Exploring SME's behavioural changes resulting from innovation policy: the effect of receiving a subsidy on intrapreneurship

Intrapreneurship is critical for small to medium-sized enterprises (SMEs), in that it enhances innovation and organizational performance. This study details how intrapreneurship develops in subsidized relative to unsubsidized SMEs. We build on behavioural additionality research, as these studies examine changes in firm behaviour that occur after the firm receives public support. Prior studies focus on the effect on external collaboration, but subsidies also can lead to organizational learning and upgraded competencies, implying the potential for changes to organizational routines. Our test of the behavioural additionality effect relies on an original longitudinal data set involving manufacturing SMEs in the Dutch province of Limburg. The data analysis combines propensity score matching with a difference-in-difference approach, which reveals a significantly higher increase in one aspect of intrapreneurship, namely strategic renewal behaviour, among SMEs that receive an innovation subsidy. The findings advance understanding of intrapreneurship and behavioural additionality effects and provide policy makers with new evidence of the added value of subsidy programmes.