Whitman School of Management at Syracuse University
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Abstract Details

THE IMPACT OF PUBLIC PROGRAMS ON THE SURVIVAL AND PROFITS OF STARTUPS: EVIDENCE FROM A REGION OF SPAIN
Vol. Volume 17 Number 2 June/2012

MARÍA J. ALONSO-NUEZ

CARMEN GALVE-GÓRRIZ


In spite of their significance, the analyses of public subsidies for startups have been scant in the scientific literature. The focus has been more on justifying or arguing against the state"s intervention through the granting of subsidies. The main aim of these public policies is to create companies by disadvantaged groups. Looking at the data we observe that the aim was achieved. Given this evidence, this paper analyzes how public programs that promote the creation of companies affect those companies" survival and net profits over a period of five years. Using a bivariate probit econometric model for a sample of businesses in a particular region of Spain, the results do not reveal the existence of differences, in terms of survival and profits, between companies created with and without public subsidies. The results do not support the arguments for or against the effectiveness of public programs, because subsidized companies neither survive longer nor have less net profits than unsubsidized companies.



Keywords: Survival, profits, startups, public subsidies, microenterprises