Selective Subsidies, Entrepreneurial Founders' Human Capital, and Access to R&D Alliances

We investigate if and to what extent the receipt of a “selective” public subsidy - a public subsidy awarded through a competitive procedure - acts as a quality signal and helps new technology-based firms (NTBFs) to access R&D alliances. In particular, we theoretically enquire and empirically analyze which founding team-level characteristics allow NTBFs to: i) get a selective public subsidy; and ii) access an R&D alliance with another firm or a public research organization (e.g. an university), once the subsidy is awarded. We estimate an Heckman-type probit model on a sample of 977 NTBFs. First, our results show that the receipt of a selective public subsidy increases the likelihood to access an R&D alliance. Second, founders' technical education figures as a key determinant to get the first selective subsidy. Finally, founders' previous industry-specific work experience allows an NTBF to “exploit the signal” of the selective subsidy, by positively moderating the impact of the subsidy on an NTBF's likelihood to establish an R&D alliance. This moderating effect is economically relevant and statistically significant only when the alliance is established with a corporate partner