Public subsidies and firm innovation, a mediating role of external collaboration: the relation between diverse natures of innovation activities

Abstract

This paper investigates the impact of a public support on private innovation outcome, and whether this relation is mediated by a firm collaboration. Various types of a partnership and innovation performance are considered to clarify a heterogeneous policy effect. Empirical results based on merged two waves of Korean innovation survey indicate that subsidies positively associate only with a marketable performance; this relation is likely to be mediated by a certain type of the firm collaboration. However, the magnitude of the indirect effect is not sufficient to be statistically confirmed. This implicates that a role of public subsidies is to lead firms only to be more innovative. The innovation outcome can be promoted by a firm collaboration which is, however, not inevitably induced by a public support.