How Tax Credit Shapes Firm R&D Strategies?
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Pierre Courtioux
Abstract
This study extends the definition of firms’ R&D strategies to integrate fiscal considerations related to R&D tax credits. Using French company data, we identify six types of ‘extended’ R&D strategies. We then examine the relationships of these strategies with the effective rate of R&D tax credits, defined as the ratio of total tax reliefs obtained by a firm through R&D tax credit to real R&D spending. This study contributes to a better understanding of the heterogeneity of companies’ R&D strategies.
Funding source: Idex Université Paris Cité
Award Identifier / Grant number: Emergence en Recherche 2019
The PCA components.
| Components | Eigenvalue | Percentage of variance | Cumulative percentage of variance |
|---|---|---|---|
| Component 1 | 2.04 | 17.04 | 17.04 |
| Component 2 | 1.52 | 12.70 | 29.74 |
| Component 3 | 1.27 | 10.59 | 40.33 |
| Component 4 | 1.26 | 10.47 | 50.80 |
| Component 5 | 0.97 | 8.08 | 58.88 |
| Component 6 | 0.06 | 9.02 | 66.90 |
| Component 7 | 0.87 | 7.29 | 74.18 |
| Component 8 | 0.83 | 6.81 | 81.09 |
| Component 9 | 0.75 | 6.35 | 87.34 |
| Component 10 | 0.69 | 5.75 | 93.09 |
| Component 11 | 0.55 | 4.62 | 97.71 |
| Component 12 | 0.27 | 2.29 | 100.00 |
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Source: ERD 2013 (MESRI), GECIR (MESRI, DGFiP) – authors’ calculation.
Descriptive statistics (mean) for illustrative variables by cluster (Part I).
| Variables | All sample | Patent management strategy (S1) | Self-contained research strategy (S2) | Optimisation strategy (S3) | Capital investment strategy (S4) | Public-oriented research strategy (S5) | Human capital-intensive strategy (S6) |
|---|---|---|---|---|---|---|---|
| Size class | |||||||
| Big firms | 0.009 | 0.032 | 0.008 | 0.003 | 0.002 | 0.013 | 0.000 |
| Intermediate size companies | 0.166 | 0.145 | 0.282 | 0.077 | 0.105 | 0.121 | 0.007 |
| SMEs | 0.581 | 0.468 | 0.628 | 0.601 | 0.545 | 0.558 | 0.367 |
| Micro-firms | 0.244 | 0.355 | 0.082 | 0.319 | 0.348 | 0.308 | 0.626 |
| Age (in years) | |||||||
| [0; 2] | 0.030 | 0.048 | 0.011 | 0.03 | 0.044 | 0.036 | 0.150 |
| [2; 5] | 0.132 | 0.113 | 0.056 | 0.168 | 0.168 | 0.163 | 0.361 |
| [5; 10] | 0.183 | 0.177 | 0.12 | 0.21 | 0.168 | 225 | 0.211 |
| more than 10 | 0.637 | 0.613 | 0.789 | 0.579 | 0.606 | 561 | 0.272 |
| n.a. | 0.018 | 0.048 | 0.024 | 0.012 | 0.015 | 0.015 | 0.007 |
| Number of observations | 6976 | 62 | 2336 | 894 | 477 | 3058 | 147 |
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Source: ERD 2013 (MESRI), GECIR (MESRI, DGFiP) – authors’ calculation.
Descriptive statistics (mean) for illustrative variables by cluster (Part 2).
| Variables | All Sample | Patent management strategy (S1) | Self-contained research strategy (S2) | Optimisation strategy (S3) | Capital investment strategy (S4) | Public-oriented research strategy (S5) | Human capital-intensive strategy (S6) |
|---|---|---|---|---|---|---|---|
| Industrial sector | |||||||
| Agriculture | 0.010 | 0.016 | 0.013 | 0.006 | 0.010 | 0.009 | 0.007 |
| Manufacturing | 0.383 | 0.355 | 0.555 | 0.284 | 0.478 | 0.278 | 0.136 |
| Energy and facilities | 0.006 | 0.016 | 0.004 | 0.007 | 0.019 | 0.006 | 0.000 |
| Building | 0.013 | 0.016 | 0.023 | 0.012 | 0.010 | 0.007 | 0.007 |
| Trade | 0.065 | 0.065 | 0.086 | 0.048 | 0.075 | 0.051 | 0.088 |
| Information and communication | 0.229 | 0.145 | 0.133 | 0.368 | 0.115 | 0.280 | 0.252 |
| Finance and real estate | 0.023 | 0.065 | 0.026 | 0.030 | 0.017 | 0.019 | 0.014 |
| Scientific and technical activities | 0.247 | 0.306 | 0.135 | 0.216 | 0.237 | 0.330 | 0.476 |
| Other | 0.024 | 0.016 | 0.024 | 0.029 | 0.038 | 0.020 | 0.020 |
| Scientific field | |||||||
| Scientific and technical fields | 0.192 | 0.177 | 0.102 | 0.189 | 0.205 | 0.250 | 0.422 |
| Computing and information industries | 0.156 | 0.113 | 0.090 | 0.249 | 0.080 | 0.190 | 0.190 |
| Publishing, audiovisual distribution | 0.076 | 0.081 | 0.045 | 0.119 | 0.038 | 0.092 | 0.082 |
| Metal and machinery manufacturing | 0.110 | 0.194 | 0.160 | 0.102 | 0.145 | 0.071 | 0.034 |
| Chemical industry | 0.049 | 0.000 | 0.068 | 0.027 | 0.061 | 0.039 | 0.061 |
| Pharmaceutical industry | 0.035 | 0.016 | 0.039 | 0.021 | 0.013 | 0.042 | 0.000 |
| Agriculture, food manufacturing | 0.057 | 0.081 | 0.087 | 0.029 | 0.069 | 0.040 | 0.340 |
| Aerospace, marine and military industries | 0.017 | 0.016 | 0.015 | 0.013 | 0.008 | 0.020 | 0.007 |
| Other | 0.309 | 0.323 | 0.392 | 0.251 | 0.382 | 0.258 | 0.170 |
| Number of observations | 6976 | 62 | 2336 | 894 | 477 | 3058 | 147 |
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Source: ERD 2013 (MESRI), GECIR (MESRI, DGFiP) – authors’ calculation.
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