Network Contracts and Firm Performance: Evidence from Matching Estimates of a Regional Programme Impact

This paper empirically assesses the stimulating effect of the ERGON1 program issued by the Lombardy Region (Italy). ERGON1 provided economic incentives for creating network contracts among firms, mostly located in the region. A network contract is an innovative policy instrument introduced in Italy in 2009, which fosters the creation of firm aggregations with an ad hoc contract, without resorting to mergers. Network contracts are meant to increase economic efficiency for all firms involved in the contract. A new database has been collected for the analyzes presented. Information is available on firms' balance sheets, on ERGON1 call participants, and on network contracts existing in Italy as of 2015. Empirical results suggest that firms enjoy an increase in productivity after being financed to create network contracts. Causality issues are tackled by means of Propensity Score Matching Estimates. Estimates suggest that ERGON1 causes a better economic performance of firms in the sample.