This paper examines the impact of government-organized innovation advice (GOIA), subsidies, and their mix on firms’ innovation activities. Using a unique panel dataset of Flemish SMEs, and applying vector matching alongside staggered DiD methods to address endogeneity, our analysis reveals two pivotal findings: First, GOIA, a non-financial and highly accessible policy tool, stimulates R&D expenditures and boosts innovation output amongst R&D-intensive firms. Remarkably, the effects of GOIA are comparable in magnitude to those of subsidies, highlighting its exceptional cost-effectiveness as a policy instrument. Second, the policy mix of GOIA and subsidies only benefits firms with low R&D intensity. A possible explanation is that firms with limited R&D experience require external innovation advice to effectively utilize the financial support provided by subsidies in their innovation activities. Overall, our findings illustrate the strong potential of GOIA to enhance firms’ innovation capacity.
