Is a Policy Mix More Effective Than Individual Policies for SME Innovation? An Exploratory Analysis

The provision of public funds to private firms for the purchase of services, particularly knowledge-intensive ones, has received so far little attention from the evaluation literature (Bakhshi et al., 2015; Bruhn et al., 2018 are notable exceptions). These interventions aim to help SMEs to access a variety of knowledge and competencies required for innovation, which are not available within the firm (Vossen, 1998; Storey, 2003). The implicit assumption is that SMEs primarily suffer from constraints on their financial resources, rather than on their capabilities. After receiving the subsidy, SMEs should be able to identify the services they need, as well as the suppliers that can best provide them. However, it is well known that SMEs, may not only lack the financial resources to invest in innovation, but also the capabilities to identify the competences and services they need, or the right suppliers that can provide them (Fontana et al., 2006; Ortega Argilés et al., 2009). Subsidies for the purchase of knowledge-intensive services address the former problem, but not the latter. As discussed by Shapira and Youtie (2016), to help SMEs increase their awareness of their needs and how to address them, they could be provided with complementary services, such as technology and innovation advisory services. This study presents an exploratory empirical analysis focused on two interconnected regional innovation policy interventions implemented in Tuscany (Italy). We adopt a propensity score matching approach applied to the case of multiple treatments, as proposed by Lechner (2002a, 2002b). In particular, we compare three different treatments: (i) the use of innovation vouchers for the purchase of knowledge-intensive services; (ii) the reliance on an intermediary’s technology and innovation advisory service; (iii) the combination of the two treatments, i.e. the use of innovation vouchers for the purchase of knowledge-intensive services with guidance from the intermediary. While policy mixes have been advocated as a response to complex problems (Flanagan et al., 2011; Cunningham et al., 2016), very little empirical evidence is available about the comparative effectiveness of policy mixes with respect to that of the single policies in the mix (Martin, 2016), and no other studies consider the particular combination of innovation vouchers and advisory services. This exploratory study captures an aspect that lies at the core of the policy mix literature, namely that the mix cannot be considered as the simple sum of the single instruments that are included in it (Magro and Wilson, 2013), but it can facilitate the emergence of synergies and complementarities among them.