Performance analysis of promotion programs of the smart factory using propensity score matching

This study aims to demonstrate the effectiveness of government-funded programs supporting the construction of smart factories. In the analysis of performance, a challenge arises as simple statistical techniques often fail to address the issue of 'selection bias' when assessing the business performance of companies that engaged in a specific promotional program versus those that did not. In this study, we utilized the propensity score matching (PSM) technique to measure the business performance of participating companies based on the counterfactual of not participating. It compares them to companies that did not participate in the program but have similar attributes. We conducted a comparative analysis of business performance between two provinces in the Republic of Korea. The findings indicated that participation in the promotion program had a positive impact on the compound annual growth rate of sales during the study period. This suggests that companies involved in the program exhibited enhanced business performance compared to their non-participating counterparts. The insights gained from this study will be instrumental in shaping policies for forthcoming follow-up initiatives.