Subsidizing Start-Ups: Policy Targeting and Policy Effectiveness

Abstract

start-ups, subsidies, subsidy allocation, policy evaluation, L53, O38, H59,

Effects of Soft Loans and Credit Guarantees on Performance of Supported Firms: Evidence from the Czech Public Programme START

“…Presented results are also against the findings of Honjo and Harada [79], Zecchini and Ventura [81], or Garcia-Tabuenca and Crespo-Espert [48], who are in favour of the positive impact of interventions on sales and profitability of the supported companies. Obtained results can be compared with the findings of Maggioni et al [78] or Kösters [83], who were also unable to find positive outcomes on the performance of the supported companies by the public policies. Concretely, Maggioni et al [78] were unable to prove any impact of the programme on sales and they also report a higher debt ratio for the treated firms, in comparison with the control group.…”

“…Concretely, Maggioni et al [78] were unable to prove any impact of the programme on sales and they also report a higher debt ratio for the treated firms, in comparison with the control group. Furthermore, Kösters [83] report even higher failure rates for the group of supported firms. Stated hypothesis (H 1 ), assuming a better financial performance of the supported (Treated) firms, in comparison with the control group, in terms of higher net profits, higher return on assets (ROA), higher return on equity (ROE), higher sales and higher assets turnover, based on the obtained results cannot be supported.…”

“…The authors conclude that the programme positively influenced a firm's survival rate, but no effect was observed for R&D activity and productivity. Kösters [83] studied the effects of the Eastern German programme supporting firms with soft loans and credit guarantees. She finds no statistically significant impact of the programme on the survival rates and growth in employment of the supported companies.…”

“…The following key performance indicators were selected based on the previously published studies and based on the data availability. My research hypothesis is formally stated as follows: To see whether this remarkable allocation of financial capital had any impact on the financial performance of the supported enterprises, I run the following counterfactual analysis, applying the methodology of previous scholars, e.g., [19,20,83,90], assuming a quasi-experimental research framework. The following key performance indicators were selected based on the previously published studies and based on the data availability.…”

Public Business Advice in the Founding Process: An Empirical Evaluation of Subjective and Economic Effects

“…4 Unfortunately, we lack information about the take-up of individual schemes which change a lot over time. 5 ,In turn, program selection effects can be considered to be relatively weak when policymakers pursue a strategy of "building winners" (Kösters, 2010). 6 Perceived usefulness is a central evaluation outcome in past evaluation research (McMullan et al, 2001;Storey, 2000).…”