Naslov
A by-product of big government: the attenuating role of public procurement for the effectiveness of grants-based entrepreneurship policy

Autori
Grajzl, Peter ; Srhoj, Stjepan ; Cepec, Jaka ; Mörec, Barbara

Izvornik
Small business economics (0921-898X) 1 (2023), 1; 1-22

Vrsta, podvrsta i kategorija rada
Radovi u časopisima, članak, znanstveni

Ključne riječi
Government grants ; Public procurement ; Firms ; Contextual effects ; Big government ; State capitalism

Sažetak
We study the contextual role of public procurement for the effectiveness of grants-based entrepreneurship policy. Drawing on the resource- based view of the firm, we argue that partaking in procurement can erode grant effectiveness by relaxing a firm’s preexisting financial constraints and diverting managerial attention away from market-centered resource configurations. To test our hypothesis, we use detailed firm-level data from Slovenia and combine matching with difference-in-differences. When firms are not involved in procurement, all investigated types of grants meet the intended policy goals, apart from productivity growth. In contrast, when firms participate in procurement, small-business grants exhibit generally weaker effects, R&D grants fail to have any impact, and employment grants lastingly reduce firm productivity. Given that public procurement occupies a large footprint in many economies, our analysis highlights an unintended adverse by-product of big government and underscores the limits of state capitalism.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA