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The impact of public support for innovation on SME performance and efficiency

Raphaël Chiappini and Sophie Pommet

Bordeaux Economics Working Papers from Bordeaux School of Economics (BSE)

Abstract: This article examines the impact of two types of financial support for innovation granted by French public institutions to French SMEs on a set of firm performance measures. Using an original database that provides information on repayable advances and subsidies obtained by 5,448 French SMEs over the period 2010-2016, we evaluate the effectiveness of such financial support using a quasi-experimental design. Our findings indicate that both repayable advances and subsidies significantly improve targeted SMEs’ turnover, level of intangible assets and total employment at one year and three years after support is granted. The impact on firm-level TFP is only positive and significant after three years, while being negative in the very short run. Our results also provide evidence that the combination of both instruments for a given innovation project within a year does not entail significantly higher effects. A heterogeneous analysis reveals that the impact of financial support instruments for innovation is significantly higher for young, micro and small firms. Furthermore, our analysis shows that innovation support benefits more to firms located in the Paris region than in other regions and this tends to exacerbate regional inequalities. Finally, our findings indicate that the transformation of Oséo into Bpifrance in December 2012 has led to an increase in the effectiveness of the innovation policy.

Keywords: Innovation policy; firm performance; policy evaluation; Mahalanobis distance matching; difference-in-difference. (search for similar items in EconPapers)
JEL-codes: C14 C21 O33 O38 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-cse, nep-eff, nep-ent, nep-ino, nep-inv, nep-ppm, nep-sbm, nep-tid and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:grt:bdxewp:2023-06

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