Impact of Deadweight Effect on the Performance of Supported Firms
Impact of Deadweight Effect on the Performance of Supported Firms

Author(s): Simona Bratkova, Miroslav Šipikal, Valéria Némethová
Subject(s): National Economy, Business Economy / Management
Published by: Scientia Moralitas Research Institute
Keywords: Entrepreneurship; structural funds; deadweight effect; firm support
Summary/Abstract: Public support can flow to different areas of the economy and can have several dimensions. Frequent recipients of subsidies are firms, whose support can have specific effects. Such an undesirable effect occurs if these projects are supported that would be carried out without this subsidy. In this case, we are talking about the so-called deadweight effect, which has been discussed and investigated in several studies in the scientific literature. The present article tries to shift knowledge about this effect through a study of supported companies in Slovakia. The aim of the research is to find out whether deadweight effect had an impact on the short-term or long-term results of investigated companies by analysing economic results of the supported firms. Changes in several firm indicators were monitored as profit, sales and value added for individual years (2010, 2013, 2018). Results present changes in size categories of firms according to the number of employees. Firm groups were distinguished based on the extent of deadweight effect. The results showed that in cases when deadweight effect occurred, the profitability of supported firms increased, which ultimately means inessentiality of subsidy that spilled over into the profits of surveyed companies.

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