Analysis of the Effect of R&D Planning Support for SMEs Using Latent Growth Modeling

Abstract

Small and medium enterprises (SMEs) in Korea play a pivotal role in the national economy. However, due to scale limitations, the resources available to SMEs for innovation activities are limited. Therefore, as a means to compensate for the market failure of SMEs, which can be caused by resource limitations, and to ensure sustainable growth, the government supports the SMEs for innovation activities. Korea has fulfilled SME R&D planning support projects since 2002 to efficiently support SMEs’ technology commercialization activities through systematic support in the early stages of the technology commercialization cycle. In order to analyze the effectiveness of SME R&D planning support program, this study conducted latent growth modeling analysis using financial data of three years of SMEs participating in the program. According to the analysis results, SMEs receiving R&D planning support funds have an increase in sales compared to those that do not. In particular, it was analyzed that the sales increase effect of companies supported by R&D funds continuously appeared more clearly. The result of this analysis is that policy support for SMEs can help technological innovation activities necessary for R&D planning, which is an early stage of SME technological innovation. This study is meaningful in that it quantitatively analyzes using latent growth model and the contribution of government support at the R&D planning stage to SMEs’ innovation capabilities and their contribution to performance. However, it has a limitation that it does not address the specific impact path of the planning stage support on innovation capacity and innovation performance.