Entrepreneurial Finance and the Effects of Restrictions on Government R&D Subsidies

Annamaria Conti ()
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Annamaria Conti: Scheller College of Business, Georgia Institute of Technology, Atlanta, Georgia 30308

Organization Science, 2018, vol. 29, issue 1, 134-153

Abstract: Entrepreneurial ventures often face liquidity constraints. While governments have intervened with programs subsidizing research and development (R&D) projects, these programs may have their effectiveness undermined by the restrictions they impose on subsidy recipients. We study the impact on venture outcomes of one important restriction, namely, the prohibition on transferring know-how away from a given geographic area. Using novel data on Israeli start-ups and evaluating a policy change that relaxed this restriction, we find that the policy change increased the likelihood of applying for a subsidy for start-ups most likely to have been affected by the restriction. We also show that R&D subsidies had a significant positive effect on start-up survival, the ability to attract external investment, and innovation, but only for recipients applying for subsidies after the restriction was relaxed.

Keywords: entrepreneurial finance; government R&D subsidies; subsidy restrictions (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:29:y:2018:i:1:p:134-153

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