Incentives for technological innovation: a study of the public policy of tax exemption in Brazil

Porto, Geciane Silveira; Memória, Caroline Viriato

doi:10.1590/0034-761220170340x

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Article • Rev. Adm. Pública 53 (3) • May-Jun 2019 • https://doi.org/10.1590/0034-761220170340x copy

Incentives for technological innovation: a study of the public policy of tax exemption in Brazil

Authorship SCIMAGO INSTITUTIONS RANKINGS

Abstract

The goal of this paper is to explain relations between investments in Research and Development - R&D and innovation’s outcomes between the 2009s and 2013s in companies that are encouraged by the Lei do Bem (Good Law), which regulates tax incentives for technological innovation. Econometric Logit models were estimated for fixed effects. The analysis results indicate that the probability of firms presenting innovations in general (in products, processes or services) or only in products depends on the size of the company and the amount invested in R&D, particularly it depends on the investment in human resources - HR. On the other hand, the chances of firms innovate in process are limited to the size of the company, the spending specifically to develop HR programs. The results confirm that investments in R&D from the beneficiaries produce innovation’s outcomes.

Keywords:
investment in Research and Development; Lei do Bem; innovation outcome

	Percentile (average of total employees per company from 2009 to 2013)
25%	197
50%	555
75%	1,553
Observations	1,978
Mean	2,005.4
Standard deviation	6,643

Total employees	Origin of capital
Total employees	National	Mixed	Foreign	Total
Lower than 197	15.0%	1.1%	4.0%	20.2%
Between 197 and 555	16.7%	1.2%	6.4%	24.1%
Between 555 and 1,553	18.1%	1.4%	7.6%	27.1%
Superior than 1,553	16.4%	1.4%	10.8%	28.6%
Total	66.3%	4.99%	28.75%	100.0%

There is a management area in R&D		There is HR training and development programs		Other government support programs were used
Yes	No	Yes	No	Yes	No
84.00%	16.00%	29.01%	70.99%	6.38%	93.62%

	Innovation in some aspects	Innovated in product	Innovated in process	Innovated in service
Not once	656	773	1,157	1,647
At least once, but not every year	671	601	502	248
In all the years in which he participated in the program	652	605	320	84

Variable	Specification (1)		Specification (2)		Specification (3)		Specification (4)		Specification (5)
Variable	Logit	Linear	Logit	Linear	Logit	Linear	Logit	Linear	Logit	Linear
Log (Total Employees)	0.012	0.022***	0.015	0.011	0.002	0.006	0.043	0.036***	0.043	0.033***
Log (Total Employees)	(1.341)	(0.007)	(0.252)	(0.008)	(0.105)	(0.008)	(2.078)	(0.009)	(1.814)	(0.009)
Mixed Origin of Capital	-0.014	-0.009	-0.059	-0.019	-0.032	-0.024	-0.033	-0.019	-0.032	-0.018
Mixed Origin of Capital	(1.536)	(0.048)	(1.316)	(0.048)	(1.518)	(0.048)	(1.470)	(0.049)	(1.277)	(0.049)
External Origin of Capital	0.036	0.086***	0.077	0.076***	0.062	0.065**	0.066	0.063**	0.075	0.065**
External Origin of Capital	(3.784)	(0.026)	(1.061)	(0.026)	(3.232)	(0.027)	(3.274)	(0.027)	(3.310)	(0.027)
HR Program	0.019	0.034*	0.041	0.030
HR Program	(1.994)	(0.020)	(0.619)	(0.020)
Management Area in R&D	0.014	0.021	0.027	0.015	0.015	0.012	0.014	0.008	0.013	0.005
Management Area in R&D	(1.510)	(0.032)	(0.507)	(0.032)	(0.749)	(0.032)	(0.644)	(0.032)	(0.520)	(0.032)
Log (R&D/Revenue Expenditures)			0.039	0.019***	0.042	0.031***
Log (R&D/Revenue Expenditures)			(0.655)	(0.005)	(2.142)	(0.008)
Log (R&D expenditures dedicated to R&D/Revenue)					0.180	0.110***	0.187	0.109***	0.199	0.104***
Log (R&D expenditures dedicated to R&D/Revenue)					(9.073)	(0.040)	(8.932)	(0.040)	(8.420)	(0.040)
Log (Third-party expenses dedicated to R&D/Revenue)					-0.012	0.013	-0.014	0.004	-0.012	0.002
Log (Third-party expenses dedicated to R&D/Revenue)					(0.620)	(0.084)	(0.686)	(0.085)	(0.515)	(0.084)
Log (Capital Expenditures for R&D/Revenue)					-0.175	-0.034	-0.162	-0.020	-0.173	-0.019
Log (Capital Expenditures for R&D/Revenue)					(8.834)	(0.074)	(7.756)	(0.075)	(7.325)	(0.074)
Log (R&D Expenses/Total Employees)							0.045	0.031***	0.048	0.029***
Log (R&D Expenses/Total Employees)							(2.161)	(0.009)	(2.031)	(0.009)
Patent Registries, cultivar records or other intellectual property rights									0.029	0.038*
									(1.245)	(0.020)
Constant		0.416***		0.230***		0.024		0.033		0.064
Constant		(0.055)		(0.078)		(0.120)		(0.121)		(0.122)
Observations		2,479	4,671	2,479	4,671	2,472	4,643	2,462	4,626	2,462
Number of companies		671	1.978	671	1.978	670	1.963	668	1.961	668
Year binary variables		Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes

