SME Growth: The Role of Government Grant

Abstract

The objectives of this research are two: to understand, if Government grants create favorable conditions for enterprises which mean to promote diversification process by increasing range of company products; and to understand if diversification strategy, stimulated by public grants, can lead to a growth of company value. This research is carried out through the balance sheets of the data-base AIDA and analysis of questionnaires submitted to a sample of 100 small and medium-sized enterprises located in Molise Region (Italy), operating in the agro-alimentary sector, and which benefited from public grants during the period 2007-2008. The analysis covering the period 2003-2014. The empirical evidence from January 2003 to December 2014 indicates a strong relationship between Government grant, strategy diversification and growth of enterprise value. It should be emphasized that present work limits its field of investigation to a few variables without fully addressing other elements of uncertainty that may adversely affect on SME’s EVA. This work will be useful to stimulate debate on policies to support SMEs. The originality of this study is the correlation between public grants, corporate strategies and added economic value.