the probability of having a formal R&D department. However, the results are not robust regarding innovation for products, services, processes, logistics, marketing and organizational innovation. On the other hand, collaborative actions were shown to positively impact the realization of all types of innovation and stimulate internal and external R&D. Thus, it is concluded that public support programs could be more successful if they promote cooperation with public and / or private actors.

KEYWORDS:

• Pseudo-panel
• probit
• R&D

JEL CODE:

• C23
• O3

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Cristian Mardones http://orcid.org/0000-0002-9389-7368

Notes

1 It is not necessary for the firm to carry out all types of mentioned innovations to be considered innovative.

2 In the early 1990s, public instruments for the promotion of innovation were scarce, and existing funding was mainly directed at academic research and technological institutes. However, in recent years, Chile has experienced an accelerated learning process by building a complete and comprehensive portfolio of instruments targeting firms and institutions across all economic sectors (OECD 2007).

3 According to the Oslo Manual (OECD 2005), innovation policy is an amalgamation of science and technology policy with industrial policy.

4 The questionnaire of the innovation survey conducted in Chile follows the guidelines established in the OSLO Manual (OECD 2005).

5 The uses of various public programs that seek to promote the country's innovative activity have been consulted in the different versions of the Innovation Survey (i.e. CORFO, FIA, INNOVA CHILE, INNOVA BIO-BIO and FONDEF). However, as the format of this survey has varied over time, it is not possible to obtain specific information on the use of each of these programs in each version of the survey. Therefore, this study assesses the joint effectiveness of these programs to determine if they are really encouraging innovation and R&D in Chilean firms.

6 Eurostat uses a disaggregation of the manufacturing industry according to technological intensity (high-technology, medium-high-technology, medium-low-technology and low-technology). Following a similar approach Eurostat defines the following sector as knowledge-intensive services (Knowledge-intensive market services excluding high-tech and financial services KIS1, High-tech knowledge-intensive services KIS2, Knowledge-intensive financial services KIS3 and Other knowledge-intensive services KIS4) or as less knowledge-intensive services (Less knowledge-intensive market services LKIS1, Other less knowledge-intensive services LKIS2).

7 Eurostat classification of economic activities according to technological intensity and based on NACE Rev. 2 at 2-digit level.

8 Goldberg and Palladini (2008) mention CORFO's activities are based on the idea that the State should only intervene when there are clear market failures and that all programs should be driven by demand, which is demonstrated through ownership and co-financing of the private sector, therefore CORFO does not discriminate between economic activities or geographical regions in the allocation of its resources.

9 https://techcrunch.com/2016/10/16/a-look-into-chiles-innovative-startup-government/

Additional information

Funding

This work was supported by Corporación de Fomento de la Producción (CORFO) [INNOVA CHILE N° 15||PES-44389, 2016].