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Journal of Evolutionary Economics

, Volume 21, Issue 3, pp 519–543 | Cite as

Public funding for innovation and the exit of firms

  • Bernd EbersbergerEmail author
Regular Article

Abstract

This paper focuses on the effect public subsidies for innovation have on the exit of firms. Utilizing Finnish firm level data I employ a kernel matching approach to eliminate the selection bias of public funding and estimate the counterfactual. As a robustness check a treatment model is estimated. Public funding for innovation exhibits a significant effect reducing the probability of exit. Distinguishing between exit by merger and exit by closure shows that public funding has a significant effect on the former. No significant effect on the latter can be found.

Keywords

Public funding Innovation Exit of firms 

JEL Classification

O38 L11 C21 

Notes

Acknowledgements

The analysis was started when the author was with the Technical Research Center of Finland (VTT). Funding by the Finnish Funding Agency for Technology and Innovation and the Finnish Ministry of Employment and the Economy is gratefully acknowledged. The analysis was conducted in the research laboratory of Statistics Finland. The author thanks Olavi Lehtoranta for his support and suggestions. Dirk Czarnitzki, two anonymous referees and the editors provided helpful comments and suggestions on earlier versions of the paper.

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Copyright information

© Springer-Verlag 2010

Authors and Affiliations

  1. 1.Management Center InnsbruckInnsbruckAustria

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