@article{f7b43c7c58f54020ab032e61f8b398af,
title = "Tax incentives… or subsidies for business r&d?",
abstract = "We study whether firms{\textquoteright} actual use of R&D subsidies and tax incentives is correlated with financing constraints -internal and external- and appropriability difficulties and investigate whether both tools are substitutes. We compare the use of both policies by SMEs and by large firms and find significant differences both across instruments and across firm size. For SMEs, financing constraints are negatively correlated with the use of tax of credits, while they are positively associated with the likelihood of receiving a subsidy. The use of legal methods to protect intellectual property is positively correlated with the probability of using tax incentives, but not with the use of subsidies. For large firms externalfinancing constraints are correlated with instrument use, but results regarding appropriability are ambiguous. Our findings suggest that (1) direct funding and tax credits are not perfect substitutes in terms of their ability to reach firms experiencing barriers associated to market failures; (2) one size may not fit all in innovation policy when the type or intensity of market failure differs across firm size, and (3) subsidies may be better suited than tax credits to encourage firms, especially young knowledge-based firms, to start doing R&D.",
keywords = "Innovation, Policy mix, R&D, SMEs, Subsidies, Tax incentives",
author = "Isabel Busom and Beatriz Corchuelo and Ester Mart{\'i}nez-Ros",
note = "Funding Information: Timing of support: subsidies usually provide upfront funding for R&D projects, while tax incentives provide a compensation after the project has been privately funded. To benefit from a tax credit, and independently of whether they are applied to the corporate tax or to wage or social security contribution taxes for R&D employees, the firm must be able to fund the project in advance. As young firms and SMEs may often lack internal and external funding, they are less likely to benefit from this instrument.15 In addition, R&D subsidies not only provide up-front funding for R&D, but also may provide a signal of the quality of a project to potential private investors. Subsidies may therefore have a certification effect, unlike tax credits, facilitating access to external finance (Meuleman and De Maeseneire 2012). Funding Information: Acknowledgments This research has been supported by Instituto de Estudios Fiscales, Ministerio de Ciencia e Innovaci{\'o}n (Projects ECO2009-08308 and ECO2009-10003), Generalitat de Catalunya 2009SGR0600); and Junta de Extremadura (Project IB10013). Ester Mart{\'i}nez Ros benefited from a grant from Bankia to visit UNU-MERIT while working on this project. We are grateful to anonymous referees for their helpful comments. Publisher Copyright: {\textcopyright} Springer Science+Business Media New York 2014. Copyright: Copyright 2021 Elsevier B.V., All rights reserved.",
year = "2014",
month = oct,
doi = "10.1007/s11187-014-9569-1",
language = "Ingl{\'e}s estadounidense",
volume = "43",
pages = "571--596",
number = "3",
}