Reasons and opportunism control in public grants policies for development and innovations of businesses

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Salvatore Esposito De Falco ORCID logo, Nicola Cucari ORCID logo

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In this paper we would to analyze the mechanism of public grants on economic growth. In particular this topic has been the subject of scientific interest by economists and, recently, also by business economics scholars. The studies of the economists focused on the motivations of the intervention itself; the business economic studies, on the other hand, have analyzed the impact both on the behavior of entrepreneurs and on the firms themselves by public grants. The studies examined so far highlight two basic conceptual dimensions, different, but also complementary to each other: on the one hand the economic-oriented to investigate the motivations and effectiveness of the public intervention; the second, business-oriented, focused on the firm’s behavior following public grant. Based on these arguments, our research question arises: could the effectiveness of public intervention for funding development and business innovation be influenced by the differences in the various socio-political and institutional contexts in which they are applied? The aim of paper is analyze the motivations of public grants policies and their influence on the behavior of firms. In this way we want to identify a solutions scheme able to recover efficiency and effectiveness of public actions to support development. It is therefore possible to identify some corrective mechanisms on public intervention policies. In particular with reference to the behaviors induced by the grants policies, the idea is to re-design the grants policies in consideration of the different forms of pre and post contractual opportunism. With reference, instead, to the motivations underlying the public grants policies, it is necessary to examine the relationship between the State (Principal) and the beneficiary firms (Agent) in relation to the respective dimensions of the contractual force.

Keywords: Public Grants Policies, Corporate Governance Best Practices, Developmental State, Economic Development, Growth, Innovation

JEL Classification: O31, O32, O38

Received: 23.08.2019
Accepted: 30.08.2019

How to cite: Esposito De Falco, S., & Cucari, N. (2019). Reasons and opportunism control in public grants policies for development and innovations of businesses. In S. Esposito De Falco, F. Alvino, & A. Kostyuk (Eds.), New challenges in corporate governance: Theory and practice (pp. 349-361).