IDEAS home Printed from https://ideas.repec.org/p/eti/dpaper/21039.html
   My bibliography  Save this paper

Are Applying for and Receiving Subsidy Worth for Small Enterprises? Evidence from the Government Support Program in Japan

Author

Listed:
  • HASHIMOTO Yuki
  • TAKAHASHI Kohei

Abstract

This paper examines the effects of the Business Sustainable Subsidy (BSS) on small enterprises' productivity. The BSS aims productivity improvement and sustainable development of small enterprises by aiding a part of expenses for their business activities. We use rich firm data which contains the attributes and the accounting information of both applied and non-applied firms and examine the effects of receiving and applying for the subsidies. We employ sharp regression discontinuity design for the effects of reception and difference in differences design for that of application. Our empirical results show that significant differences in small enterprises' performance improvement were not evident between receiving the subsidies and not. On the other hand, we found that applicant small enterprises perform higher productivity and sales growth than not-applicant firms. We also robustly obtain the positive results of application impacts by difference in differences model with propensity score matching, controlling for preintervention levels and trends in the outcome. Our findings imply that application in itself promotes firms' voluntarily activities to their own business issues through external support, and leads to improve their productivity.

Suggested Citation

  • HASHIMOTO Yuki & TAKAHASHI Kohei, 2021. "Are Applying for and Receiving Subsidy Worth for Small Enterprises? Evidence from the Government Support Program in Japan," Discussion papers 21039, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:21039
    as

