Abstract

Despite the recognition of innovation and entrepreneurship as key factors to promote the socio-economic development of countries, little is known regarding the effectiveness and implications of public innovation policies on new ventures’ innovations. This study examines the characteristics of new ventures and how the main public instruments for innovation respond to them. Such relationships are tested empirically in a sample of 438 European new ventures. The results show that favorable loans for financing innovation projects, aids for building innovation networks, the provision of information and attending trade fairs are positively related to the development of product innovations. However, more traditional public instruments such as subsidies and tax reductions do not seem to be effective. This study has important theoretical and practical implications to launch more effective and efficient public policies to foster product innovations in new ventures.