The Effects of R&D Subsidies and Network Embeddedness on R&D Output: Evidence from the German Biotech Industry

Although policy makers subsidize firms’ R&D projects to increase innovational output in an industry, region, or country, it remains unclear whether such subsidization triggers additional R&D efforts or crowds out private investments. To address this question, we assess the effectiveness of subsidization for individual and collaborative research in the German biotech industry while also examining the relevance of network embeddedness for patent output. Our results indicate that subsidies do lead to increased patent output, with additional benefits from involvement in more than one project. However, the amount of money is only significant under certain circumstances. Also, it is higher degree centrality in the firm network that significantly increases R&D success.