Who Benefits From the Governmental Support Policy for Innovative Firms and for How Long? Evidence From the Korean Venture Certification Program

This study evaluates the effects of the government’s support policies for innovative firms, for which small firms are eligible by way of a venture certification program in Korea. We analyze whether the effects of the innovative firms’ policies are heterogeneous across several dimensions. Specifically, we examine how policy effects vary along with the venture certification types, firm size, and age. We assess the short- and long-term effects of the certification program on the performance of certified firms. We find that the program is likely to help innovative and young firms enhance their sales, employment and labor productivity over time. Moreover, the impact of the program is bigger for firms that are financed by venture capital, smaller in size (less than 20 employees) and younger (less than 5 years). In contrast, the support policies for innovative firms were somehow ineffective for firms that are research and development-intensive, medium sized (more than 100 and less than 300 employees) or older (more than 10 years)