Effectsof Public Subsidies on Productivity of Firms in the Czech Food Industry

The previous studies report ambiguous effects of public subsidies on firm productivity. The aim of the paper was to assess the effects of public subsidies on the productivityof firms that were supported by the Czech Operational Programme Enterprise and Innovation(OPEI) in the EU programming period 2007-2013. Design/methodology/approach:We used the data for 147 supported companies in the Czech food processing industry (72.4% of all beneficiaries within the industry) to calculate four indicators related to the firm productivity, i.e. value added, personnel costs, value added per personnelcosts and production efficiency. We analysed the level and development of selected productivity indicators and then we applied the paired t-test to compare the productivity in the period before the intervention (2005-2007) with the post-programme period (2014-2015). Findings: The obtained results suggest that participation of the Czech food processing companies in the OPEI did not lead to the higher productivity of the supported enterprises, both in terms of labour productivity and production efficiency two years after the end of the intervention. Research/practical implications:The presented findings, therefore, suggest that there is no significant impact of the public support from the OPEI on the productivity of supported enterprises in the Czech food industry. However, it is worth mentioning, that the results must be taken as a preliminarysince we have not accounted for the firm-level characteristics such as firm size. The changes in the productivity indicators might also take more time, and therefore it would be very relevant to investigate the effects also in the long run. Originality/value:The presented study empirically contributes to the knowledge on the relationship between the allocationof the public subsidies and firm productivity from the perspective of the Czech agribusiness sector.