The Effect of a Financial Support on Firm Innovation Collaboration and Output: Does Policy Work on the Diverse Nature of Firm Innovation?

Although prior studies explored the effectiveness of innovation policy in terms of firm’s collaboration and innovation output, few studies examined a nature of these effects. This paper addresses this gap by investigating policy effects on firm’s collaboration regarding a type of partnerships and innovation output in terms of a novelty. The empirical analyses from logistic regression and propensity score matching with the data from Korea Innovation Survey 2014 of manufacturing industries reveal that public support leads to increased collaboration and innovation output in overall. Moreover, a magnitude of effects is cumulative along with the extent of a policy scheme. However, the effect on innovation output seems to be only captured by a high degree of the support. These results implicate that a certain threshold level of intervention is needed to trigger innovation outcome. This paper contributes to the understanding of policy effectiveness regarding a nature of innovation activities.