Business – 8.1 Marketing analysis – Product development | e-Consult

Government policies shape R&D strategy through incentives, regulations, and support mechanisms. Two common instruments are:

1. R&D Tax Credits or Relief: By allowing firms to deduct a proportion of qualifying R&D expenditure from taxable profits, these credits lower the effective cost of innovation. Companies may increase R&D budgets, accelerate project pipelines, and prioritize activities that qualify for the relief.
2. Direct Grants and Subsidies: Targeted funding programmes (e.g., innovation vouchers, collaborative research grants) provide cash support for specific projects or partnerships with universities. This reduces financial risk, encourages collaboration, and can steer firms toward strategic sectors identified by the government, such as green technologies or digital transformation.

Both instruments aim to boost national innovation capacity, but they also guide firms toward areas that align with broader economic or policy goals, influencing the direction and intensity of corporate R&D investment.