Variable	Specification (1)		Specification (2)		Specification (3)		Specification (4)		Specification (5)
	Logit	Linear	Logit	Linear	Logit	Linear	Logit	Linear	Logit	Linear
Log (Total Employees)	0.022**	0.030	0.000	0.014	-0.000	0.004	0.002	0.048**	0.002	0.043**
Log (Total Employees)	(0.009)	(0.019)	(0.002)	(0.019)	(0.001)	(0.020)	(0.001)	(0.021)	(0.002)	(0.021)
Mixed Origin of Capital	-0.073	-0.067	-0.011	-0.077	-0.003	-0.074	-0.003	-0.076	-0.004	-0.075
Mixed Origin of Capital	(0.089)	(0.100)	(0.017)	(0.099)	(0.005)	(0.099)	(0.005)	(0.099)	(0.007)	(0.099)
External Origin of Capital	0.133**	0.144**	0.013	0.131**	0.003	0.121**	0.004	0.123**	0.006	0.124**
External Origin of Capital	(0.060)	(0.057)	(0.014)	(0.056)	(0.004)	(0.056)	(0.005)	(0.057)	(0.007)	(0.057)
HR Program	0.019	0.016	0.001	0.010
HR Program	(0.029)	(0.029)	(0.004)	(0.029)
Management Area in R&D	0.070*	0.071*	0.007	0.064	0.002	0.060	0.002	0.052	0.002	0.051
Management Area in R&D	(0.042)	(0.041)	(0.008)	(0.041)	(0.002)	(0.041)	(0.002)	(0.041)	(0.003)	(0.041)
Log (R&D/Revenue Expenditures)			0.005	0.027***	0.002	0.050***
Log (R&D/Revenue Expenditures)			(0.004)	(0.008)	(0.002)	(0.014)
Log (R&D expenditures dedicated to R&D/Revenue)					0.004	0.142**	0.005	0.142**	0.006	0.137**
Log (R&D expenditures dedicated to R&D/Revenue)					(0.004)	(0.061)	(0.005)	(0.061)	(0.007)	(0.061)
Log (Third-party expenses dedicated to R&D/Revenue)					-0.001	0.013	-0.001	0.010	-0.001	0.014
Log (Third-party expenses dedicated to R&D/Revenue)					(0.005)	(0.127)	(0.005)	(0.127)	(0.007)	(0.127)
Log (Capital Expenditures for R&D/Revenue)					-0.004	-0.051	-0.003	-0.015	-0.005	-0.014
Log (Capital Expenditures for R&D/Revenue)					(0.006)	(0.126)	(0.006)	(0.130)	(0.009)	(0.131)
Log (R&D Expenses/Total Employees)							0.002	0.052***	0.003	0.051***
Log (R&D Expenses/Total Employees)							(0.002)	(0.014)	(0.003)	(0.014)
Patent Registries, cultivar records or other intellectual property rights									0.002	0.046*
									(0.003)	(0.027)
Constant		0.217*		-0.058		-0.421**		-0.395*		-0.359*
Constant		(0.123)		(0.146)		(0.209)		(0.211)		(0.211)
Observations		1,571	4,036	1,571	4,036	1,568	4,010	1,556	3,996	1,556
Number of companies		489	1.867	489	1.867	489	1.851	485	1.849	485
Year binary variables		Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes

