Fostering Czech firms? innovation performance through efficient cooperation

Research background: The business climate development and the stage of innovation systems? transformation are very similar in many Central and Eastern European countries, making it necessary to study these specific economies. These economies are at a different level of transformation, and their governments are trying to support the development of a knowledge-based economy, the creation of innovation systems, and collaboration among different types of entities. These governments need feedback in the form of research into the impacts of public funding on innovation activities through the influence of basic research and cooperation-based resources in individual countries. Purpose of the article: This paper focuses on the examination of (i) the influence of national and European subsidies on innovation performance in manufacturing firms in the Czech Republic and (ii) impacts of knowledge- and cooperation-based resources on innovation activities in Czech manufacturing. Methods: The latest available data from the Community Innovation Survey was used for analyses realized by different regression models. The proposed research models were gradually created to verify the influence of pro-innovation factors (expenditures on in-house and external R&D and on the acquisition of external tangible and intangible sources, cooperation with different partners and innovation) and public (national and/or European) funding of firms? innovation performance within the Czech manufacturing industry. Findings and value added: The results have showed that there is a need to focus on direct and indirect effects of selected innovation determinants; we have also identified the crucial role of cooperation (specifically with government, public, or private research institutes) as a mediating variable within innovation processes. The results have also evidenced that public funding affects the efficiency of knowledge- and cooperation-based resources and amplifies the impact on firms? innovation performance differently. Whereas subsidies from national budgets do not significantly influence the innovation performance of Czech manufacturing firms, European subsidies, on the other hand, significantly increase firms? innovation performance. A long-term contribution of this paper is the significant completion of the theory of policy implications that may be applicable in a broad international context beyond the borders of the Czech Republic. This study significantly contributes to the ongoing discussion about (i) the significance of public financial subsidies from both national and European funds and (ii) the effects of cooperation and R&D on firms? innovation performance within ?catching-up? in Central and Eastern Europe.