Why Firms (Do Not) Participate in EU Funded R&D Consortia

In their efforts to raise private R&D investments, governments increasingly are directing attention to support R&D collaboration. This holds a fortiori for the European Union, whose flagship policy instrument for stimulating R&D in Europe is the Framework Program (FP). But is this money and attention well spent? Does industry participate in publicly funded R&D collaboration and does it lead to higher innovative performance? Despite improvements to make the FP more business-friendly, industry participation has been declining over time. This paper tries to address why firms are (not) participating in EU funded R&D consortia. To this end we review the insights from the theoretical literature on benefits and costs for firms from joining (subsidized) R&D, and the empirical evidence on effects from publicly sponsored R&D in general and the EU FP programs specifically.