European Cooperative R&D and Firm Performance: Evidence Based on Funding Differences in Key Actions

49 Pages Posted: 16 Apr 2013

See all articles by Luis Aguiar

Luis Aguiar

University of Zurich - Department of Business Administration

Philippe Gagnepain

Universidad Carlos III de Madrid - Department of Economics

Date Written: April 2013

Abstract

The Framework programmes created by the European Union are the main financial tools used to support cooperative R&D activities in the EU. Unlike previous empirical studies, this paper suggests that their impact on firms’ competitiveness is significant. We analyze industry-oriented research joint ventures supported by the Fifth European Framework Programme between 1998 and 2002. A key feature of this Programme is that funding is available to the firms based on social and economic concerns instead of pure performance criteria, which guarantees that financial support is not granted conditional on technological opportunities. This allows us to identify the causal effect of the programme on firms’ performance using the funding available to the firms in their respective industries as a source of exogenous variation in the decision to participate in the programme. Our results suggest that participation in large research projects raises labor productivity by at least 35 percent and profit margin by up to 8 percentage points.

Keywords: Firm performance, R&D cooperation, Treatment effect

JEL Classification: C3, L2, O3

Suggested Citation

Aguiar, Luis and Gagnepain, Philippe, European Cooperative R&D and Firm Performance: Evidence Based on Funding Differences in Key Actions (April 2013). CEPR Discussion Paper No. DP9426. Available at SSRN: https://ssrn.com/abstract=2251707

Luis Aguiar (Contact Author)

University of Zurich - Department of Business Administration ( email )

Rämistrasse 71
Zurich, CH-8006
Switzerland

Philippe Gagnepain

Universidad Carlos III de Madrid - Department of Economics ( email )

Calle Madrid 126
Getafe, 28903
Spain
+34 91 624 5732 (Phone)

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