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Access to EU public financial support and commercialization of innovations: Evidence from hospitality industries in Spain and Croatia.

Purpose – The purpose of this paper is to assess the impact of public financial support to innovations provided through EU funds on success of innovation process in hospitality industries of two leading tourism countries in Europe, Spain and Croatia during 2012-2014 period. The paper investigates whether innovation push channels improve ability of firms to increase share of turnover generated from new products and services. We distinguish between commercialization of innovations which are new to the market and those that are new to the firm but have already been known to other competitors. Methodology – The study relies on data from the most recent round of Community Innovation Survey, a confidential dataset compiled by Eurostat on innovation activities of firms in EU member states. Treatment analysis is applied to assess whether EU funded public support creates additionality effects or it leads to quiet life behaviour. The model used also introduces number of firm specific characteristics such as previous innovation experience, pattern of innovation development, licensing behaviour, firm size, ownership and the quality of organizational human capital. Findings – Results of investigation point to the positive impact of EU funds in Spain when it comes to share of sales coming from radical innovations and positive in both countries when it comes to share of sales from innovations which are new to the firm but have been known to the market as well as unchanged or marginally modified products. This signals that in both countries firms exploit EU funds to apply solutions proven successful by others but do not engage in disruptive innovations required for stronger market differentiation and generation of above average returns. The ability to access EU funds for innovations is positively related to firm size and the quality of organizational human capital. Moreover, firms that are part of foreign owned groups have higher chances of accessing EU funds for innovations. Together with previous findings this signals that experience, knowledge transfer and absorptive capacity of firms are the key factors behind the ability of firms to benefit from public support to innovation. Contribution – In development of innovations firms are often constrained with lack of knowledge, skills and financial resources. Public support is essential in such circumstances for firms that are interested in pursuit of innovations. There is longstanding discussion, however, whether public funds are efficient in facilitating innovation and this debate has particularly been pronounced at EU level. Our study thus provides direct inputs for formulation of future innovation policies that can help to improve performance of firms in hospitality industries.

hospitality industry ; EU funds ; innovation commercialization ; treatment analysis

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