IDEAS home Printed from https://ideas.repec.org/p/bdi/opques/qef_915_25.html
   My bibliography  Save this paper

The impact of public incentives on the birth of innovative start-ups

Author

Listed:
  • Giuseppe Albanese

    (Bank of Italy)

  • Raffaello Bronzini

    (Bank of Italy)

Abstract

We study the impact of a regional policy aimed at increasing the number of innovative start-ups in the second largest Italian region (Lazio). The programme financed the creation of innovative firms, selecting from projects presented in a call for applications open to faculty members, researchers or young graduates. When comparing recipients with similar non-recipient applicants, we find that nearly all the projects funded led to the creation of a new firm, compared with approximatively 50 per cent for non-funded applications. Subsidized firms exhibit a similar survival rate to non-subsidized firms on average but a slower growth in terms of sales, employment and assets. This difference is primarily attributable to a lower incidence of high-growth firms among subsidized projects.

Suggested Citation

  • Giuseppe Albanese & Raffaello Bronzini, 2025. "The impact of public incentives on the birth of innovative start-ups," Questioni di Economia e Finanza (Occasional Papers) 915, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_915_25
    as

    Download full text from publisher

    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2025-0915/QEF_915_25.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Laura Ramaciotti & Alessandro Muscio & Ugo Rizzo, 2017. "The impact of hard and soft policy measures on new technology-based firms," Regional Studies, Taylor & Francis Journals, vol. 51(4), pages 629-642, April.
    2. John Haltiwanger & Ron S. Jarmin & Robert Kulick & Javier Miranda, 2016. "High Growth Young Firms: Contribution to Job, Output, and Productivity Growth," NBER Chapters, in: Measuring Entrepreneurial Businesses: Current Knowledge and Challenges, pages 11-62, National Bureau of Economic Research, Inc.
    3. Francesco Manaresi & Carlo Menon & Pietro Santoleri, 2021. "Supporting innovative entrepreneurship: an evaluation of the Italian “Start-up Act” [The effects of entry on incumbent innovation and productivity]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 30(6), pages 1591-1614.
    4. Paolo Finaldi Russo & Silvia Magri & Cristiana Rampazzi, 2016. "Innovative start-ups in Italy: their special features and the effects of the 2012 law," Questioni di Economia e Finanza (Occasional Papers) 339, Bank of Italy, Economic Research and International Relations Area.
    5. Michel Dumont & Glenn Rayp & Marijn Verschelde & Bruno Merlevede, 2016. "The contribution of start-ups and young firms to industry-level efficiency growth," Applied Economics, Taylor & Francis Journals, vol. 48(59), pages 5786-5801, December.
    6. Santoleri, Pietro & Russo, Emanuele, 2025. "Spurring subsidy entrepreneurs," Research Policy, Elsevier, vol. 54(1).
    7. Zhao, Bo & Ziedonis, Rosemarie, 2020. "State governments as financiers of technology startups: Evidence from Michigan's R&D loan program," Research Policy, Elsevier, vol. 49(4).
    8. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2009. "The Effects of Entry on Incumbent Innovation and Productivity," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 20-32, February.
    9. Francesco Biancalani & Dirk Czarnitzki & Massimo Riccaboni, 2022. "The Italian Start Up Act: a microeconometric program evaluation," Small Business Economics, Springer, vol. 58(3), pages 1699-1720, March.
    10. Hyejin Jung & Byung-Keun Kim, 2018. "Determinant factors of university spin-off: the case of Korea," The Journal of Technology Transfer, Springer, vol. 43(6), pages 1631-1646, December.
    11. David B. Audretsch (ed.), 2006. "Entrepreneurship, Innovation and Economic Growth," Books, Edward Elgar Publishing, number 4130, December.
    12. Marius Tuft Mathisen & Einar Rasmussen, 2019. "The development, growth, and performance of university spin-offs: a critical review," The Journal of Technology Transfer, Springer, vol. 44(6), pages 1891-1938, December.
    13. Bronwyn H. Hall & Nathan Rosenberg (ed.), 2010. "Handbook of the Economics of Innovation," Handbook of the Economics of Innovation, Elsevier, edition 1, volume 1, number 1.
