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The show must go on: The role of public financial support in promoting firm innovation investments during a crisis

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  • Cowling, Marc
  • Farè, Luca
  • Vismara, Silvio

Abstract

During crises, public financial support primarily aims to stabilize firms’ cash flows to sustain their operations. However, beyond this intended objective, such support may produce additional outcomes that remain underexplored. This study examines whether the public loan guarantee schemes introduced in the UK during the economic downturn due to the Covid-19 pandemic helped firms address new investment opportunities. Based on opportunity identification theory and using privileged data from UK public institutions covering the 2020–2023 period, we hypothesize and document that firms receiving public financial support are more likely to identify and pursue new innovation-related investment opportunities.

Suggested Citation

  • Cowling, Marc & Farè, Luca & Vismara, Silvio, 2026. "The show must go on: The role of public financial support in promoting firm innovation investments during a crisis," European Economic Review, Elsevier, vol. 187(C).
    • Handle: RePEc:eee:eecrev:v:187:y:2026:i:c:s0014292126001091
    DOI: 10.1016/j.euroecorev.2026.105365
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