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Government R&D support for SMEs : Policy effects and improvement measures

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Government R&D support for SMEs04



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Title Government R&D support for SMEs
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Sub Title

Policy effects and improvement measures

Material Type Videos
Author(English)

Korea Development Institute

Publisher

[Sejong] : Korea Development Institute

Date 2018-04
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Government and Law < General
Holding Korea Development Institute
License

Abstract

Qualcomm, Symantec, 23andMe and iRobot, are all firms that started small but are now market leaders thanks to their innovative technological capabilities. And, supporting their growth was the US’ Small Business Innovation Research program, or SBIR, which provides active R&D support to small companies and startups. Taking cue from the US’ program, the Korean government established the Korea Small Business Innovation Research program in 1998 to drive the growth of Korea’s SMEs. Since then, the budget for the R&D grant has continued to mount, nearing the 3 trillion won mark in 2015. Korea is now ahead of Germany and Japan, and is the second largest spender after the US. Thanks to the grants, many of the recipients have been able to strengthen their technological capabilities. However, due to the lack of preceding research, it is unclear what other benefits the grants offer. Accordingly, KDI analyzed the economic gains of Korea’s R&D support. A simple comparison was first conducted between recipients and non-recipients based on ten performance indicators. The results found that recipients overwhelmed their counterparts in terms of operating performance, financing and capabilities and assets at the time of support. But, after 2 or 3 years, the trend reverses, with non-recipients making bigger improvements across the majority of indicators. Next, an examination was conducted on the impact of the grant on corporate growth. The grants enabled companies to secure more funding and expand their investments in all aspects. Unfortunately, this failed to improve the value added, operating profit and sales.