R&D Tax Incentives for Innovation and Managerial Decisions
In many countries tax incentives are a popular means of realizing political, economic and social objectives. The main motive of their application is often to achieve and accelerate the selected activities in the public interest and also stimulate development of industry, and induce growth in research and investment. The key element that helps a company achieve a competitive advantage is innovation. Global competition forces the production of unique products and services. Tax incentives in science, research and development are important in stimulating innovation. The purpose of this article is to show the level of managerial awareness about R&D tax incentives, the level of R&D tax incentive usage by companies in Poland, and main obstacles that managers meet with R&D tax incentives in practice. We explore R&D tax incentives as a government instrument on R&D management and aim to find the reasons why Polish companies do not take advantage of them. We examine 275 companies using a semi-structured questionnaire. Our findings suggest that many firms report lack of knowledge about such incentives, and firms find many obstacles to reach all of the requirements which are necessary to use the incentive. Due to our analysis we find that large firms, especially those that implement innovation, are more likely to use the tax incentives, but small and medium sized companies find more obstacle. The effect of this tax policy is significant mainly in large, high-tech sector firms. (original abstract)
- Act dated 29 July 2005 on certain forms of support for innovative activity. Journal of Laws of 19.09.2005r., (No. 179, item. 1484).
- Andrews, D., Westmore, B. (2014). Managerial Capital and Business R&D as Enablers of Productivity Convergence. OECD Economics Department Working Papers, No. 1137, OECD Publishing.
- Badea, I., Preda, L.E., Constantinescu, A. (2009). The Impact of the Globalization on the Evolution of Tax Systems. Metalurgia International, vol. 14.
- Band, J. (2003). The IBM Corporation. London: Business Insights.
- Barej, E. (2009). Financial Support for Research and Development in Poland. Oeconomica vol. 270(55).
- Association of Business Service Leaders in Poland, (2012). Business Services Sector in Poland, Warsaw.
- Busom, I., Corchuelo, B., Marti'nez-Ros, E. (2014). Tax Incentives... or Subsidies for Business R&D? Small Business Economics, vol. 43(3), 571-596.
- De Waegenaere, A., Sansing, R.C., Wielhouwer, J.L. (2012). Multinational Taxation and R&D Investments. Accounting Review, vol. 87(4).
- Eisenhardt, K.M., Graebner, M.E. (2007). Theory Building from Cases: Opportunities and Challenges. Academy of Management Journal, vol. 50, 25-32.
- Elschner, C. (2011). What the Design of an R&D Tax Incentive Tells about Its Effectiveness: a Simulation of R&D Tax Incentives in the European Union. Journal of Technology Transfer, vol. 36.
- Ministry of Economy, (2012). Entrepreneurship in Poland. Warsaw.
- EUROPE 2020. A strategy for smart, sustainable and inclusive growth, COM (2010). 2020 European Commission. Brussels: Friedrich-Ebert-Stiftung Group.
- Fowler, F.J. (2009). Survey Research Methods. Sage: Thousand Oaks.
- Frascati Manual, (2005). Proposed Standard Practice for Surveys on Research and Experimental Development. OECD.
- Graetz, M.J., Doud, R. (2000). Technological Innovation, International Competition, and the Challenges of International Income Taxation. Columbia Law Review, vol. 113/2.
- Hacker, B., Jakobi, A.P., Petzold, S., Pusch, T., Steinberg, P. (2010). Europe 2020 - Proposals for the Post-Lisbon Strategy: Progressive Policy Proposals for Europe's Economic, Social and Environmental Reneval. International Policy Analysis. Berlin: Friedrich- Ebert-Stiftung.
- Hall, B., Van Reenen, J. (2000). How Effective are Fiscal Incentives for R&D? A Review of the Evidence. Research Policy, vol. 29.
- Hodzić, S. (2013). Research and Development and Tax Incentives. South East European Journal of Economics and Business, vol. 7(2).
- http://ec.europa.eu/enterprise/policies/innovation/facts- figures-analysis/innovation-scoreboard/index_en.htm z dnia 16.04.2013r.
- Hutschenreiter, G. (2002). Tax Incentives for Research and Development. Austrian Economic Quarterly, vol. 2.
- Kesner-Skreb, M. (2001). Tax Incentives. Financial Theory and Practice, vol. 25(4).
- Klemm, A., Van Parys, S. (2012). Empirical Evidence on the Effects of Tax Incentives. International Tax and Public Finance, vol. 19/3.
- Kohler, C.P., Laredo, P., Rammer, C. (2012). The Impact and Effectiveness of Fiscal Incentives for R&D. Manchester Business School.
- Ming Ling, L., Arifin, M. Z. (2012). Small Business Enterprises and Taxation: a Case Study of Corporate Clients of a Tax Firm. Academy of Accounting & Financial Studies Journal, Vol.2, No. 3, 209- 214.
- Moncada-Paterno-Castello, P. (2010). New Insights on EU-US Comparison of Corporate R&D, JRC-IPTS. Working Papers on Corporate R&D and Innovation, Institute of Prospective Technological Studies.
- Orlova, M., Khafizova, A. (2014). The Tax Component of Innovative Activity Assessment in the Russian Federation. Life Science Journal, vol. 11(11), 328-333.
- Deloitte, (2013). Overview of R&D Tax Incentives in the World in 2012. Warsaw.
- Paving the Way for a Sustainable European Prosperity Strategy, (2010). Friedrich-Ebert-Stiftung Group. International Policy Analysis.
- Popa, I., Lavric, V., Draghici, S. (2012). Tax Incentives Schemes for R&D - a Solution for the Romanian Economy. Review of General Management, vol. 16(2), 88-99.
- Ministry of Economy (2012). Program of Entrepreneurship Development 2020.
- Eurostat, (2012). Research and Development: Annual Statistics. Brussels.
- Deloitte, (2013). Review of Tax Incentives in the World in 2012. Warsaw.
- Sakata, I., Fujisue, K., Okumura, H. (2005). Do R&D and IT Tax Credits Work? Evaluation of the Japanese Tax Reform. International Journal of Technology Management, vol. 32/2.
- Sanchez-Gonzales, G., Herrera, L. (2010). The Influence of R&D Cooperation on Innovatory Effort. Innovation: Management, policy and practice, vol. 12(3).
- Schumpeter, J. (1998). The Theory of Economic Development. Tenth printing 2004. New Brunswick, New Jersey: Transaction Publishers.
- Central Statistic Office, (2012). Science and Technology in 2011. Warsaw.
- Tassey, G. (2007). Tax Incentives for Innovation: Time to Restructure the R&D Tax Credit. Journal of Technology Transfer, vol. 32.
- Trandafir, A., Luminita, R. (2014). R&D Tax Relief in the European Union. Economics, Management and Financial Markets, vol. 9(1), 431- 439.
- Walicka, M. (2014). Innovation Types at SMEs and External Influencing Factors. Financial Internet Quarterly e-Finanse, vol. 10(3), 73-81.
- Walicka, M. (2014). Tax Risks Sources and Consequences as a Part of Intercultural Management at Family Companies. Journal of Intercultural Management, Vol. 6, No. 4, 191-201.
- Yanadori, Y., Cui, V. (2013). Creating Incentives for Innovation? The Relationship between Pay Dispersion in R&D Groups and Firm Innovation Performance. Strategic Management Journal, vol. 34(12), 1502-1511.
- Yang, C.H., Huang, C.H., Hou, T.C.T. (2012). Tax Incentives and R&D Activity: Firm-level Evidence from Taiwan. Research Policy, vol. 41(9), 1578- 1588.