Abstract

Abstract
This study investigates the impact of Business Innovation and Growth Support (BIGS) programs on the beneficiary enterprises Research and Development (R&D) spending by type of intervention, support mechanism, business size, age, and industry. The study uses the BIGS micro level data on program beneficiaries and links it with the business register and other admin data sources in the Business Linkable File Environment (B-LFE) to obtain enterprises level characteristics and the counterfactual group.
The Propensity Score Matching (PSM) shows that both direct funding through BIGS and indirect support via tax credits stimulate private R&D investment. Direct funding and fiscal incentives are complementary to each other. The study also found out that advisory support is equally important as providing financial support to increase business-funded R&D. The overall effect, however, masks substantial heterogeneity in the program’s impact. On average, the impact of BIGS support on private R&D investment is strong for small- and medium-sized enterprises (SMEs), for young enterprises less than ten years old and stronger in the manufacturing and professional, scientific, and technical services sectors. It is suggested that the BIGS programs should implement differentiated subsidy strategies according to enterprises’ attributes.