The impact of public funding for research and development on business performance in Mexico Delia Margarita Vergara Reyes, Alex J. Guerrero, Guillermo Arenas Díaz and Joost Heijs

This study evaluates the impact of financial incentives for corporate innovation on the performance of Mexican companies. It also analyses the priorities underlying the incentive programmes by constructing a profile of the types of firm that are the main recipients of this kind of support. Propensity score matching —in this case, matching based on the probability of receiving such support— of data from the 2017 Research and Technological Development Survey (ESIDET) is used for this purpose. When corporate and governments funds are both taken into account, the results indicate that public funding fosters higher levels of expenditure on research and development, but when public funds are deducted from the total, the results show that these incentive programmes have had no net effect on the initial foreseen level of private research and development expenditure. The findings also indicate that government funding has a positive impact on corporate performance and in terms of human capital and that the types of firm that tend to receive this kind of support more often are in the services sector, those that are more innovative, larger and more competitive, and those that engage in the development of technological applications that are nearer to the market rather than those devoted to basic research.