The Effects of Public Subsidies on Firms’ Innovation as a Form of Industry-Government Partnership: Comparison of Western and Central European Countries

Abstract

Industry-government partnerships can take many forms and can be built for a variety of different purposes. Supporting firms’ innovation is one of the key activities, as it can lead to several side effects that are not visible at first glance. This is about creating added value, spilling over knowledge, creating new jobs and internships for students, contributing to regional and national growth. This paper focuses on one of the burning topics, which is the influence of public support on the activities of companies – such as innovation. Moreover, we also focus on the effects of public sector contracts in the framework of innovation. The focus group of our study consists of the so-called weak innovators, the countries of Central Europe, specifically the Czech Republic and Slovakia. In addition, to have a better picture of the researched activities, we also focus on strong innovator - Germany. Such a comprehensive study allows us to map the behaviour of companies in these countries and at the same time propose implications that will be relevant for a wider range of states (public policymakers) in Europe. Our results can thus be reflected, among other things, in public policies that examine the effectiveness of the education system in the countries of Central and Eastern Europe, since educational institutions represent a key player that generates knowledge and contributes to the creation of the knowledge pool in each country. For these reasons, in our study we present several implications both for the makers of public (educational) policies and for businesses.