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Public Interventions Supporting Innovation in Small and Medium-Size Firms. Successes or Failures? A Probit Analysis

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Abstract

The aim of this work is to investigate the probability of success or failure of public interventions, made to support the development of some Italian firms. The great number of small and medium-size enterprises, placed in the Canavese area, north of Turin, Italy, has suffered, in the nineties, of a gap in technological innovation in their production. The Consortium for the Canavese Technological District (CCTD), a public local association established in 1993 specifically to support the firms of the area, has supplied them with some technological, innovative services, sustaining their growth. More exactly, some research centres, named Centres of Competence, were created, with the pre-existing structures of the Polytechnic of Turin and of the firm RTM (placed in Vico Canavese, Province of Turin): their targets were to supply innovative services to the local firms and to place technical machineries at the disposal of the local units, to support their innovation and competitiveness. The present research analyzes a central point: which has been the impact of these services? Which is the probability that a public o private intervention to innovate has success and brings economic growth to the involved firms? This objective is achieved with a Probit Model, built on a panel of 103 firms, that covers a 6-year range (from 1999 to 2004) and contains their balance-sheets data and the technical information regarding their collaborations with the Centres; the results highlight the role of a solid patrimonial stability, of the choice of the right innovations to apply to the production processes as well as the importance of a high previous technological status of the involved enterprises.

Suggested Citation

  • Serena Novero, 2008. "Public Interventions Supporting Innovation in Small and Medium-Size Firms. Successes or Failures? A Probit Analysis," CERIS Working Paper 200811, Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY.
  • Handle: RePEc:csc:cerisp:200811
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    Keywords

    Innovation probability; Public interventions; Firms growth; Qualitative choice models;

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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