Small Business Economics

, Volume 39, Issue 4, pp 921–936 | Cite as

Picking the winner? Empirical evidence on the targeting of R&D subsidies to start-ups



This paper investigates the allocation of R&D subsidies given to start-ups. Considering the coexistence of various R&D project schemes, we take an aggregate view and analyze the determinants of the receipt of (any) R&D subsidies within the first three business years of the start-ups. We argue that policymakers and funding authorities follow a strategy of “picking the winner”. Analyzing start-ups in the East German state of Thuringia, we conduct logistic regressions and find ambiguous support. R&D subsidies are given to start-ups with innovative business ideas, especially academic spin-offs. Although the ambitions and patent stock of the founder(s) do not decide the receipt of R&D subsidies, team start-ups and the initial capital of a start-up tend to affect this decision positively. Hence, we cannot exclude a “picking the winner” strategy in targeting R&D subsidies to start-ups. More generally, however, the problems of policy targeting question the massive subsidization of private R&D.


Start-ups R&D subsidies Subsidy allocation 

JEL Classifications

O38 L26 L52 



Financial support by the Thuringian Ministry of Education (Thüringer Kultusministerium) and the Hans-Böckler-Stiftung within the research project “Success and Failure of Innovative Start-ups—A Process-oriented Analysis of Economic and Psychological Determinants” is gratefully acknowledged. We thank the members of the DFG RTG 1411 “The Economics of Innovative Change” for helpful comments. Furthermore we are grateful for the comments of the anonymous reviewers of SBEJ and the editor. The usual caveats apply.


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Copyright information

© Springer Science+Business Media, LLC. 2011

Authors and Affiliations

  1. 1.Department of EconomicsFriedrich Schiller University of JenaJenaGermany
  2. 2.Department of Marketing and ManagementI2M Group, University of Southern DenmarkOdense MDenmark
  3. 3.DFG RTG 1411“The Economics of Innovative Change”Friedrich Schiller University of JenaJenaGermany

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