The impact of the 'ERDF innovation action grant scheme (innovation)' on the business growth of Maltese SMEs

Abstract

For the 2007-2013 EU programme, Malta introduced the 'ERDF Innovation Actions Grant Scheme (Innovation)' to help SMEs to invest in projects that stimulate innovative processes, products and services. In total, 79 SMEs were beneficiaries of the scheme and depending upon the size of the enterprise, the co-finance grant varied from 30%-50% of the project's total cost. Although this may have helped the beneficiaries to implement innovative projects, it was unknown however, whether the beneficiaries have attained long-term business growth from this scheme, even though studies prove that a correlation between innovation and growth exists. It may have been taken for granted that the beneficiaries may have well-made-use of the grants for investing on innovative strategies, thus perceiving that long-term business growth is attained. But, since there was no post-evaluation to date, it was uncertain whether the scheme had truly contributed to long-term business growth. The aim of this research was to validate the cause-and-effect hypothesis - the beneficiaries of the grant scheme have attained long-term business growth from their innovate project co-financed by the scheme. The research also examined other secondary related hypotheses such as whether the managements' rating on the innovation aspect of the project developed was related to the beneficiaries' business growth. To test these hypotheses, the Chi-Squared Test for Independence was used as the prime statistical test. This test examined whether the claimed hypotheses of the research were true or false.