Abstract

This paper examines the outcome additionality of early-stage public innovation by drawing on arguments from the signaling literature and the resource-based view. Despite the theoretical justification of public support to innovation projects it is far from clear how and when such activities impact the performances of targeted firms. Partly due to theoretical shortcomings, since the literature that investigates the mechanisms behind outcome additionality is scarce. Partly due to methodological challenges, where the empirical documentation has been difficult. In this paper we narrow the identified gap by opening the black box of outcome additionality and reveal the causal mechanisms that transform public subsidies into firm-specific outcomes by expanding theory and applying a superior methodological approach.

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