Purpose: This study investigates the question of how government supports affect firms’ knowledge assets in the Korean solar energy technology sector.
Research design, data, and methodology: To grasp the characteristics of the data, various panel framework tests has been performed. Taking into account the panel framework test results, the presence of first-order autocorrelation, panel unit-roots, and cross-sectional dependence, a dynamic panel vector autoregressive model in the first difference has been established to test the relationship between the variables in question. Biased-corrected least squares dummy variable estimator that offers more efficient parameters in a small sample size has been used to estimator the nexus between the variables to be examined in the study.
Results: Technology-push support has a significant positive effect on the enhancement of firms’ knowledge assets. However, demand-pull support does not. The study indicates that firms’ slack, industrial competition, and interaction between firms’ slack and technology-push support positively affect firms’ knowledge asset. Firm size and age do not have significant effects on knowledge assets creation. Plus, this study shows that there is a path dependence in firms’ knowledge assets, meaning that the value of knowledge assets in the present period is positively affected by the value in the previous period.
Conclusions: The positive and reliable role of technology-push policy, organizational slack, and the interaction between technology-push policy and the slack in knowledge assets creation should be continuously and strategically addressed at the firm- and government-level. This study contributes to understanding of the effects of government supports on knowledge assets at the firm level, in which the empirical results are needed to be interpreted under the consideration of some limitations. To more correctly grasp the effects of government supports on innovation, both qualitative (knowledge assets) and quantitative (patent) aspects should be taken into account. In addition, the reasons for inertia of firm experience to and insignificant effects of demand-pull policy on knowledge asset creation should be explored more systematically and deeply.