Government subsidies and firm performance: Evidence from high-tech start-ups in China

Abstract

This study applies fsQCA to examine the effectiveness of government subsidies on the performance of high-tech start-ups under different configurations. We find that 1) selective subsidies can help ventures maintain high-performance regardless of the legal environment in which start-ups operate; and 2) start-ups with non-selective subsidies do not necessarily have high-performance if they operate in regions with weak legal protection and face strong market competition. We contribute to the literature by emphasizing that the effectiveness of government subsidies relies on the interplay of firm attributes and legal environment. Our findings also have practical implications for government support of sustainable entrepreneurs.