You can lead a firm to R&D but can you make it innovate? UK evidence from SMEs

Marc Cowling

Research output: Contribution to journalArticlepeer-review


The UK Government introduced tax credits for SMEs to promote and support R&D in 2000. Since then the policy has become more generous in this respect, particularly since 2008. In this paper we use the National Systems of Entrepreneurship (NSE) as a conceptual framework in which to question whether SMEs take-up of tax credits has actually led to an increase in product, service, or process innovations. Our evidence suggests that (a) SME engagement with the policy is fairly randomly distributed across the sector, and (b) there is little additional product-service innovation to justify the expenditure in foregone taxes given the current distribution of credits, but (c) there is evidence of enhanced radical process innovations, particularly when combined with strong capability and planning at the firm level.
Original languageEnglish
Pages (from-to)565-577
Number of pages13
JournalSmall Business Economics
Issue number4
Publication statusPublished - 16 Feb 2016

Bibliographical note

The final publication is available at Springer via


  • Innovation
  • Tax credits
  • SMEs
  • Government policy


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