Innovation policy (science & technology policy/program) aims to stimulate industrial innovation and address the gap between ideas and the market for new products/process. Hence, small and medium enterprises (SMEs) are an important target group for innovation policy. While SMEs play important economic role in Taiwan, it is more meaningful to evaluate related innovation policies, to understand the impact of polices as well as test theoretical models of interactions between the public and private sectors. This topic is significant but little studied or investigated with the chance of bias. From the perspective of program evaluation, the thesis evaluated the effect of government subsidies on SMEs¡¦ innovation including impact assessment and efficiency assessment and took the Small Business Innovation Research (SBIR) Program as an example. The target population for evaluation covered three groups: SBIR awardees, firms with rejected applications, general SME manufacturers. Questionnaires were delivered to 942 firms with SBIR Phase I or Phase II awards and 222 firms with rejected applications between 1999 and 2004; 374 and 36 valid questionnaires were returned separately. The Department of Statistics of the Ministry of Economic Affairs provided the data of general SMEs. This thesis evaluated the impact of SBIR by a quasi-experimental design and examines the efficiency by an econometric model. Main findings are as follows: A. The impact of government R&D subsidies on SMEs: 1. Innovative activity (R&D spending): Compared to other SMEs (firms with rejected applications or general SME manufacturers), the growth of SBIR awardees¡¦ R&D spending is significant. 2. Productivity (employment or sales): Compared to other SMEs (firms with rejected applications or general SME manufacturers), the growth of SBIR awardees¡¦ employment is significant. Compared to general SME manufacturers, the growth of SBIR awardees¡¦ sales is significant; but compared to firms with rejected applications, the growth of SBIR awardees¡¦ sales is not significant. B. The efficiency of government R&D subsidies on SMEs: 1. Innovative activity (R&D spending): On average, 0.28 percentage change in SBIR awardees¡¦ R&D spending is correlated with 1 percent change in subsidies (elasticity relationship). 2. Productivity (employment or sales): On average, 0.08 percentage change in SBIR awardees¡¦ employment and 0.25 percentage change in SBIR awardees sales is separately correlated with 1 percent change in subsidies (elasticity relationship).

Government support for applied Research and Development (R&D) persisted in the US despite evidence to the contrary. Many provide government R&D funding for enterprises of particular interest and a number of countries have substantially increased their expenditure on R&D. SBIR as a means of funding high-risk R&D with broad commercial and societal benefits that would not be undertaken by a single company, either because the risk was too high or because a large enough share of the benefits of success would not accrue to the company for it to make the investment. Therefore, the program¡¦s goal is to the development and application of new, enabling technologies that individual firms would not or pursue on their own and thereby encourage the economic growth that comes from the commercialization and use of new technologies in the private sector. However, very few studies of R&D policy toward innovative subsidy program in developing country. Public programs to subsidize high-technology firms have represented a significant but little-studied area of public expenditures. This article assesses the long-run success of firms participating in the SBIR program in Taiwan. The plan of this research is as follows. The purpose of this search in Taiwan is to study the impact of government-industry R&D programs on private R&D. The research has 3 important aspects. First, using a questionnaire to understand the enterprises intention and behavior which have participated in the ¡§Small Business Innovation Research (SBIR)¡¨ this paper first examines whether government R&D subsidies influence firm¡¦s innovative activities. Second, this paper examines what the correlation is between government funding and private R&D expenditures. Finally, this research conducted 67 important interviews from enterprises. Not only the multi-methodology comparisons, the empirical results aimed at: 1) Examine the role of public/private partnerships (PP/Ps) as an instrument to leverage public investment in strategy technology and innovation and to achieve other goals of technology and innovation policy; 2) Identify the critical factors determining the success of R&D subsidy program for innovation, with an emphasis on programme design, financial arrangement, and evaluation 3) Government R&D subsidies have a significant positive effect or not on firm¡¦s R&D expenditure / employment / firm-financed R&D spending.

