Public Financial Support and Inbound Open Innovation in Developing Economies: Evidence from Moroccan Firms

Abstract

Abstract The objective of this study is to quantitatively examine the impact of public financial support (PFS) on the adoption of inbound open innovation (IOI). The study is based on data from the World Bank survey of 1,096 Moroccan firms (WBES, 2020). Inbound open innovation is measured by two indicators, namely the acquisition of external knowledge and the use of licensed foreign technologies. Given the nature of the data, we apply two complementary methods to control for the potential endogeneity problem associated with access to public funding: logistic regression and propensity score matching (PSM). The results show that firms benefiting from public financial support are more likely to adopt inbound open innovation (IOI), i.e., the acquisition of external knowledge and the use of licensed foreign technologies. This result highlights the strategic role of public innovation policy, particularly public financial support, in supporting innovation in developing countries (DCs). Our study concludes that targeted financing mechanisms can strengthen the absorptive capacity of companies, particularly in contexts where private investment in research and development (R&D) and technological knowledge remains limited. This can generate positive spin-offs not only for companies benefiting from public financial support (PFS), but also for the economy as a whole, by improving productivity, boosting competitiveness, and helping to bridge the technology gap with advanced countries.