||Economic literature suggests that private firms, especially small and medium ones, may not pursue technology research and development projects because of complexity of technology and financial barriers. Two main economic rationales have been discussed for public subsidies of private-sector research and development (R&D). First is the generation of positive externalities. Government R & D subsidies can have positive spillovers so that other firms or society would benefit. A second rationale is derived from the fact that government subsidies provide information on firms to financial institutions and potential investors. Information asymmetries tend to exclude entrepreneurs from private investments [Eshima, 2003]. |
Taiwan launched similar SBIR in 1997. Since then, Taiwan’s SBIR research budget has steadily increased. SBIR’s actual expenditure increased from NT$340 million to NT$520 million from 2004 to 2005. The SBIR produced 839 patents, 523 patent applications, 210 technical papers, and 265 contracts and industrial services in 2005. With respect to the benefits of research and development, the SBIR also produced 285 enterprise investments in 2005.
There are many researches on the TDP and the objects are almost the firms which got the subsidies. On the other hand, there is no research focus on the firms which failed to apply. Because it is limited to examine the effect of the government subsidies, we can not know comprehensively whether the subsidies raise the companies’ performance or not. This paper evaluates public support of private-sector R&D through the Small Business Innovation Research (SBIR) Program in Taiwan. We not only want to know the effect of the subsidy subjects on the individual company, but also find the significant differences in the performance of the companies which got the subsidies or not. SBIR has been launched for seven years since 1999. The method which measures long-term performance should be applied. The research uses the Lerner and Eshima’s quasi-experiment framework of the policy estimate to the United States and Japan. We distribute the firms into two groups. One is the treat firms that received subsidy, and the other is the matched firms each that applied the subsidy but not received. Furthermore, the research estimates the effect of the subsidies on the performance of the firms’ R&D activities and operation with t tests of paired.