Harald Stahl

Public Research and Industrial Innovations in Germany

This paper deals with the effects of publicly funded research at universities, polytechnics and federal research labs on industrial innovations in Germany. We discuss the characteristics of companies that benefit from the findings of public research institutions. In questioning 2,300 companies we found that less than one tenth of product or process innovating firms introduced innovations between 1993 and 1995 that would not have been developed without public research. These new products amount to approximately 5 percent of all new product sales. Regressions show that firms? own R&D support the ability to absorb the findings of public research and turn them into innovations. Contrary to the widely held opinion that proximity to public research institutions does promote collaboration between firms and public research and increase the amount of received knowledge spillovers, we found no higher probability of publicly supported innovations for firms in Germany that are located near universities or polytechnics.

Factors Determining R&D and Innovation Expenditure in German Manufacturing Industries

In the mid-1980s, Kamien and Schwarz (1985) concluded in their famous survey on innovation and market structure that the bulk of the empirical literature exhibits a U-shaped relationship between innovation activity on one side and market structure as well as firm size on the other. Later Cohen, Levin and Mowery (1987) argued that these correlations vanish if one controls for inter-industry differences in technological opportunity and appropriability. As it is obvious from the papers by Acs and Audretsch (1987) and Pavitt, Robson and Townsend (1987), small firms contribute — at least in some sectors of the manufacturing sector — more than bigger firms to the commercialization of new products than is indicated by their share in national R&D expenditure records in traditional R&D statistics. Based on the Dutch innovation survey in 1984, Kleinknecht (1989) found the largest R&D intensities in small firms. Moreover, standard R&D statistics are affected by a severe undercounting of R&D in small firms (see, for example, Kleinknecht, Poot and Reijnen, 1991).