Government’s financial vs non-financial support and firms’ innovation performance: evidence from Thailand

Purpose The purpose of this study is to examine the effects of the government’s financial and non-financial support and the combination of the two supports on firms’ innovation performance (i.e. new product introduction). Design/methodology/approach This study is based on data from 423 manufacturing firms in Thailand collected through the authors’ administered survey. The authors use propensity score matching to control for selection bias that may arise when financial or non-financial support is likely to be given to firms with particular characteristics. Then the authors use the negative binomial regression to estimate the treatment effects. Findings Key findings of this study are as follows. First, the effect of financial support is positive and significant, suggesting that firms receiving financial support are likely to introduce more product innovations. Second, non-financial support is also significant for innovation performance. Firms receiving this type of support are expected to introduce more new products than those without support. Finally, the authors find that firms that receive both types of support tend to introduce more product innovations than those without support, suggesting the crucial effects of combined support on firms’ innovation. Originality/value This study contributes to the existing literature by analyzing financial and non-financial types of support separately and comparing their effects on firms’ innovations, which differs from previous studies that focus on either type of support. Moreover, while most studies on government support and firms’ innovation focus on developed economies, this study examines a developing country (Thailand) with relatively less technological progress.