The Purposefulness and Effectiveness of Supporting Entrepreneurship with Public Funds – EU Funds for the Development of Self-Employment and Startups

Abstract

Purpose: The paper discusses issues associated with using funds that support the development of entrepreneurship – the purpose of the paper is to answer questions regarding the purposefulness and effectiveness of fi nancial instruments from EU funds aimed at the development of emerging businesses (startups). Methodology: The paper analyzes previously conducted research studies in the fi eld of the discussed topic, it systematizes and describes the fi nancial instruments from EU funds supporting self-employment and startups in their early stages of activity. It also provides an overview of evaluation reports concerning these instruments. The paper also contains a case study: an analysis of the effectiveness of a selected project supporting the development of entrepreneurship (co-fi nanced from EU funds), in which the method of evaluating the net effect of the support in the short term has been used. Findings: An analysis of previously conducted research studies has shown that properly designed State aid targeted at those starting up their own business is sensible, as it provides them with seed capital and it helps them survive the most diffi cult period of the so-called “startup”. However, there is a lack of comprehensive studies to confi rm the positive impact of business support interventions carried out using EU funds. The methodology of evaluating the net effect used by the Author in the conducted study has made it possible to identify the actual size of the – positive – impact of the selected project on the growth of self-employment. Limitations: The study revealed some limitations – the method and time of the study allow to capture the phenomenon on a micro-scale, in the short term. The institutions that are involved in the process of allocating funds should develop a comprehensive methodology that implements the idea of evaluating the net effect, allowing to assess the effectiveness of the support at regional and national level in the long term. Originality: The originality of the paper consists in applying the theories and results of previous studies to the Polish practice of supporting businesses at their early stages of development as well as applying the method of evaluating the net effect, which allows to determine the actual impact of the intervention.