Does public entrepreneurial financing contribute to territorial servitization in manufacturing and KIBS in the United States?

ABSTRACT

This study uses territorial innovation theory and research advances on territorial servitization to examine the effect of public financing on firm survival and performance in two critical sectors in the United States. The goal is to inform servitization efforts on the effect of public entrepreneurial financing to support the renaissance of manufacturing and the ever-growing knowledge-intensive business services (KIBS) sector. Results indicate that public start-up and expansion capital, as government loans and guaranteed loans, decrease firm survival in the KIBS sector and firm receipts in both sectors, when compared with private sources of capital. In sensitivity analyses, no effect is observed for government grants.

KEYWORDS:

• territorial innovation
• servitization
• entrepreneurial finance
• manufacturing
• knowledge-intensive
• entrepreneurship

JEL:

• R11
• R12
• R58
• Z18

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the author.

ORCID

Maria Figueroa-Armijos http://orcid.org/0000-0001-7060-908X

Notes

1. Form 1040 Schedule C, ‘Profit or Loss from Business’ (Sole Proprietorship); form 1065, ‘U.S. Return of Partnership Income’, any one of the 1120 corporation tax forms; form 941, ‘Employer’s Quarterly Federal tax Return’; and form 944, ‘Employer’s Annual federal Tax Return’ (see http://www.census.gov/econ/sbo/methodology.html).

2. If using STATA software, the ‘predict’ option is used immediately after to obtain the fitted value of Public Capital (Public Capital hat). The author thanks the editors for kindly suggesting this analytical technique, and to Angrist and Pischke (2008) for an excellent book.