Journal
ENERGY POLICY
Volume 132, Issue -, Pages 1333-1344Publisher
ELSEVIER SCI LTD
DOI: 10.1016/j.enpol.2019.03.009
Keywords
Government subsidy; Firm-level innovation; Renewable energy technology industry; Korea
Funding
- Ministry of Education of the Republic of Korea
- National Research Foundation of Korea [NRF-2017S1A5A2A01025812]
- National Research Foundation of Korea [2017S1A5A2A01025812] Funding Source: Korea Institute of Science & Technology Information (KISTI), National Science & Technology Information Service (NTIS)
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This study investigates how government policies affect firm-level innovation. To empirically test this relationship, we use panel data for the Korean renewable energy technology firms. Taking into account the results of various panel framework tests and sample size, we establish a panel vector autoregressive model in the first difference, and use a bias-corrected least squares dummy variable estimator to test complex dynamic relationships between public subsidies, firm heterogeneities (size, age, and slack), industry dynamic competition, and innovation. Based on the estimations, we find that there is a positive bidirectional causal relationship between firms' innovation and each of the following: research and development (R&D) subsidy, available organizational slack, and industry dynamic competition. Non-R&D subsidy, firm size, and age do not have significant direct effects on firm-level innovation. However, non-R&D subsidy is involved in the relationship between R&D subsidy and firms' innovation. We discuss some implications based on the findings of this study.
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