Abstract

We evaluate the effect of innovation support programmes on output innovation by SMEs in traditional manufacturing industry. This focus is motivated by a definition of traditional manufacturing industry that includes capacity for innovation, and by evidence of its continued importance in EU employment. We conducted a survey in seven EU regions to generate the data needed to estimate pre-published switching models by means of the copula approach, from which we derived treatment effects on a wide range of innovation outputs. We find that for participants the estimated effects of innovation support programmes are positive, typically increasing the probability of innovation and of its commercial success by around 15 per cent. Yet we also find that a greater return on public investment could have been secured by supporting firms chosen at random from the population of innovating traditional sector SMEs. These findings indicate the effectiveness of innovation support programmes while suggesting reform of their selection procedures.