Government-Funded Businesses: An Empirical Study of Romanian Start-Ups


  • Bogdan Glavan Romanian-American University, Romania
  • Ana Maria Mihaela Iordache Romanian-American University, Romania
  • Flavia Anghel National University of Political Studies and Public Administration, Romania
  • Ioana Gabriela Grigorescu Romanian-American University, Romania
  • Alexandru Ionescu Romanian-American University, Romania
  • Radu Nechita Babes-Bolyai University, Romania



startups, entrepreneurship, state aid, cluster analysis, determinant analysis


Policymakers consider startups an essential sector of a dynamic and competitive economy. In this paper we assess the outcome of a Romanian program which provided a consistent subsidy to potential startup entrepreneurs. More specifically, we carry out a cluster and discriminant analysis to measure the economic performance of startup companies five years after their inception. The results show that there are three groups of businesses: companies with high capital and operational efficiency, companies with average profitability, and companies with low profitability, with substantial differences in turnover, profits, debt etc. We argue that these differences are attributable in part to the entrepreneur’s human capital and to the attempt to exploit the different fiscal treatment of labor and capital income. We also show that the public grant scheme had no durable impact on employment and on fixed assets, which suggests the presence of a significant crowding out and moral hazard effects.

Author Biographies

Bogdan Glavan, Romanian-American University, Romania

Bogdan Glăvan is a professor of economics at the Romanian-American University in Bucharest. He has published in American Journal of Economics and Sociology, Independent Review, Betriebswirtschaftliche Forschung und Praxis, Quarterly Journal of Austrian Economics. He served as executive director of Romanian Counterguarantee Fund, and has a decade-long experience in entrepreneurship.

Ana Maria Mihaela Iordache, Romanian-American University, Romania

Ana Maria Mihaela Iordache graduated from the Faculty of Cybernetics, Statistics and Economic Informatics at the Bucharest University of Economic Studies. She received a Ph.D. in Cybernetics and Statistics from The Bucharest University of Economic Studies. She works at the Romanian-American University since 2007, currently holding the position of Lecturer. Ana Maria Mihaela Iordache, Department of Informatics, Statistics and Mathematics, Romanian-American University. WOS ResercherID: ABB-0008-2021, ORCID: 0000-0002-0219-9135.

Flavia Anghel, National University of Political Studies and Public Administration, Romania

Flavia Anghel is a PhD lecturer at the Faculty of Management, with 20 years of experience in the field of research and academia. She holds a PhD in Economics from the Bucharest University of Economic Studies (ASE), a MA in Accounting, a BA in Economics from the same university, and a BA in Psychology from the University of Bucharest. She is a certified coach, project manager, project evaluator, and she has more than 10 years of experience as trainer and project manager in various research and development projects, financed from national and European funds.

Ioana Gabriela Grigorescu, Romanian-American University, Romania

Ioana Gabriela Grigorescu graduated from the Faculty of European Economic Studies at the Romanian-American University. She received a Ph.D. in Economics Science from The Bucharest University of Economic Studies. Works as an assistant professor at the Faculty of Management Informatics. She is a member of the board of the Department of Commerce, Economic Integration and Business Administration.

Alexandru Ionescu, Romanian-American University, Romania

Alexandru Ionescu has been involved in teaching and consultancy activities for almost 17 years, at present, his position being that of Associated professor at Romanian-American University. He graduated School of Domestic and International Business, Banking and Finance at Romanian-American University in Bucharest. Alexandru holds a PhD in international business and economics obtained in 2004 from the Academy of Economic Studies, the thesis title being ‘The impact of international factors on Romania growth’.

Radu Nechita, Babes-Bolyai University, Romania

Radu Nechita is Associate professor and teaches Microeconomics, Globalization and Development, European Economic Integration at Babeș-Bolyai University, Cluj-Napoca, Romania (Department of European Studies). His general topics of interest gravitate around the institutional factors of development, with emphasis on regulations, monetary and fiscal policies. He promotes economic education in various forms: as a trainer in personal finance or in entrepreneurial education, by publishing dozens of articles in mass-media and by participating at over one hundred TV and radio shows.

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