The purpose of this article is to study the relationship between the competitiveness of small- and medium-sized companies and the public support offered to them in the form of direct subsidies allocated through European structural funds. Using micro-data gathered by the Operational Programme Enterprise and Innovations for Competitiveness (OPEIC) of European structural funds from 2007–2013, this analysis focuses on small- and medium-sized enterprises (SMEs) in the Czech Republic. We employed a counterfactual approach based on Propensity Score Matching (PSM), Nearest Neighbour Estimator and Difference in Difference design with two groups of companies: applicants receiving support and a control group. When using value added and value added per labour cost as the competitiveness indicators for SMEs, we found that Cohesion Policy (CP) support had no statistically significant impact on these indicators. On the other hand, we a found positive impact on personnel expenditure. These results highlight a number of doubts regarding the effectiveness of SME cohesion funding, given that a rise in personnel expenditure, which is not supported by an appropriate increase in added value, is unlikely to be sustainable.
AbadieAImbensG (2002) Simple and bias-corrected matching estimators. Technical report, Department of Economics, University of California, Berkeley, CA.
2.
AbadieADrukkerDHerrJLet al. (2004) Implementing matching estimators for average treatment effects in Stata. STATA Journal4(3): 290–311.
3.
ArshedNCarterSMasonC (2015) The ineffectiveness of entrepreneurship policy: Is policy formulation to blame?Small Business Economics43(3): 639–659.
4.
AsdrubaliPSignoreS (2015) The economic impact of EU guarantees on credit to SMEs. European Economy Discussion Papers, no. 2. Brussels: European Commission.
5.
AudretschDBThurikAR (2001) What’s new about the new economy? Sources of growth in the managed and entrepreneurial economies. Industrial and Corporate Change10(1): 267–315.
6.
AyyagariMBeckTDemirguc-KuntA (2007) Small and medium enterprises across the globe. Small Business Economics29(4): 415–434.
7.
BatraGMahmoodS (2003) Direct support to private firms: Evidence on effectiveness. World Bank Policy Research, Working Paper no. 3170. Washington, DC: World Bank.
8.
BeckTDemirguc-KuntALevineR (2005) SME’s, growth, and poverty: Cross-country evidence. Journal of Economic Growth10(3): 199–229.
9.
BenáčekVZemplinerovaA (1995) Problems and environment of small businesses in the Czech Republic. Small Business Economics7(6): 437–450.
10.
BohataMMladekJ (1999) The development of the Czech SME sector. Journal of Business Venturing14(5): 461–473.
11.
BuckleyJPMirzaH (1997) Introduction. In: BuckleyJPCamposJMirzaHet al. (eds) International Technology Transfer by Small and Medium Sized Enterprises: Country Studies. New York: St Martin’s Press, pp.1–5.
12.
CaliendoMKopeinigS (2008) Some practical guidance for the implementation of propensity score matching. Journal of Economic Surveys22(1): 31–72.
13.
CaliendoMKünnSWeißenbergerM (2016) Personality traits and the evaluation of start-up subsidies. CESifo Working Paper no. 5733. Munich: CESifo.
14.
ChoHJPucikV (2005) Relationship between innovativeness, quality, growth, profitability, and market value. Strategic Management Journal26(6): 555–575.
15.
CriscuoloCMartinROvermanHet al. (2012) The Causal Effects of an Industrial Policy. No. w17842. Cambridge, MA: National Bureau of Economic Research.
16.
De KokJVroonhofPVerhoevenWet al. (2011) Do SMEs create more and better jobs? Report prepared by EIM for the European Commission, DG Enterprise and Industry, European Commission, Brussels.
EdwardsTDelbridgeRMundayM (2007) A critical assessment of the evaluation of EU interventions for innovation in the SME sector in Wales. Urban Studies44(12): 2429–2488.
19.
Fernández-SerranoJRomeroI (2014) The European cohesion policy and the promotion of entrepreneurship: The case of Andalusia. Journal of Regional Research29(1): 215–236.
20.
FischerFMillerGSidneyM (2006) Handbook of Public Policy Analysis: Theory, Politics and Methods. London: CRC Press.
21.
HartsenkoJSaugaA (2012) Does financial support from the EU structural funds has an impact on the firms’ performance: Evidence from Estonia. In: Proceedings of 30th International Conference Mathematical Methods in Economics (ed RamikJStavarekD), 11–13 September 2012, pp.260–265. Karvina: School of Business Administration, Silesian University.
22.
HiranoKImbensGWRidderG (2003) Efficient estimation of average treatment effects using the estimated propensity score. Econometrica71(4): 1161–1189.
23.
ImbensG (2004) Nonparametric estimation of average treatment effects under exogeneity: A review. Review of Economics and Statistics86(1): 4–29.
24.
JonesOTilleyF (2003) Competitive Advantage in SME’s: Organising for Innovation and Change. New York: Wiley.
25.