    Download full text from publisher

    File URL: https://www.rieti.go.jp/jp/publications/dp/21e039.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Raffaello Bronzini & Eleonora Iachini, 2014. "Are Incentives for R&D Effective? Evidence from a Regression Discontinuity Approach," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 100-134, November.
    2. Junichi Nishimura & Hiroyuki Okamuro, 2011. "R&D productivity and the organization of cluster policy: an empirical evaluation of the Industrial Cluster Project in Japan," The Journal of Technology Transfer, Springer, vol. 36(2), pages 117-144, April.
    3. Nishimura, Junichi & Okamuro, Hiroyuki, 2011. "Subsidy and networking: The effects of direct and indirect support programs of the cluster policy," Research Policy, Elsevier, vol. 40(5), pages 714-727, June.
    4. Dirk Czarnitzki & Julie Delanote, 2015. "R&D policies for young SMEs: input and output effects," Small Business Economics, Springer, vol. 45(3), pages 465-485, October.
    5. Blanes, J. Vicente & Busom, Isabel, 2004. "Who participates in R&D subsidy programs?: The case of Spanish manufacturing firms," Research Policy, Elsevier, vol. 33(10), pages 1459-1476, December.
    6. Lorraine Uhlaner & André Stel & Valérie Duplat & Haibo Zhou, 2013. "Disentangling the effects of organizational capabilities, innovation and firm size on SME sales growth," Small Business Economics, Springer, vol. 41(3), pages 581-607, October.
    7. Hassan ABBAR & Salma ECHCHARQY, 2016. "THE CORRELATION BETWEEN STRATEGIC PLANNING AND ECONOMIC MOROCCAN SME’s PERFORMANCE," Management and Marketing Journal, University of Craiova, Faculty of Economics and Business Administration, vol. 0(2), pages 225-242, November.
    8. Bernini, Cristina & Pellegrini, Guido, 2011. "How are growth and productivity in private firms affected by public subsidy? Evidence from a regional policy," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 253-265, May.
    9. Chiara Criscuolo & Ralf Martin & Henry G. Overman & John Van Reenen, 2019. "Some Causal Effects of an Industrial Policy," American Economic Review, American Economic Association, vol. 109(1), pages 48-85, January.
    10. Robson, Paul J A & Bennett, Robert J, 2000. "SME Growth: The Relationship with Business Advice and External Collaboration," Small Business Economics, Springer, vol. 15(3), pages 193-208.
    11. Kazuyuki Motohashi, 2002. "Use of Plant-Level Micro-Data for the Evaluation of SME Innovation Policy in Japan," OECD Science, Technology and Industry Working Papers 2002/12, OECD Publishing.
    12. Matias D. Cattaneo & Nicolas Idrobo & Rocio Titiunik, 2019. "A Practical Introduction to Regression Discontinuity Designs: Foundations," Papers 1911.09511, arXiv.org.
    13. Toshihiro Okubo & Tetsuji Okazaki & Eiichi Tomiura, 2022. "Industrial cluster policy and transaction networks: Evidence from firm‐level data in Japan," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(4), pages 1990-2035, November.
    14. Hallberg, K., 2000. "A Market-Oriented Strategy for Small and Medium Scale Enterprises," Papers 40, World Bank - International Finance Corporation.
    15. Okamuro, Hiroyuki, 2007. "Determinants of successful R&D cooperation in Japanese small businesses: The impact of organizational and contractual characteristics," Research Policy, Elsevier, vol. 36(10), pages 1529-1544, December.
    16. Brian Gibson & Gavin Cassar, 2005. "Longitudinal Analysis of Relationships between Planning and Performance in Small Firms," Small Business Economics, Springer, vol. 25(3), pages 207-222, October.
    17. Cibela NEAGU, 2016. "The importance and role of small and medium-sized businesses," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(608), A), pages 331-338, Autumn.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kohei Takahashi & Yuki Hashimoto, 2023. "Small grant subsidy application effects on productivity improvement: evidence from Japanese SMEs," Small Business Economics, Springer, vol. 60(4), pages 1631-1658, April.
    2. Hiroyuki Okamuro & Junichi Nishimura, 2021. "Effects of multilevel policy mix of public R&D subsidies: Empirical evidence from Japanese local SMEs [The Impact of R&D Subsidies on R&D Employment Composition]," Science and Public Policy, Oxford University Press, vol. 48(6), pages 829-840.
    3. Okamuro, Hiroyuki & Nishimura, Junichi, 2018. "Whose business is your project? A comparative study of different subsidy policy schemes for collaborative R&D," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 85-96.
    4. Takano, Keisuke & Okamuro, Hiroyuki, 2019. "Local R&D support as a driver of network diversification? A comparative evaluation of innovation policies in neighboring prefectures in Japan," TDB-CAREE Discussion Paper Series E-2019-02, Teikoku Databank Center for Advanced Empirical Research on Enterprise and Economy, Graduate School of Economics, Hitotsubashi University.
    5. Stjepan Srhoj & Michael Lapinski & Janette Walde, 2019. "Size matters? Impact evaluation of business development grants on SME performance," Working Papers 2019-14, Faculty of Economics and Statistics, Universität Innsbruck.
    6. Hiroyuki Okamuro & Junichi Nishimura, 2013. "Impact of university intellectual property policy on the performance of university-industry research collaboration," The Journal of Technology Transfer, Springer, vol. 38(3), pages 273-301, June.
    7. Brachert, Matthias & Brautzsch, Hans-Ulrich & Dettmann, Eva & Giebler, Alexander & Schneider, Lutz & Titze, Mirko, 2020. ""Evaluation der Gemeinschaftsaufgabe 'Verbesserung der regionalen Wirtschaftsstruktur' (GRW)" durch einzelbetriebliche Erfolgskontrolle: Endbericht," IWH Online 5/2020, Halle Institute for Economic Research (IWH).
    8. Andrea Bellucci & Luca Pennacchio & Alberto Zazzaro, 2019. "Public R&D subsidies: collaborative versus individual place-based programs for SMEs," Small Business Economics, Springer, vol. 52(1), pages 213-240, January.
    9. Kölling Arnd, 2016. "Developing Eastern Germany: The Effects of Economics Promotion in the Eastern German States after Reunification," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(2), pages 275-295, March.
    10. Hiroyuki Okamuro & Junichi Nishimura, 2020. "What Shapes Local Innovation Policies? Empirical Evidence from Japanese Cities," Administrative Sciences, MDPI, vol. 10(1), pages 1-22, February.
    11. Bearzotti, Enia & Polanec, Sašo & Bartolj, Tjaša, 2023. "The Effects of Subsidies on Firm Size and Productivity," MPRA Paper 118490, University Library of Munich, Germany.
    12. Riccardo Crescenzi & Guido de Blasio & Mara Giua, 2020. "Cohesion Policy incentives for collaborative industrial research: evaluation of a Smart Specialisation forerunner programme," Regional Studies, Taylor & Francis Journals, vol. 54(10), pages 1341-1353, October.
    13. Hünermund, Paul & Czarnitzki, Dirk, 2019. "Estimating the causal effect of R&D subsidies in a pan-European program," Research Policy, Elsevier, vol. 48(1), pages 115-124.
    14. Anabela Santos & Michele Cincera & Paulo Neto & Maria Manuel Serrano, 2019. "How internationalization and competitiveness contribute to get public support to innovation? The Portuguese case," GEE Papers 0121, Gabinete de Estratégia e Estudos, Ministério da Economia, revised May 2019.
    15. Emmanuel Chavez, 2020. "The Effects of Public R&D Subsidies on Private R&D Activities in Mexico," Working Papers halshs-02355106, HAL.
    16. Gonzalo Nunez-Chaim & Henry G. Overman & Capucine Riom, 2024. "Does subsidising business advice improve firm performance? Evidence from a large RCT," CEP Discussion Papers dp1977, Centre for Economic Performance, LSE.
    17. Neumark, David & Simpson, Helen, 2015. "Place-Based Policies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1197-1287, Elsevier.
    18. Seo, Seongmin & Kwak, Do Won, 2024. "The impact of the innovation city project on the local economy: Evidence from Korean Innovation City Project from 2012 to 2014," Journal of Asian Economics, Elsevier, vol. 90(C).
    19. Antonio Prencipe & Luciano D'Amico & Danilo Boffa & Christian Corsi, 2024. "The effect of output additionality of public funding support on firm innovation. Evidence from firms of different sizes," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 2278-2299, April.
    20. Cingano, Federico & Palomba, Filippo & Pinotti, Paolo & Rettore, Enrico, 2023. "Granting more bang for the buck: The heterogeneous effects of firm subsidies," Labour Economics, Elsevier, vol. 83(C).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eti:dpaper:21039. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: TANIMOTO, Toko (email available below). General contact details of provider: https://edirc.repec.org/data/rietijp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.