Year of Publication



Martin School of Public Policy and Administration

Executive Summary

Investment in Research and Development (R&D) is one of the most significant governmental activities. Many countries including Korea continue the R&D investment in various fields such as defense, environment, and medical care. In addition, the Korean government has a plan to significantly expand R&D investment for small businesses because the growth of small businesses is considered as an important factor for economic development such as new job creation. Since the government budget is a finite resource in which various departments compete for the budget, the budget increase of a program can be justified when the government grants lead to better performance.

I analyzed the correlation between the performance indicators to assess the effects of the R&D subsidy program. Subjects of analysis are 347 companies that participated in the Technology Innovation Development of Small Businesses (TIDS) program in 2011. The reasons for using the data of the TIDS program are that the program has the largest budget and is often used by small businesses. Performance indicators are classified into inputs, outputs, and outcomes. The subsidy of the government is the important input. There are three types of outputs: whether to succeed in R&D for new products or processes, acquisition of patents, and commercialization of technology. Outcomes are the change in sales and the change in the number of employees.

As a result of analyzing the relationship between performance indicators, government grants, which is the most important explanatory variable, has a positive effect on the probability that small businesses succeed in R&D. It is statistically significant that companies which commercialized the technology developed are more likely to increase their sales.