A comparative evaluation of regional subsidies for collaborative and individual R&D in small and medium-sized enterprises

We analyse whether public subsidies supporting collaborative research and development (R&D) projects in small and medium-sized enterprises (SMEs) are able to encourage persistent R&D investment and interorganisational networking more than subsidies supporting individual R&D projects. Adopting a counterfactual approach to policy evaluation, we compare subsidies for collaborative R&D and for individual R&D implemented in the same Italian region in the same period. Our findings suggest that, once public support is no longer available, the two subsidies have different effects on different types of SMEs. If the policymakers' objective is to increase the number of R&D-performing SMEs over time, they should provide subsidies for collaborative R&D to firms with modest R&D experience. If their objective is to increase the amount of spontaneous R&D investment over time, they should target SMEs with some prior R&D experience, using either subsidy. Finally, if their objective is to induce SMEs to network with external organisations, subsidies for collaborative R&D projects should be preferred to subsidies for individual R&D projects.