Public SME grants and firm performance in European Union: A systematic review of empirical evidence

Dvouletý, Ondřej; Srhoj, Stjepan; Pantea, Smaranda

doi:10.1007/s11187-019-00306-x

Cited by 118 publications

(93 citation statements)

References 79 publications

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“…Analyzing these results in detail, by examining core factors for enhancement of business performance, we detected that government support is a core condition the business enhancement of SMEs. Our findings add to previous research focused on measuring the business output of SMEs [53]. Results concerning technological innovation capabilities (i.e., product and service innovation, process innovation), revealed that it is a peripheral condition for SMEs to enhance their business output.…”

Section: Discussionsupporting

confidence: 75%

“…Activity and productivity authors usually operationalize by the indicators of assets turnover, labor productivity (value-added per labor cost) and total factor productivity (TFP). Profitability and rentability are usually measured by the indicators of sales (or turnover), value added or profit [53]. The important lesson that was taken from the previous studies is that the trend is now shifting towards using multiple indicators [54][55][56], instead of using one or two measures, providing a structured overview on the overall effect of the grants on firm financial performance and productivity [53].…”

Section: Research Model and Hypothesismentioning

confidence: 99%

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The Government R&D Funding and Management Performance: The Mediating Effect of Technology Innovation

Jin

Lee

2020

Journal of Open Innovation: Technology, Market, and Complexity

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Korea’s small- and medium-sized enterprises are desperate to improve their performance through engaging in technological innovation, due to the fierce competition prevalent in a low growth economic environment. However, most small- and medium-sized enterprises are having difficulty responding to changes in the economic environment due to the challenge of developing their own technologies and their limited resources. The aim of this study is to assess whether government financial support for R&D aimed at small- and medium-sized enterprises has contributed to improvements in their business management performance. The sample of this study was comprised of 105 KOSDAQ-listed small- and medium-sized enterprises with experience in technology development. The empirical analysis was conducted on the basis of the mediating effect measurement method of Baron and Kenny (1986). It was found that company technological innovation capabilities have a positive effect on management performance, and in particular, that the majority of companies that received government financial support for R&D have improved their management performance. Therefore, it is recommended that small- and medium-sized companies take an active part in various government R&D financial support programs and make efforts to strengthen their technological innovation in areas such as their product service and process innovation capabilities.

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Section: Discussionsupporting

confidence: 75%

Section: Research Model and Hypothesismentioning

confidence: 99%

The Government R&D Funding and Management Performance: The Mediating Effect of Technology Innovation

Jin

Lee

2020

Journal of Open Innovation: Technology, Market, and Complexity

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“…By contrast, prior to 2000 the falls in unemployment were statistically identical across the two groups of areas. 22 20 We checked that these collinearity issues are not spuriously driving our key findings. We constructed the rule change instruments dropping some of the potentially collinear variables and found that our results are robust.…”

Section: A Main Resultsmentioning

confidence: 91%

“…For the period from 2000 onward, column 4 shows that the coefficient on ILO unemployment reduces in absolute size and is no longer significant when we drop the claimant count and structural unemployment rate. 20 As discussed in Section III, we use the results from columns 1 and 2 to construct our IV for the policy: the change in the predicted level of maximum investment subsidy based on pre-1993 area characteristics. The distribution of the level of the IV ( z r,t ≡ θ τ X r,93 ) is shown in panel A of online Appendix Figure A1, and the change (which we use as our IV, Δ z r,t ≡ ( θ 00 − θ 93 ) X r,93 ) is in panel B.…”

Section: Estimating the Policy Rulesmentioning

confidence: 99%

Some Causal Effects of an Industrial Policy

Criscuolo

Martin

Overman

et al. 2019

American Economic Review

335

152

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We exploit changes in the area-specific eligibility criteria for a program to support jobs through investment subsidies. European rules determine whether an area is eligible for subsidies, and we construct instrumental variables for area eligibility based on parameters of these rule changes. Areas eligible for higher subsidies significantly increased jobs and reduced unemployment. A 10-percentage point increase in the maximum investment subsidy stimulates a 10 percent increase in manufacturing employment. This effect exists solely for small firms: large companies accept subsidies without increasing activity. There are positive effects on investment and employment for incumbent firms but not Total Factor Productivity. (JEL E24, G31, H25, L25, L52, R23)

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“…Policies aimed at SMEs target economic achievements in terms of new job creation. As documented by prior studies, in policy actions, we "may find various activities, including trainings and education, advisory services and counseling or direct financial support distributed through financial instruments (soft loans and credit guarantees) and capital grants/subsidies" (Dvouletý et al 2020). While such public policy interventions are aimed at coping with different market failures, empirical evidence shows that Fig. 1 Hypothetical extraction impact: total extraction of SMEs and large firms (% loss in gross demand by products).…”

Section: Policy Implicationsmentioning

confidence: 99%

Macroeconomic lockdown and SMEs: the impact of the COVID-19 pandemic in Spain

2021

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The relative importance of small-and mediumsized enterprises (SMEs) and large firms is a recurrent topic in the small business economics literature. This paper presents a real and financial social accounting matrix (FSAM) capable of distinguishing the direct and indirect effects that are transferred from micro-, small, medium, and large firms to the rest of the economy. We use the hypothetical extraction method (HEM) to explore the sequence of reactions associated with shocks that arise from the COVID-19 lockdown. Using a structural model for the Spanish economy, we identify the role of different firm size categories in the aggregate gross domestic product (GDP). Our results allow us to reconcile the mixed narrative that accompanies the evaluation of the role played by these categories in economic activity by revealing that both SMEs and large firms are important for supporting economic activity. In particular, SMEs help explain 43% of the income and two-thirds of the unemployment decline caused by the COVID-19 pandemic. Our findings also show the importance of conditioning SME industrial policy to sectoral analysis. Plain English summary The effects of the macroeconomic lockdown and its transmission to the rest of the economy differ by firm size and across sectors. Using the Spanish context for micro-, small, medium, and large firms, we distinguish the direct and indirect effects caused by the COVID-19 pandemic. The main implications are the following: (1) Research: results emphasize that SMEs and large firms are both important to support economic activity but, in order to account for the relative effects on SMEs, it is crucial to consider the specific sector that receives the disruption. 2) Policy: SMEs are an important focus of business support policies within the EU. According to our estimations, disruptions in SMEs produce larger reductions in demand. These results could support credit policies for SMEs with a strong impact on the aggregate economy due to their greater productive and financial linkages with the domestic economy.

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Public SME grants and firm performance in European Union: A systematic review of empirical evidence

Cited by 118 publications

References 79 publications

The Government R&D Funding and Management Performance: The Mediating Effect of Technology Innovation

The Government R&D Funding and Management Performance: The Mediating Effect of Technology Innovation

Some Causal Effects of an Industrial Policy

Macroeconomic lockdown and SMEs: the impact of the COVID-19 pandemic in Spain

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