Innovation Performance and the Signal Effect: Evidence from a European Program

33 Pages Posted: 13 Apr 2021 Last revised: 16 Apr 2021

See all articles by Nadine Levratto

Nadine Levratto

EconomiX-CNRS-University Paris Nanterre

Aurelien Quignon

Universite du Luxembourg - Department of Economics

Date Written: December 18, 2020

Abstract

This paper seeks to estimate the effect of a European policy that subsidizes innovation investments. By carefully selecting observables, we compare recipients of the program with non-recipient firms to overcome the endogeneity of R&D grants. We conduct a difference-in-differences design on the universe of a unique firm-level dataset of European SMEs between 2008 and 2017. We find a significant effect of proof of concept grants, which implies an increase in the number of patent applications and the probability of patenting. There are positive impacts on credit financing, which suggest a signal effect to investors about the project quality of young firms.

Keywords: R&D subsidies, Innovation, Patent, Financing constraints, H2020

JEL Classification: G28, G32, O30, O38

Suggested Citation

Levratto, Nadine and Quignon, Aurelien, Innovation Performance and the Signal Effect: Evidence from a European Program (December 18, 2020). Available at SSRN: https://ssrn.com/abstract=3813430 or http://dx.doi.org/10.2139/ssrn.3813430

Nadine Levratto

EconomiX-CNRS-University Paris Nanterre ( email )

200, avenue de la République
Batiment Allais
Nanterre, 92001
France

Aurelien Quignon (Contact Author)

Universite du Luxembourg - Department of Economics ( email )

Luxembourg

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