dissertation in pdf-format - Aalto-yliopisto

specialized assistance to support their innovations. Tether (1998) argued that financial support may
even lead to selection of such projects which may not be optimal from the point of view of the
innovations. This is likely to increase the number of imitations with little genuine innovation.
However, in many circumstances financial support may have positive impacts, too. Santarelli and
Piergiovanni (1996) discovered that the presence of spill-overs at the regional level from both
private and public R&D expenditures is positively correlated with the development of new products.
Moreover, firms that have R&D collaboration agreements have a higher probability of applying at
least one patent, and they also apply for a higher number of patents (Brouwer and Kleinknecht,
1999). Based on these prior findings and the assumption that public R&D funding increases the
overall innovativeness of the firm, the fifth hypotheses will be defined as follows:
H5. Public R&D funding has an impact on the innovation activity (IPRs) of growing SMEs.
3. Data and methodology
The data were collected using the purposive sampling procedure (Miles and Huberman, 1994).
Recently, purposeful sampling strategy has been recommended for use especially in studies where
specific types of firms are of interest (Achtenhagen et al., 2010). The total size of the sample data is
348 continuously growing SMEs from the period of 2002-2005. From these firms 262 are located in
urban areas and 86 in rural areas (Table 1); 28 of these firms have produced and owned at least 1 IPR
during the period 1988-2005 whereas 320 of the businesses were classified as non-IPR growth
SMEs.
The study analyses SME data from all the branches of industry in two Finnish regions, Eastern
Finland (a rural area) and Helsinki Region (an urban area). The Helsinki region has twice as many
people as Eastern Finland living in a spatial area that is 8 times smaller. This would indicate more
market opportunities and larger markets as well as better possibilities for recruiting human resources.
The corporate population density is 14 times higher and its relative growth has also been higher in
the Helsinki area than in Eastern Finland (Appendix 1). Moreover, private and public R&D
investments have been around 3 times higher in the Helsinki region compared with those in Eastern
Finland. This difference could indicate that the Helsinki region has been a more favourable area for
the creation of new products and innovation-driven growth.
Almost all the growing firms (around 95 %) in both Eastern Finland and the Helsinki region are
located in towns, municipality centres or their close neighbourhood. Manufacturing is the dominant
branch of industry in Eastern Finland, employing one-third of the total number of private sector
employees (Appendix 3). In both areas the employment has decreased mostly in manufacturing. The