Public subsidies for SME research and development: Empirical evaluation of collaborative versus individual place-based programs

This paper provides novel empirical evidence on the effectiveness of regional research and innovation policies for small and medium-sized firms (SMEs). Two subsidy programs implemented at the regional level in central Italy are investigated. One program targeted firms' individual research, while the other addressed collaborative research between firms and universities. Using a matched difference-in-differences approach our empirical analysis shows a differentiated impact of the two programs. The first was successful in stimulating additional private R&D investment and, at least partially, in improving firms. performance. The second program had weaker effects, mostly restricted to R&D expenditure and employment. Otherwise, subsidized firms show a reduction in their tangible and intangible investments, thus casting doubts on the benefits of subsidies forcing R&D collaborations.