Variable	Specification (1)		Specification (2)		Specification (3)		Specification (4)		Specification (5)
	Logit	Linear	Logit	Linear	Logit	Linear	Logit	Linear	Logit	Linear
Log (Total Employees)	0.032***	0.040***	0.040	0.041***	0.012	0.036**	0.014	0.045**	0.015	0.045**
Log (Total Employees)	(0.006)	(0.015)	(0.025)	(0.015)	(0.014)	(0.015)	(0.012)	(0.019)	(0.012)	(0.019)
Mixed Origin of Capital	0.002	0.004	0.005	0.005	0.001	0.006	-0.000	0.005	-0.000	0.005
Mixed Origin of Capital	(0.054)	(0.088)	(0.064)	(0.088)	(0.022)	(0.087)	(0.023)	(0.087)	(0.025)	(0.087)
External Origin of Capital	-0.052	-0.058	-0.060	-0.058	-0.022	-0.063	-0.024	-0.064	-0.025	-0.064
External Origin of Capital	(0.046)	(0.058)	(0.056)	(0.058)	(0.028)	(0.058)	(0.029)	(0.059)	(0.031)	(0.059)
HR Program	0.033	0.046*	0.039	0.046*
HR Program	(0.026)	(0.026)	(0.035)	(0.026)
Management Area in R&D	0.007	0.005	0.009	0.005	0.004	0.008	0.004	0.008	0,004	0,008
Management Area in R&D	(0.029)	(0.035)	(0.035)	(0.035)	(0.013)	(0.035)	(0.014)	(0.035)	(0,014)	(0,035)
Log (R&D/Revenue Expenditures)			-0.004	-0.001	0.003	0.013
Log (R&D/Revenue Expenditures)			(0.011)	(0.007)	(0.003)	(0.013)
Log (R&D expenditures dedicated to R&D/Revenue)					0.030	0.090*	0.032	0.089*	0.034	0.088
Log (R&D expenditures dedicated to R&D/Revenue)					(0.029)	(0.054)	(0.031)	(0.054)	(0.032)	(0.054)
Log (Third-party expenses dedicated to R&D/Revenue)					-0.003	-0.025	-0.004	-0.025	-0.004	-0.024
Log (Third-party expenses dedicated to R&D/Revenue)					(0.045)	(0.098)	(0.048)	(0.099)	(0.050)	(0.099)
Log (Capital Expenditures for R&D/Revenue)					0.020	0.031	0.030	0.063	0.032	0.063
Log (Capital Expenditures for R&D/Revenue)					(0.045)	(0.122)	(0.053)	(0.124)	(0.057)	(0.124)
Log (R&D Expenses/Total Employees)							0.004	0.013	0.004	0.013
Log (R&D Expenses/Total Employees)							(0.003)	(0.013)	(0.003)	(0.013)
Patent Registries, cultivar records or other intellectual property rights									0.003	0.006
									(0.010)	(0.024)
Constant		0.014		0.026		-0.188		-0.173		-0,168
Constant		(0.098)		(0.125)		(0.196)		(0.199)		(0.199)
Observations		1,247	4,036	1,247	4,036	1,245	4,010	1,238	3,996	1,238
Number of companies		390	1.867	390	1.867	390	1.851	388	1.849	388
Year binary variables		Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes

Fundação Getulio Vargas Fundaçãoo Getulio Vargas, Rua Jornalista Orlando Dantas, 30, CEP: 22231-010 / Rio de Janeiro-RJ Brasil, Tel.: +55 (21) 3083-2731 - Rio de Janeiro - RJ - Brazil
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[1] Geciane Silveira Porto - PhD in Administration from the University of São Paulo (USP); Professor at the Faculty of Economics, Administration and Accounting of Ribeirão Preto, University of São Paulo (FEA-RP/USP). E-mail: geciane@usp.br