KhandkerSRKoolwalGBSamadHA (2010) Handbook on Impact Evaluation: Quantitative Methods and Practices. Washington, DC: World Bank.
26.
KohnTO (1997) Small firms as international players. Small Business Economics9: 45–51.
27.
LambrechtJPirnayF (2005) Evaluation of public support measures for private external consultancies to SMEs in the Walloon Region of Belgium. Entrepreneurship and Regional Development17(2): 89–108.
28.
LechnerM (1999) Earnings and employment effects of continuous off-the-job training in East Germany after unification. Journal of Business & Economic Statistics17(1): 74–90.
29.
LenihanH (2011) Enterprise policy evaluation: Is there a ‘new’ way of doing it?Evaluation and Program Planning34(4): 323–332.
30.
LindP (2014) Monitoring Business Performance: Models, Methods, and Tools. New York: Routledge.
31.
LituchyTRReavleyMA (2004) Women entrepreneurs: A comparison of international small business owners in Poland and the Czech Republic. Journal of International Entrepreneurship2(1–2): 61–87.
32.
Lloyd-ReasonLMullerKWallS (2002) Innovation and education policy in SME’s: A Czech perspective. Education + Training44(8/9): 378–387.
33.
MachekOHnilicaJ (2015) Evaluating the impact of family presence in ownership and management on financial performance of firms using matched-pair investigation. Politická ekonomie63(3): 347–362.
34.
MeghanaABeckTDemirguc-KuntA (2007) Small and medium enterprises across the globe. Small Business Economics29(4): 415–434.
35.
MeredithJShafferS (2002) Operations Management for MBAs. New York: John Wiley & Sons.
36.
Ministry of Industry and Trade of Czech Republic (MIT) (2010) Report on Development of Small and Medium Enterprises and Its Support in 2009. Prague: MIT.
37.
Ministry of Industry and Trade of Czech Republic (MIT) (2012) Report on Development of Small and Medium Enterprises and Its Support in 2013. Prague: MIT.
38.
Ministry of Industry and Trade of Czech Republic (MIT) and European Regional Development Fund (ERDF) (2012) Operational Programme ‘Entrepreneurship and Innovation’. Prague: MIT.
39.
MullerPGagliardiDCaliandroCet al. (2014) Annual Report on European SME’s 2013/2014 – A Partial and Fragile Recovery. Brussels: European Commission.
40.
MusteenMFrancisJDattaDK (2010) The influence of international networks on internationalization speed and performance: A study of Czech SME’s. Journal of World Business45(3): 197–205.
41.
NightingalePCoadA (2014) Muppets and gazelles: Political and methodological biases in entrepreneurship research. Industrial and Corporate Change23(1): 113–143.
42.
NorrmanCBager-SjögrenL (2010) Entrepreneurship policy to support new innovative ventures: Is it effective?International Small Business Journal28(6): 602–619.
43.
Organisation for Economic Co-operation and Development (OECD) (2011) OECD Science, Technology and Industry Scoreboard 2011. Paris: OECD Publishing.
44.
OhILeeJDHeshmatiAet al. (2009) Evaluation of credit guarantee policy using propensity score matching. Small Business Economics33(3): 335–351.
45.
PotlukaODerlukiewiczNGombitovaDet al. (2010) Impact of EU Cohesion Policy in Central Europe. Leipzig: Leipziger Universitätsverlag.
46.
ReinowskiESchultzB (2006) Microeconometric evaluation of selected ESF-funded ALMP-programmes. IWH-Discussion Papers no. 17. Halle: Halle Institute for Economic Research.
47.
RosenbaumPRubinD (1983) The central role of the propensity score in observational studies for causal effects. Biometrika70(1): 41–50.
48.
RoyA (1951) Some thoughts on the distribution of earnings. Oxford Economic Papers3(2): 135–145.
49.
RubinD (1974) Estimating causal effects to treatments in randomised and nonrandomised studies. Journal of Educational Psychology66(5): 688–701.
50.
ShaneS (2009) Why encouraging more people to become entrepreneurs is bad public policy. Small Business Economics33(2): 141–149.
51.
Spring Singapore (2011) A Guide to Integrated Management of Productivity Activities (IMPACT). Singapore: Spring Singapore.
52.
SternbergR (2012) Do EU regional policies favour regional entrepreneurship? Empirical evidence from Spain and Germany. European Planning Studies20(4): 583–608.
53.
StoreyDJ (2000) Small Business: Critical Perspectives on Business and Management. New York: Routledge.
54.
Tödtling-SchönhoferHHamzaCReschAet al. (2011) Impact and Effectiveness of the Structural Funds and EU Policies Aimed at SMEs in Regions. Brussels: European Parliament.
55.
WachK (2012) Europeizacja malych i srednich przedsiebiorstw: Rozwój przez umiedzynarodowienie. Warszawa: PWN.
56.
WolffJAPettTL (2006) Small-firm performance: Modelling the role of product and process improvements. Journal of Small Business Management44(2): 268–284.
