Siva’s Effect on Firm Performance: Evidence from the Incubation Program

Abstract

Innovation is often a directed process where firms invest in R&D to enhance products, processes or efficiency, and more times than not, generates knowledge externalities. In an attempt to correct for this failure, governments regularly sub-sidise R&D through different support schemes. This thesis conducts a matched difference-in-difference analysis to evaluate indirect public support to R&D. Our aim is to find the effect of Siva’s (the Industrial Development Corporation of Nor-way) Incubation Program on firm performance. We find that enrollment in the program has positive effects on the number of employees, sales revenues, value cre-ation and labour productivity in the first 3-year period after attendance. However, in the long-run as measured by the second 3-year period, program participation shows no distinguishable positive effects. In fact, the coefficients might suggest that the effects could be negative.