Funding Innovation at Regional Level: An Analysis of a Public Policy Intervention in the Piedmont Region

C<sc>annone</sc> G. and U<sc>ghetto</sc> E. Funding innovation at regional level: an analysis of a public policy intervention in the Piedmont region, <italic>Regional Studies</italic>. The aim of this paper is to evaluate the attractiveness and efficiency of the public financing programme DOCUP 2000-2006 (<italic>Documento Unico di Programmazione</italic>) in the Piedmont region of Italy. The dataset consists of 1235 firms that applied for public funding to Finpiemonte S.p.A. First, the determinants that lead firms to apply for public funding are examined. It is found that leveraged firms are more likely to ask for public subsidies. What drives Finpiemonte in selecting the firms to be subsidized is then analysed. Results for Measure 2.1b point to lower levels of firm leverage, lower costs and a higher life cycle of the projects to be financed. If the grant scheme under Measure 2.6b is considered, the selection process seems to be influenced by firm profitability. Finally, the efficacy of the programme on firm performance in the years following the granting of the subsidy is estimated. It is found that subsidized firms show an increase of indebtedness and of total fixed assets, while there is no evidence of any impact on firm profitability.