Research

Young Innovative Companies (YICs) typically face restricted access to the capital market. A pending question is whether subsidies can alleviate this constraint. Analyzing a comprehensive dataset of subsidies granted by the French Public Investment Bank (BPIfrance) to YICs, I confirm the existence of an impact on their access to the capital market and disentangle between a prototyping effect and a certification effect. A prototyping effect occurs when receiving a grant enables additional R&D, particularly in demonstration and prototype development, thereby reducing technical risk and facilitating market financing of the project. On the other hand, a certification effect arises from the program’s selection process, signaling the quality of the project and mitigating information asymmetry that typically burdens startups. I find that public financial support significantly enhances companies’ access to the capital market, encompassing both equity and debt. The immediate impact observed, especially among seed-stage startups, suggests that the certification effect predominantly drives these outcomes. Selection in the program is key to permitting access to the capital market, but the actual size of the funds raised mostly depends on the market capacity, at least when it comes to equity.

In the past decade, research has shown the existence of strong barriers hindering investment in green innovation. Especially, the literature has demonstrated the presence of externalities and a path dependency to previous research. Path dependency happens when previous events influence or constrain later ones. The historical difference in in- vestments between dirty and green technologies has created a gap in their competitiveness affecting, today, the development of the latest. Different authors have argued for the expansion of public supports to overcome these barriers, particularly through subsidies. In this paper, I investigate if subsidizing green innovation projects may help to enhance the production of green knowledge and reverse the path dependency. I analyze a subsidy program conducted in France between 2010 and 2018 called PIA-ADEME. A key feature of this program is that it only targets projects for environmental innovation. Also, all calls for proposals, that are part of the program, are thematized with large application sectors. I use the variation in the budget allocated to each of these sectors as a source of exogenous variation in the probability to be treated. The results tend to indicate that subsidies indeed enhance the production of green knowledge but are not enough to overcome the path dependency.

In order to minimize the environmental footprint of our production, innovation must play a central role. Over the last two decades, government support for environmental research projects has intensified to accelerate the transition and help overcome challenges green innovation undergoes. Grant programs are a central component of the public action in that field. This work intends to evaluate the effectiveness of such measures. It focuses on the main support program dedicated to environmental innovation in France: the calls for projects of the agency for environmental transition, Ademe. Within it, most funds have been allocated to collaborative research projects. The methodology developed here seeks to understand the impacts of the program and the mechanisms underlying public intervention. It is based on the use of quantitative and qualitative data, and thus falls into the family of so-called mixed methods. The program has a strong incentive impact, with a significant increase in the resources allocated to R&D. The final impact on innovation activities appears to be insignificant. However, this lack of results seems to be explained by the lack of time between the treatment and the last year of observation available. In addition to the financial contribution, the program seems to rely on three other mechanisms: First, the complementarity between partners, second a strong technical learning effect, and finally a signal effect. These effects seem particularly relevant for overcoming barriers to access to financing as well as to technological diffusion within the market.