How does the productivity of a company benefit society?

Political adjustment screws and more openness

Influence on business decisions through state subsidy measures should generally be viewed critically, as they are often associated with considerable deadweight effects. This also applies to the tax research funding that has just been decided, which explicitly does not exclude large companies from funding. Here in particular it is questionable whether the funding will lead to an increase in innovation expenditure, as this is subject to lower funding restrictions than SMEs due to economies of scale. In the interests of efficiency, tax research subsidies, if used, should therefore be focused as much as possible on SMEs. It remains to be seen whether this has been achieved with the new law. At least the possibility of order funding was given, should smaller companies not have their own departments.

In addition, politics should start at those points that lie beyond the sphere of influence of the companies, in particular the economic framework conditions. It can, for example, ensure that universities and research institutions are better equipped to promote technical progress. This would also benefit smaller companies that enter into research collaborations with universities. But the state should also invest significantly more in expanding the general education system. On the one hand, this serves to impart the basic skills required in the modern world of work, which are a prerequisite for realizing high work productivity. On the other hand, it is also important to support all children - regardless of their social or cultural origin. Against the background of an increasing shortage of skilled workers, the German economy is dependent on taking children from so-called “educationally disadvantaged classes” with them and making them fit for modern society.

Furthermore, it could facilitate the immigration of qualified skilled workers or dismantle market entry regulations, as the Advisory Council recently called for in its report to assess macroeconomic developments. Political measures could also promote indirect support for ICT investments, for example through the consistent expansion of the digital infrastructure, especially in rural areas. Ultimately, companies (especially SMEs) and their management themselves are asked to be open to the possibilities of digitization and, accordingly, to invest in their companies, the training and further education of their employees and the entire knowledge chapter.


You can find the study on which this article is based here.

This post is also on published.