Non-Market Intermediaries and Government Financial Support as Innovation Catalysts
Creators: name: Yeo, Jihye
Publisher: name: The Australian National University
Year: 2021

description: This dissertation aims to improve our understanding of innovation catalysts. Past studies have identified that a variety of industry actors and policy measures can work as innovation catalysts (e.g., David, Hall, &amp; Tool, 2000; Howells, 2006; McDermott, Corredoira, &amp; Kruse, 2009). However, they are still limited in clarifying their roles in boosting innovation, which makes it difficult to understand how their support assists in firms' innovation activities. In this dissertation, I re-examine support programs that are designed to catalyse innovation to improve our understanding of innovation catalysts. I particularly focus on examining non-market intermediaries and government financial support. As these programs are often established by public funding to boost innovation, asking about their actual roles in helping innovation is a fundamental question. To explore these subjects, separate studies for (1) non-market intermediaries and (2) government financial support are conducted. In the first study, I focus on the emergence of non-market intermediaries, asking where they come from and how they emerge in relation to the roles of innovation catalysts. Past studies have thus far been interested in identifying the effect of non-market intermediaries after their inception, treating them as exogenous variables. However, this perspective can mislead our understanding of their actual roles. By investigating the process of their inception, this study explains (1) how non-market intermediaries emerge, (2) how their roles evolve over time and (3) how different intermediaries can influence firm innovation in unique ways. I use a qualitative methodology to examine the emergence of non-market intermediaries in the Australian advanced manufacturing industry. My second study focuses on identifying the causal effect of government financial support on firm innovation. Despite a number of scholarly efforts, empirical evidence on this is mixed. This is partly due to econometric identification challenges. Hence, in this study, I aim to provide evidence that is based on estimates that address the relevant econometric challenges. I focus on specifying how potential sources of bias - endogeneity and sample selection - can mislead the interpretation of the causal effect of government financial support. Using an econometric approach suggested by Semykina and Wooldridge (2010), I estimate the causal effect of Australian government financial incentives on firm innovation. I use the Business Longitudinal Data of the Australian Bureau of Statistics. My research empirically shows particular roles played by non-market intermediaries and government financial support. More specifically, the first study demonstrates that non-market intermediaries are endogenous actors, showing (1) a process model of sequentially interconnected phases through which intermediaries emerge, (2) the evolution of roles that intermediaries play at different stages of the industry and (3) the different functions of intermediaries in stimulating innovation. The second study, addressing econometric identification challenges, provides empirical evidence from which useful implications can be drawn regarding the effectiveness of government financial support and to what extent government financial support helps the innovation of firms. Taken together, this dissertation contributes to clarifying the roles of innovation catalysts.