R&D Programmes, Policy Mix, and the ‘European Paradox’: Evidence from European SMEs

Using a sample of SMEs from 28 European countries, this study evaluates the input and output additionality of national and EU R&D programmes both separately and in combination. Accordingly, we contribute to understanding the effectiveness of policy mix, in this case of innovation policy from the perspective of multi-level governance. Empirical results are quite different for innovation inputs and innovation outputs. For innovation inputs, we found positive treatment effects from both national and EU programmes separately as well as complementary effects for firms supported from both sources relative to firms supported only by national programmes. For innovation outputs, we report no evidence of additionality from national programmes and cannot reject crowding out from EU programmes. However, crowding out from EU support is eliminated by combination with national support. These findings have policy implications for the governance of R&D policy and suggest that the European Paradox – success of EU support in promoting R&D inputs but not commercialisation – is not yet mitigated.