R&D subsidies and firm innovation: does human capital matter?

This paper examines the innovation impact of R&D subsidies in Spain. It contributes to the literature on technology policy by challenging the assumption considering this impact as homogenous across firms. The paper presents a conceptual framework in which the human capital composition of a firm's R&D staff, defined in terms of education and skills, conditions the innovation impact of R&D subsidies. Using panel data for Spain, we find that the shares of Ph.Ds. and researchers within a firm's R&D staff positively moderate the effect of national R&D subsidies on the production of technological knowledge. This fact shows the strategic value of Ph.Ds. and researchers in exploiting R&D subsidies. We also show that the contribution of Ph.Ds. is limited to the production of technological knowledge. In contrast, the contribution of researchers goes beyond the production of technological knowledge, also enhancing the R&D subsidy impact on the commercialisation of firms' innovations.