PUBLIC FINANCIAL SUPPORT AND INBOUND OPEN INNOVATION IN DEVELOPING ECONOMIES: EVIDENCE FROM MOROCCAN FIRMS

Abstract

The objective of this study is to quantitatively examine the impact of

public financial support (PFS) on the adoption of inbound open inno-

vation (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 pub-

lic 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 ac-

quisition of external knowledge and the use of licensed foreign tech-

nologies. 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 fi-

nancing mechanisms can strengthen the absorptive capacity of com-

panies, particularly in contexts where private investment in research

and development (R&D) and technological knowledge remains lim-

ited. This can generate positive spin-offs not only for companies ben-

efiting 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.