Over the last few years, business management has become quite complex, leading to constant risks in the business context resulting from economies' globalization, not only by the frequent change in the organizations' proprietary structure, but also due to technological innovation and competitiveness in the global market. The sum of all the factors referred to above and the actual pandemic situation has substantially increased the level of risk in current or strategic management decisions taken within the scope of the organizations' activity. Thus, the aim of this research is to study the impact of EU funds on Portuguese companies by analyzing companies that have benefited from European incentives under the innovation incentive system, since it covers financing investments of global and strategic nature in productive areas. In this sense, the sample includes the companies that had projects approved in 2014 and aims to verify the impact of these incentives on the capacity of value creation, as well as on job creation and internationalization level in years of 2015, 2016, 2017, and 2018.
TopIntroduction
Globalization has brought density and greater uncertainty to business management. That happened perhaps mostly because of increasing technological innovation and competitiveness, but certainly also because of recurrent transformation in the organizations’ proprietorship structure. Thus, all these aspects have noticeably amplified risk, both in current as in strategic management choices. Value creation has nowadays won important relevance in the context of organizations’ activity, since it validates companies’ ability to reward investors, both internal and external, bearing in mind total investment.
According to Neves (2011), the existing intensifying interest about creating value stretched out simple profits’ analysis. This happens due to progressive consensus about real benefit of financial results, that can only lead to both wealth and imperishability of an organization when rewarding total invested capital along with value creation.
Portuguese companies have been assisted by EU funds over the past few decades precisely to enhance competitiveness and capability to create value, in this increasingly international context. Literature has not developed many studies on the impact of these funds on national companies, despite the relevance of the subject. Regarding the ongoing pandemic situation and the expected gigantic negative impact on organizations, on employment and on economy, this is an issue which got sustained magnitude.
The purpose of this research work is, thus, to understand the stimulus provoked by EU funds on Portuguese corporations, by analyzing figures about those that have been helped by European incentives under the Innovation Incentive System. This choice was made bearing in mind that this Program comprises financing investments both global and strategic, in productive areas. In this sense, the sample includes all the 166 companies that had projects approved in 2014 and aims to verify value creation ability, as well as job creation and internationalization level. To achieve our goal, we use both economic and financial data for the financial years of 2015, 2016, 2017 and 2018 and several statistical techniques, such as means deviation and multivariate linear regression.
Besides this introduction, the work has four parts: theoretical framework, on which we exploit the substance of investment decision trough the analysis of various studies about the impact of subsidies on companies’ performance, value creation and capital cost; the empirical study, which comprehends a more detailed portrayal of purposes and research methodology; results’ analysis and discussion and general work conclusions.