The Effect of Public Subsidies on Organizational Performance: Evidence from Italy’s SME Digitalization Voucher

This thesis investigates the impact of public support for digital transformation on the performance of Italian small and medium-sized enterprises (SMEs), with a specific focus on the national Voucher for the Digitalization of SMEs program. By using a rich panel dataset and adopting a Difference-in-Differences (DID) approach the study evaluates whether receiving the voucher led to measurable short-term improvements in firm-level outcomes. Firm performance is assessed along 5 dimensions: ROE and ROA for profitability, investment in tangible fixed assets, debt-to-equity ratio for financial structure and labour productivity. The analysis is structured around four key research hypotheses addressing overall effects, as well as treatment heterogeneity across firm size, industry and geographic location. The results provide partial support for the effectiveness of the policy. Treated firms show a statistically significant improvement in profitability ratios, while no robust or mixed effects emerge for investment, productivity, or leverage indicators. The impact appears concentrated among micro and small firms, service-based and knowledge-intensive sectors, and firms located in less developed regions such as Southern Italy. Robustness checks using Propensity Score Matching (PSM) and alternative sample trimming confirm the main findings. Overall, the evidence highlights that public digitalization incentives can positively influence firm performance when aligned with specific firm-level characteristics and contextual needs. The results have implications for the design of future innovation policies and for the strategic targeting of digital support instruments.