| Title |
Small grant subsidy application effects on productivity improvement: evidence from Japanese SMEs |
| ID_Doc |
67915 |
| Authors |
Takahashi, K; Hashimoto, Y |
| Title |
Small grant subsidy application effects on productivity improvement: evidence from Japanese SMEs |
| Year |
2023 |
| Published |
Small Business Economics, 60, 4 |
| DOI |
10.1007/s11187-022-00663-0 |
| Abstract |
Plain English Summary Subsidy application with external support increases young SMEs' productivity more significantly than the receipt of small grants. We show that receiving a small subsidy does not have significant outcomes for SMEs; however, applying for one can increase SMEs' sales and productivity, using the Business Sustainable Subsidy in Japan as a case study. These positive application effects are heterogeneous depending on firm age and industry and are clearly observed in firms operating for 6-10 years in the service industry. Our findings imply that the subsidy application process with external support fosters entrepreneurship for firms that have survived the first 5 years after start-up, leading to firm's growth. With regard to public subsidy policies aiming at developing SMEs, a scheme with external support that helps young post-entry firms find their own business issues would be effective. Abstract This study examines the effects of a small grants subsidy on small- and medium-sized enterprises' (SMEs) productivity. Using rich Japanese firm-level data, we analyze the effects of both applying for and receiving subsidies. We employ a sharp regression discontinuity design for the receipt effects and a difference-in-differences (DID) design for the application effects. The result shows that there are no statistically significant changes in likelihood after receiving the subsidy. By contrast, applicants experienced higher productivity and sales growth than non-applicants. These positive effects are most obvious in post-entry firms whose operating years are 6-10 years in the service sector. These results are robustly confirmed using a DID model with propensity score matching, controlling for both pre-intervention levels and trends in the outcome. Our findings imply that the subsidy application process with external support fosters entrepreneurship for firms that have survived the first 5 years after start-up, leading to their growth. |
| Author Keywords |
SME; Subsidy; Productivity; Industrial policy; Entrepreneurship |
| Index Keywords |
Index Keywords |
| Document Type |
Other |
| Open Access |
Open Access |
| Source |
Social Science Citation Index (SSCI) |
| EID |
WOS:000852922500001 |
| WoS Category |
Business; Economics; Management |
| Research Area |
Business & Economics |
| PDF |
https://link.springer.com/content/pdf/10.1007/s11187-022-00663-0.pdf
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