    14. Alexandre Belloni & Victor Chernozhukov & Christian Hansen, 2014. "Inference on Treatment Effects after Selection among High-Dimensional Controlsâ€," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(2), pages 608-650.
    15. Antonio Accetturo, 2022. "Subsidies for innovative start-ups and firm entry [The effects of entry on incumbent innovation and productivity]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 31(5), pages 1202-1222.
    16. Zoltan J. Acs, 2005. "Innovation and the Growth of Cities," Contributions to Economic Analysis, in: Urban Dynamics and Growth: Advances in Urban Economics, pages 635-658, Emerald Group Publishing Limited.
    17. Paolo Finaldi Russo & Silvia Magri & Cristiana Rampazzi, 2016. "Innovative Start-Ups in Italy: Their Special Features and the Effects of the 2102 Law," Politica economica, Società editrice il Mulino, issue 2, pages 297-330.
    18. Anders Gustafsson & Patrik Gustavsson Tingvall & Daniel Halvarsson, 2020. "Subsidy Entrepreneurs: an Inquiry into Firms Seeking Public Grants," Journal of Industry, Competition and Trade, Springer, vol. 20(3), pages 439-478, September.
    19. Ryan Decker & John Haltiwanger & Ron Jarmin & Javier Miranda, 2014. "The Role of Entrepreneurship in US Job Creation and Economic Dynamism," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 3-24, Summer.
    20. Alperovych, Yan & Groh, Alexander & Quas, Anita, 2020. "Bridging the equity gap for young innovative companies: The design of effective government venture capital fund programs," Research Policy, Elsevier, vol. 49(10).
    21. Audretsch, David B. & Keilbach, Max C. & Lehmann, Erik E., 2006. "Entrepreneurship and Economic Growth," OUP Catalogue, Oxford University Press, number 9780195183511, Decembrie.
    22. Sabrina T. Howell, 2017. "Financing Innovation: Evidence from R&D Grants," American Economic Review, American Economic Association, vol. 107(4), pages 1136-1164, April.
    23. Josh Lerner, 2010. "The future of public efforts to boost entrepreneurship and venture capital," Small Business Economics, Springer, vol. 35(3), pages 255-264, October.
    24. Giraudo, Emanuele & Giudici, Giancarlo & Grilli, Luca, 2019. "Entrepreneurship policy and the financing of young innovative companies: Evidence from the Italian Startup Act," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    25. Autio, Erkko & Rannikko, Heikki, 2016. "Retaining winners: Can policy boost high-growth entrepreneurship?," Research Policy, Elsevier, vol. 45(1), pages 42-55.
    26. John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2013. "Who Creates Jobs? Small versus Large versus Young," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 347-361, May.
    27. Massimo G. Colombo & Silvia Giannangeli & Luca Grilli, 2013. "Public subsidies and the employment growth of high-tech start-ups: assessing the impact of selective and automatic support schemes," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(5), pages 1273-1314, October.
    28. Massimo Colombo & Luca Grilli, 2007. "Funding Gaps? Access To Bank Loans By High-Tech Start-Ups," Small Business Economics, Springer, vol. 29(1), pages 25-46, June.
    29. Alon, Titan & Berger, David & Dent, Robert & Pugsley, Benjamin, 2018. "Older and slower: The startup deficit’s lasting effects on aggregate productivity growth," Journal of Monetary Economics, Elsevier, vol. 93(C), pages 68-85.
    30. Mark R. Ayoub & Sandra Gottschalk & Bettina Müller, 2017. "Impact of public seed-funding on academic spin-offs," The Journal of Technology Transfer, Springer, vol. 42(5), pages 1100-1124, October.
    31. Colombo, Massimo G. & Grilli, Luca & Murtinu, Samuele, 2011. "R&D subsidies and the performance of high-tech start-ups," Economics Letters, Elsevier, vol. 112(1), pages 97-99, July.
    32. Fini, Riccardo & Perkmann, Markus & Kenney, Martin & Maki, Kanetaka M., 2023. "Are public subsidies effective for university spinoffs? Evidence from SBIR awards in the University of California system," Research Policy, Elsevier, vol. 52(1).
    33. Chiara Criscuolo & Peter N. Gal & Carlo Menon, 2017. "Do micro start-ups fuel job creation? Cross-country evidence from the DynEmp Express database," Small Business Economics, Springer, vol. 48(2), pages 393-412, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francesco Manaresi & Carlo Menon & Pietro Santoleri, 2021. "Supporting innovative entrepreneurship: an evaluation of the Italian “Start-up Act” [The effects of entry on incumbent innovation and productivity]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 30(6), pages 1591-1614.
