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Evaluating the impact of public subsidies on a firm’s performance: a two-stage quasi-experimental approach

Author

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  • Duch, Néstor

    () (Barcelona Institute of Economics (IEB))

  • Montolio, Daniel

    () (Barcelona Institute of Economics (IEB))

  • Mediavilla , Mauro

    () (Interdisciplinary Group on Educational Policies (GIPE))

Abstract

In this paper we evaluate the effectiveness of regional R&D public programs in Catalonia (Spain) with a two-stage procedure. Firstly, we compare the performance of publicly subsidised companies (treated) with that of similar, but unsubsidised companies (non-treated). We use the Propensity Score Matching (PSM) methodology to construct a control group which, with regard to its observable characteristics, is as similar as possible to the treated group, and that allows us to identify firms which maintain the same propensity to receive public subsidies. Secondly, and once a valid comparison group has been established, we compare the respective performance of each firm using regression techniques. As a result, we find that recipient firms, on average, seem to increase their value added as a direct result of public subsidy programs.

Suggested Citation

  • Duch, Néstor & Montolio, Daniel & Mediavilla , Mauro, 2009. "Evaluating the impact of public subsidies on a firm’s performance: a two-stage quasi-experimental approach," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 16, pages 143-165.
  • Handle: RePEc:ris:invreg:0082
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    References listed on IDEAS

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    Cited by:

    1. Andrea Bellucci & Luca Pennacchio & Alberto Zazzaro, 2019. "Public R&D subsidies: collaborative versus individual place-based programs for SMEs," Small Business Economics, Springer, vol. 52(1), pages 213-240, January.
    2. Jerzy Michalek & Pavel Ciaian & D'Artis Kancs, 2016. "Investment Crowding Out: Firm-Level Evidence from Northern Germany," Regional Studies, Taylor & Francis Journals, vol. 50(9), pages 1579-1594, September.
    3. Zhang, Huiming & Li, Lianshui & Zhou, Dequn & Zhou, Peng, 2014. "Political connections, government subsidies and firm financial performance: Evidence from renewable energy manufacturing in China," Renewable Energy, Elsevier, vol. 63(C), pages 330-336.
    4. Olubunmi Ipinnaiye & Declan Dineen & Helena Lenihan, 2017. "Drivers of SME performance: a holistic and multivariate approach," Small Business Economics, Springer, vol. 48(4), pages 883-911, April.
    5. Néstor Duch-Brown & José García-Quevedo & Daniel Montolio, 2011. "The link between public support and private r&d effort: what is the optimal subsidy?," Working Papers 2011/12, Institut d'Economia de Barcelona (IEB).
    6. Andries Brandsma & d'Artis Kancs & Pavel Ciaian, 2013. "The Role of Additionality in the EU Cohesion Policies: An Example of Firm-Level Investment Support," European Planning Studies, Taylor & Francis Journals, vol. 21(6), pages 838-853, June.
    7. Vanino, Enrico & Roper, Stephen & Becker, Bettina, 2019. "Knowledge to money: Assessing the business performance effects of publicly-funded R&D grants," Research Policy, Elsevier, vol. 48(7), pages 1714-1737.
    8. Brüggemann, Julia & Proeger, Till, 2017. "The effectiveness of public subsidies for private innovations: An experimental approach," Center for European, Governance and Economic Development Research Discussion Papers 266, University of Goettingen, Department of Economics.
    9. Sergio Afcha & Jose García-Quevedo, 2016. "The impact of R&D subsidies on R&D employment composition," Industrial and Corporate Change, Oxford University Press, vol. 25(6), pages 955-975.
    10. Arpino, Bruno & Mattei, Alessandra, 2013. "Assessing the Impact of Financial Aids to Firms: Causal Inference in the presence of Interference," MPRA Paper 51795, University Library of Munich, Germany.

    More about this item

    Keywords

    R&D policy; evaluation; firm performance; Propensity Score Matching;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy

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