Public financial support and firm-specific characteristics: evidence from Portugal

Natália Barbosa () and Fábio Silva

European Planning Studies, 2018, vol. 26, issue 4, 670-686

Abstract: This paper analyses the underlying factors explaining a firm’s use of public financial support and possible misalignments between policy goals and the characteristics of firms holding a public grant. Using firm-level data for a sample of Portuguese manufacturing firms over the 2006–2013 period, we investigate how public financial support at the firm level is related to observable firm’s characteristics. Our findings suggest that firms lacking resources, capabilities and international involvement seem to be those with great barriers to use public financial support. Therefore, it cast doubts on the efficiency of public financial support programmes aiming to mitigate market failures, by assisting constrained firms. In turn, public financial support seems to boost market selection mechanisms by favouring ‘good’ firms and pushing less-endowed firms outside the market.

Date: 2018
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DOI: 10.1080/09654313.2017.1417358

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