Impacts of public funding on firm performance - A case study on the sources of public business funding
Pesonen, Meeri (2017)
Pesonen, Meeri
2017
Kuvaus
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Tiivistelmä
This study aims to answer the following research question: what are the firm-level impacts of public innovation and business funding? The second purpose is to find out, what are the potential sources of public funding for the case company.
Public business support is strongly motivated by economic growth and market inefficiencies. Public sector is a significant financier for R&D and innovation because of positive externalities generated by innovation and new knowledge. Large amounts of public expenditure are used to stimulate research and innovation activities. Public organizations are substantial players in funding environmentally friendly technologies. Theoretical background of this study focuses on capital structure theories and rationales of public business support.
This study uses instrumental variable (IV) and ordinary least square (OLS) estimation methods to investigate the connection between public funding and firm size, profitability and leverage. Lag effects are also considered. The data consists of 1506 Finnish manufacturing companies, which have received Tekes support 2011–2016. Data on Tekes company support is combined with data on companies’ financial statements. The case study aims to find channels for public funding for the development of environmentally friendly technology and innovations. The focus is in Finland, Norway, and in cooperative actions in the Nordic and EU countries.
The results show that public business support is positively connected to firm size, and negatively connected to leverage. This study finds no statistically significant connection between public support and firm profitability. The case study findings show that the cooperative activities among different players and pubic organizations are common. Both Finland and Norway provide favourable platforms for cleantech innovations. The most significant public organization to fund cleantech in Finland is Tekes, and in Norway there are various organizations providing grants for environmental technology development.
Public business support is strongly motivated by economic growth and market inefficiencies. Public sector is a significant financier for R&D and innovation because of positive externalities generated by innovation and new knowledge. Large amounts of public expenditure are used to stimulate research and innovation activities. Public organizations are substantial players in funding environmentally friendly technologies. Theoretical background of this study focuses on capital structure theories and rationales of public business support.
This study uses instrumental variable (IV) and ordinary least square (OLS) estimation methods to investigate the connection between public funding and firm size, profitability and leverage. Lag effects are also considered. The data consists of 1506 Finnish manufacturing companies, which have received Tekes support 2011–2016. Data on Tekes company support is combined with data on companies’ financial statements. The case study aims to find channels for public funding for the development of environmentally friendly technology and innovations. The focus is in Finland, Norway, and in cooperative actions in the Nordic and EU countries.
The results show that public business support is positively connected to firm size, and negatively connected to leverage. This study finds no statistically significant connection between public support and firm profitability. The case study findings show that the cooperative activities among different players and pubic organizations are common. Both Finland and Norway provide favourable platforms for cleantech innovations. The most significant public organization to fund cleantech in Finland is Tekes, and in Norway there are various organizations providing grants for environmental technology development.