    2. Giuseppe Albanese & Raffaello Bronzini & Luciano Lavecchia & Giovanni Soggia, 2019. "Regional policies for Italian innovative start-ups," Questioni di Economia e Finanza (Occasional Papers) 511, Bank of Italy, Economic Research and International Relations Area.
    3. Santoleri, Pietro & Russo, Emanuele, 2025. "Spurring subsidy entrepreneurs," Research Policy, Elsevier, vol. 54(1).
    4. Raphaël CHIAPPINI & Sophie POMMET, 2023. "The impact of public support for innovation on SME performance and efficiency," Bordeaux Economics Working Papers 2023-06, Bordeaux School of Economics (BSE).
    5. Borgomeo, Letizia & Koenig, Christoph & Miotto, Martina, 2025. "The long-run effects of R&D subsidies on high-tech start-ups: Insights from Italy," Economics Letters, Elsevier, vol. 248(C).
    6. Audretsch, David & Colombelli, Alessandra & Grilli, Luca & Minola, Tommaso & Rasmussen, Einar, 2020. "Innovative start-ups and policy initiatives," Research Policy, Elsevier, vol. 49(10).
    7. Pietro Santoleri, 2020. "Innovation and job creation in (high-growth) new firms," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 29(3), pages 731-756.
    8. Fini, Riccardo & Perkmann, Markus & Kenney, Martin & Maki, Kanetaka M., 2023. "Are public subsidies effective for university spinoffs? Evidence from SBIR awards in the University of California system," Research Policy, Elsevier, vol. 52(1).
    9. Berger, Marius & Hottenrott, Hanna, 2021. "Start-up subsidies and the sources of venture capital," Journal of Business Venturing Insights, Elsevier, vol. 16(C).
    10. Nadine Levratto & Aurelien Quignon, 2021. "Innovation Performance and the Signal Effect: Evidence from a European Program," Working Papers halshs-03466903, HAL.
    11. Aurélien Quignon & Nadine Levratto, 2021. "Innovation Performance and the Signal Effect: Evidence from a European Program," EconomiX Working Papers 2021-34, University of Paris Nanterre, EconomiX.
    12. Luca Grilli & Boris Mrkajic & Emanuele Giraudo, 2023. "Industrial policy, innovative entrepreneurship, and the human capital of founders," Small Business Economics, Springer, vol. 60(2), pages 707-728, February.
    13. Matricano, Diego, 2024. "Designing effective policies for innovative start-ups: Lessons learned in Italy," Journal of Business Venturing Insights, Elsevier, vol. 22(C).
    14. Peter Grajzl & Stjepan Srhoj & Jaka Cepec & Barbara Mörec, 2024. "A by-product of big government: the attenuating role of public procurement for the effectiveness of grants-based entrepreneurship policy," Small Business Economics, Springer, vol. 62(3), pages 895-916, March.
    15. Magnus Henrekson & Anders Kärnä & Tino Sanandaji, 2022. "Schumpeterian entrepreneurship: coveted by policymakers but impervious to top-down policymaking," Journal of Evolutionary Economics, Springer, vol. 32(3), pages 867-890, July.
    16. Mellace, Giovanni & Ventura, Marco, 2019. "Intended and unintended effects of public incentives for innovation. Quasi-experimental evidence from Italy," Discussion Papers on Economics 9/2019, University of Southern Denmark, Department of Economics.
    17. Sónia Félix & Chiara Maggi, 2019. "What is the Impact of Increased Business Competition?," IMF Working Papers 2019/276, International Monetary Fund.
    18. Giuseppina Testa & Katarzyna Szkuta, 2018. "Improving access to finance for young innovative enterprises with growth potential: evidence of impact on firms' output - Part 2. R&D grant schemes: lessons learned from evaluations," JRC Research Reports JRC109879, Joint Research Centre.
    19. Daniel L. Bennett, 2021. "Local economic freedom and creative destruction in America," Small Business Economics, Springer, vol. 56(1), pages 333-353, January.
    20. Shyngys Karimov & Jozef Konings, 2021. "The start-up gap and jobs," Small Business Economics, Springer, vol. 57(4), pages 2067-2084, December.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bdi:opques:qef_915_25. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/bdigvit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.