The Impact of Public Incentives on the Birth of Innovative Start-Ups

Abstract

We study the impact of a regional policy aimed at increasing the number of innovative start-ups in the second largest Italian region (Lazio). The programme financed the creation of innovative firms, selecting from projects presented in a call for applications open to faculty members, researchers or young graduates. When comparing recipients with similar non-recipient applicants, we find that nearly all the projects funded led to the creation of a new firm, compared with approximatively 50 per cent for non-funded applications. Subsidized firms exhibit a similar survival rate to non-subsidized firms on average but a slower growth in terms of sales, employment and assets. This difference is primarily attributable to a lower incidence of high-growth firms among subsidized projects. 

Keywords: start-up, young innovative companies, start-up policies, academic spin-offs, regional policies, innovation policies

JEL Classification: H2, L5, R0, R3