The links between competitiveness, firms' innovative activities and public R&D support in Germany: an empirical analysis

Industrial competitiveness is becoming an increasingly important issue. In years of recession, some companies perform worse on domestic markets or lose export shares. Most investigations of the competitiveness of nations are based on macro-economic data. But a country is not much like a business. This paper tries to provide a new answer based on science and technology indicators and econometric analysis, Competitiveness is studied on the micro-economic level for a sample of 161 domestic or foreign-owned companies located in westem Germany. Zieir competitiveness is measured by two indicators: the trading result (i.e. either the net profit or loss) and the export share of (local) production. Statistics on investment and patents do not sufficiently explain competitiveness, but the scientfic potential of the firms significantly explains the competitiveness, but, it seems to be the science base of technological activities that determines competitiveness. Public subventions facilitate scientific and technological activities in industry. It is particularly interesting to note that government support is oriented towards the science base of the client companies.