| dc.description.abstract | Innovation is widely recognized as a main driving force of economic growth as well as industrial evolution. Understanding the dynamic process of innovations is particularly important and relevant to Taiwan, because it helps the government to make technology policy to encourage innovations, and then contribute to the sustainable growth. In view of this, the objects of the dissertation focus on three aspects of innovation behavior, including innovative persistency, dynamics of R&D productivity, and the tax incentives on firms’ R&D activities.
In the first issue, we examine the persistence of innovation and investigate the determinants of firm’s innovation in Taiwan’s manufacturing sector, using a panel dataset of manufacturing firms over the period 1990-2003. This study employs a new estimation method of the dynamic panel data model with unobserved heterogeneity to account for firm heterogeneity and also handles the problem of initial conditions. The empirical results find a strong effect of state dependence after controlling for firm heterogeneity and the initial condition, supporting the hypothesis of true persistent innovation. This finding is also supported for subgroups of scientific and non-scientific industries, implying that the causal effect from past innovation to current innovation exists across industries. Less surprisingly, the phenomenon of innovation persistence is stronger in scientific industries relative to non-scientific industries. We also highlight some important factors that affect continuity in the performance of innovations contributing to the understanding of the determinants of firms’ innovation.
In the second issue, we investigate changes in R&D productivity for Taiwan’s manufacturing firms over the 1990-2003 period. Employing various approaches to obtain robust results, a micoreconometric analysis at the firm-level suggests that R&D productivity overall appears to be ascendant, especially during the post-crisis period. This result is also evidenced when we segment the sample into industry groups, whereby electronics firms have a significantly high R&D productivity growth relative to firms outside the electronics industry.
Finally, we investigate the effect of tax incentives on the R&D activities of Taiwanese manufacturing firms. Specifically, we examine the potential differences in innovation effect between R&D tax credits users and non-users as well as high-tech and non-high-tech industries. Using a firm-level panel dataset during 2001 and 2005, results obtained by the technique of propensity score matching (PSM) show that R&D tax credit users appear to have a higher levels of R&D expenditure and R&D growth than non-users. Moreover, we employ the GMM of panel fixed model to control for the endogeneity of R&D tax credits in determining R&D expenditure. Empirical results obtained based on both the entire sample and high-tech-firms are quite similar that there is a significantly R&D-enhancing effect of R&D tax credits in various estimates. This suggests that the R&D preferential policy in Taiwan has induced more R&D expenditure devoted by firms. In specifically, the effect of R&D tax credits is much greater for high-tech firms than their corresponding non-high-tech firms.
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