Public SME grants and firm performance in European Union: A systematic review of empirical evidence
Governments allocate financial resources to support small- and medium-sized enterprises (SMEs) through public subsidies and grants. However, do these public investments help supported firms to increase their performance and growth? We answer this question by conducting a systematic review of evidence in the European Union. We review studies investigating the effects of public grants on firm performance in the European Union’s 28 member countries that were published from 2000 on. We provide a structured overview of 30 studies covering 13 countries. Our review offers information on the methodological approaches, variables and findings of the previous studies. The summarized findings show mostly the positive outcomes of the grants on firm-survival, employment, tangible/fixed assets, sales/turnover, with mixed findings for labour productivity and total factor productivity (TFP). However, we point out that there are significant differences concerning the time period of analysis (investigating short-term vs long-term outcomes), and importantly, the heterogeneity of effects concerning firm size and age, region, industry and intensity of support. Our study offers a series of recommendations for policymakers and researchers.
KeywordsEntrepreneurship and SME policy Business support Public grants Policy evaluation A systematic review European Union
JEL ClassificationsD04 L26 L53
The authors would like to thank Norin Arshed, Daniele Bondonio, Marc Cowling, David McKenzie, and David Storey for their helpful and encouraging comments and suggestions on the methodology and code. The authors are also grateful for the comments of both reviewers and the associate editor Saul Estrin.
This work was supported by the Internal Grant Agency of the Faculty of Business Administration, University of Economics, Prague under grant no. IP300040.
Compliance with ethical standards
The authors declare that they have no competing interests.
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All the authors read the manuscript and agree to publication.
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The authors hereby declare that this manuscript is not published or considered for publication elsewhere.
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