Performance of selected Estonian firms financed with start-up frant: ability to follow plans and grant usage efficiency. Starditoetuse poolt finantseeritud valitud alustavate ettevõtete tegevuse tulemuslikkus: võimekus plaanidest kinni pidada ning stardit

Abstract

Whereas start-up firms are important engines of growth and face at the same time many impediments in the market, government aid to start-ups has been used extensively in different countries. In this article we have studied the performance of a small sample on new Estonian firms that received public start-up grant. For the analysis we use the rather unique data on the firms’ plans for the 3 successive years after the start-up. The decisions to grant the start-up aid were maid based on these plans. The results indicated that while many firms could not meet their reported goals (in terms of turnover, profit and the number of jobs created) and more than half of the firms had tax arrears, the estimated labour taxes paid by these firms were much higher compared to the sum of the grant, thus indicating the positive net impact of grants on the state’s fiscal position.