R&D Funding Sources Effects in Selected Enterprises of Electronics Industry

Abstract

Purpose of the article: This paper examines the impact of the Czech R&D Tax Incentives scheme on the number of Innovations and patenting. Czech R&D spending in business sector is low by OECD and EU Innovation standards. To achievement the aims of strategy Europa 2020 in 2005 the Czech government introduced a R&D Tax Incentives. This type of R&D Tax Incentives is the best in EU-27, how simulated ZEW Mannheim team used European Tax Analyser. Methodolgy/methods: We analysed the effects of R&D Tax Incentives on the likelihood of innovating and patenting in business companies, NACE 26.51 Measuring, testing and navigating equipment; watches and clocks. We used three databases: Database for Czech firms, data of Financial Administration of the Czech Republic and results of questionnaire Research and Development of Czech Statistical Office. Scientific aim: The aim of this paper is to analyze and assess the current state of investment in own R&D in manufacturing enterprises of electro technical industry in the Czech Republic, especially in relation to the actual realization of innovations and patents, financing sources used in relation to the size of the business. Czech companies using public subsidies to R&D activities, structural funding from EU, own resources and R&D Tax Incentives. Findings: The part of Manufacturing Industry is the part of the third fastest growing industry and the most R&D Tax Incentives volume (in CZK). R&D investment is for SME risky. SMEs likely produce for a large company, than starting new products line by themselves. Moreover, it is very difficult for financial and government institutions to judge the quality of the R&D investment because of its uncertain outcome and firms’ reluctance to disclose all of the relevant information. For SMEs, particularly small firms and start-ups, will be more likely to be credit constrained when investing in R&D. Conclusions: Enterprises of business sector with own R&D are more competitiveness than enterprises without this. The results financial measures the period 2007-2011 show a better stability of innovative firms in times of recession.