The Innovation Behaviour of Turkish Manufacturing Firms: An Analysis of Additionality

Abstract

Innovation and R&D activities have significant effects on economic development and firm success. Innovation is a key factor in economic development through productivity gains. However, firms do not perform the socially optimal level of innovation due to market failures. Therefore, innovation activity is largely supported by governments for both developed and developing countries with the aim of creating additionality. While additionality effects from government supports are widely discussed for developed countries, there is scarce evidence for developing countries. The aim of this article is to analyse innovation behaviour of Turkish firms based on firm characteristics. Further, the behavioural additionality of government support is also analysed in order to provide a full picture. For this aim, the innovation structure is analysed using a multinomial logit model and the additionality effects are analysed using the propensity score matching (PSM) technique. Results indicate that firms that are profit-oriented, produce for the internal market and have an internal R&D unit, are more likely to implement organization and/or marketing innovation in comparison with product innovation. In addition, the same pattern is observed in companies that received government support. The results additionality indicate positive effects on behavioural additionality; however, this effect is evaluated to be limited.