Abstract Longitudinal studies examining dynamic effects of research, development, and innovation (RDI) subsidies on firm-level outcomes—particularly their role in promoting significant innovations—remain limited. This has left policymakers at a disadvantage in coordinating complementary innovation policy instruments. Using a literature-based innovation output measure, we address these shortcomings by means of a nationally representative panel study of Finnish enterprises’ significant innovation outcomes observed over 22 years. Relative to confounding factors, we find that the average dynamic effects of RDI grant subsidies on companies’ probability to commercialize a significant innovation are modest but mostly positive, persisting, and dynamically increasing, peaking around five to eight years after first receiving a grant. Robustness tests, including results based on counts of granted patents, generally support the main findings of the study. Based on our empirical insights, we provide an economic interpretation of our results, suggesting that a consistent long-term innovation subsidy policy plays a meaningful role in advancing innovation output.
Have et al. (Fri,) studied this question.
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