The Theory and Practice of Entrepreneurship
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The Theory and Practice of Entrepreneurship

Frontiers in European Entrepreneurship Research

Edited by David Smallbone, João Leitão, Mário Raposo and Friederike Welter

This timely book provides a fresh perspective on contemporary research in the field of entrepreneurship and small business, considering both theory and application.
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Chapter 4: Benefiting from Publicly Funded Pre-Competitive Research: Differences between Insiders and Outsiders

Verena Eckl and Dirk Engel


1 Verena Eckl and Dirk Engel INTRODUCTION Research and Development (R&D) policy is characterized by a wide range of instruments to address different forms of market failures (Arrow 1963) in the R&D value chain process. Knowledge of the causal impact of these efforts is essential for policy makers to redesign their portfolio of instruments. As David et al. (2000) and many others point out, estimations in the studies reviewed are mostly confronted with potential selection problems. Recently published studies (for example, Almus and Czarnitzki 2003; Busom 2000; Caloghirou et al. 2001; Czarnitzki et al. 2007; Lach 2002; Wallsten 2000) used state-of-the-art evaluation methods to compare funded firms with comparable non-funded firms. All these studies indicate positive, direct effects of funding on R&D expenditure and patent applications by programme participants. This finding speaks in favour of public R&D funding for firms to correct market failure. In addition to the direct R&D funding for firms, politicians have been demanding improvements in knowledge transfer from science to industry in order to increase the commercialization of scientific discoveries. However, robust empirical evidence concerning the extent of knowledge transfer from science to industry and its determinants for specific programmes of public R&D is very rare. The present contribution attempts to investigate the relevance of these effects for Germany’s Industrial Collective Research (ICR) programme. The ICR programme supports pre-competitive research and is one of the most important R&D funding schemes of the Federal Ministry of Economics and Technology. Project...

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