Table 1.
Definition of variables used in the analysis
| Variable | Definition |
|---|---|
| Stage one dependent variable | |
| R&D | Natural logarithm of firm's total R&D expenditure |
| Stage two dependent variables | |
| Turnover | Natural logarithm of firm's turnover |
| Exports | Natural logarithm of firm's exports |
| Gross Value Added (GVA) | Natural logarithm of firm's GVA |
| Treatment variables | |
| R&D tax credit | Binary variable equal to 1 if a firm claimed an R&D tax credit; 0 otherwise |
| R&D grant | Binary variable equal to 1 if a firm received direct funding for R&D from Industrial Development Agency (IDA) Ireland or Enterprise Ireland; 0 otherwise |
| Control variables | |
| Past turnover | Categorical variables capturing the quartile of firms' turnover (natural logarithm): 1 = Firms in the lowest turnover quartile in a given year; 2 = Firms in the second lowest turnover quartile in a given year; 3 = Firms in the second highest turnover quartile in a given year; 4 = Firms in the highest turnover quartile in a given year |
| R&D above median | Binary variable equal to one if firms' past R&D was above the median R&D expenditure; 0 otherwise |
| Past public funding for R&D | Binary variable equal to 1 if a firm received an R&D grant or R&D tax credit in the previous period; 0 otherwise |
| Other R&D support | Binary variable equal to 1 if a firm received any other form of R&D support; 0 otherwise |
| Firm size | Categorical variables: 0 = Micro if a firm has less than 10 employees; 1 = Small if a firm has 10 or more employees and less than 50 employees; 2 = Medium if a firm has 50 or more employees and less than 250 employees; 3 = Large if a firm has 250 or more employees |
| Material costs | Natural log of materials and service costs |
| Unit labour costs | Firm's payroll divided by GVA |
| Training | Natural logarithm of the firm’s total expenditure on all structured training |
| Regional R&D | Natural logarithm of the sum of all firms' expenditure on R&D in the region where a firm is based |
| Sector | Categorical variables representing 12 NACE sectors (defined in Appendix Table C1 in Supplementary material) |
| Year | Categorical variables: 0 = 2007; 1 = 2008; 2 = 2009; 3 = 2010; 4 = 2011; 5 = 2012; 6 = 2013; 7 = 2014; 8 = 2015; 9 = 2016 |
NACE is the acronym for ‘nomenclature statistique des activités économiques dans la Communauté européenne’, and is the statistical classification of economic activities used by Eurostat. Other R&D support captures any R&D support which does not provide direct funding through R&D grants or indirect funding through R&D tax credits. The R&D supports in this category are as follows: Innovation Partnerships, Innovation Vouchers, and Science Foundation Ireland research centres. The 26 counties of the Republic of Ireland constitute the regional unit for the Regional R&D variable. For the Regional R&D variable, we aggregate total R&D from our survey to the regional level