The Impact of Government Subsidies on Entrepreneurial Activities

Abstract

Purpose: The objective of this study was to look into the impact of government subsidies on entrepreneurial activities.

Methodology: The study adopted a desktop research methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library.

Findings: The findings reveal that there exists a contextual and methodological gap relating to government subsidies and entrepreneurial activities. Preliminary empirical review revealed that that government subsidies played a crucial role in stimulating entrepreneurial activities by addressing barriers such as access to finance and technology. However, the effectiveness of subsidies varied depending on factors such as subsidy design and institutional context. While some subsidy programs showed positive outcomes in terms of promoting innovation and economic growth, others faced challenges such as bureaucratic inefficiencies. The study highlighted the importance of tailored subsidy design, transparency, and complementary policies for maximizing the impact of subsidies on entrepreneurship.

Unique Contribution to Theory, Practice and Policy: The Resource Based theory, Agency theory and Institutional theory may be used to anchor future studies on the impact of government subsidies on entrepreneurial activities. The study made several recommendations to enhance the effectiveness of government subsidies in promoting entrepreneurship. These recommendations included tailoring subsidy programs to address specific needs, enhancing access to finance, strengthening entrepreneurial ecosystems, improving the regulatory environment, promoting inclusive entrepreneurship, and encouraging innovation and risk-taking. By implementing these recommendations, policymakers aimed to create a supportive environment for entrepreneurs to thrive, foster innovation, and drive economic growth and development.

Keywords: Government Subsidies, Entrepreneurial Activities, Effectiveness, Tailoring Programs, Access to Finance, Entrepreneurial Ecosystems, Regulatory Environment, Inclusive Entrepreneurship