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This dissertation examines the role of public investments in inducing small firms to develop risky, early-stage technologies. It contributes to expanding our understanding of the consequences of research, innovation, and entrepreneurship policies and programs by investigating in more depth the effect of the Small Business Innovation Research (SBIR) program on the innovation effort, ability to attract external capital, and other metrics of post-entry performance of small business start-ups using a new sample and estimation approach. Unlike prior R&D subsidy studies that concentrated almost exclusively on European countries, this dissertation focused on small business start-ups in the United States using a new scientific survey of new firms. It integrated the Kauffman Firm Survey (KFS) from the Ewing Marion Kauffman Foundation with the SBIR recipient dataset from the U.S. Small Business Administration (SBA) and used advances in statistical matching to achieve better comparability between the treated and control groups of small business start-ups. The integrated KFS-SBA dataset, which contains both recipient and non-recipient small firms, and statistical matching allowed us to empirically construct the counterfactual outcomes of SBIR recipients. This dissertation balanced the pre-treatment characteristics of SBIR recipients and non-recipients through propensity score matching (PSM). It constructed the comparison sample by identifying non-recipients with nearly identical propensity scores as those of SBIR recipients. Consistent with the propensity score theorem, observations with the same distribution of propensity scores have the same distribution of observable characteristics. PSM made the comparison and treatment samples homogenous except in SBIR program exposure, making the fundamental assumption of ignorability of treatment assignment more plausible. Using the realized outcomes of observationally similar non-recipient start-ups as the counterfactual outcomes of SBIR recipients, we found empirical evidence of the input additionality effect of the SBIR program. Had they not applied for and granted SBIR R&D subsidies, recipient start-ups would have spent only $185,000 in R&D, but with SBIR their R&D effort was significantly increased to $663,000, on average. The treatment effects analyses also found a significant positive effect of SBIR on innovation propensity and employment. However, it appears that public co-financing of commercial R&D has crowded-out privately financed R&D of small business start-ups in the United States. A dollar of SBIR subsidy decreased firm-financed R&D by about $0.16. Contrary to prior SBIR studies, we did not find any significant "halo effect" or "certification effect" of receiving an SBIR award on attracting external capital. However, we discovered a different certification effect of the SBIR program: SBIR grantees are more likely to attract external patents. This finding also confirms that innovation requires a portfolio of internal and external knowledge assets as theorized by David Teece and his colleagues. This dissertation's empirical results may be relevant to the Small Business Administration, SBIR participating agencies, the U.S. Congress, other federal, state and local policymakers, small high-tech start-ups, and scholars in the field of science, technology, and innovation policy.

This dissertation examines the role of public investments in inducing small firms to develop risky, early-stage technologies. It contributes to expanding our understanding of the consequences of research, innovation, and entrepreneurship policies and programs by investigating in more depth the effect of the Small Business Innovation Research (SBIR) program on the innovation effort, ability to attract external capital, and other metrics of post-entry performance of small business start-ups using a new sample and estimation approach. This study integrated the Kauffman Firm Survey from the Ewing Marion Kauffman Foundation with the SBIR recipient dataset from the U.S. Small Business Administration and used advances in the micro-econometrics of program evaluation to empirically construct the counterfactual outcomes of SBIR recipients. We found empirical evidence of the input additionality effect of the SBIR program. The treatment effects analyses also found a significant positive effect of SBIR on innovation propensity and employment. However, it appears that public co-financing of commercial R&D has crowded-out privately financed R&D of small business start-ups in the United States. A dollar of SBIR subsidy decreased firm-financed R&D by about $0.16. Contrary to prior SBIR studies, we did not find any significant “halo effect” or “certification effect” of receiving an SBIR award on attracting external capital. What we discovered is a different certification effect of the SBIR program: SBIR grantees are more likely to attract external patents. This finding confirms that innovation requires a portfolio of internal and external knowledge assets as theorized by David Teece and his colleagues.