Promoting innovation in micro and small businesses - the reality in Bahia

With the aim of sharing the risks and costs of innovative activity in companies as well as encouraging the launch of new products or the development of new processes the Brazilian government (through the Innovation Law) authorizes the allocation of public funds to support research and development activities in companies through public economic subsidy notices. As a tool that is still recent in Brazil even though it drives innovation the impacts of these instruments are not yet fully known. In this context this paper presents the main difficulties and advantages experienced by Brazilian companies when participating in the selection processes for economic subsidy notices. The data presented were obtained from interviews with entrepreneurs who submitted research and development project proposals to the calls for proposals both those selected and those not selected. New information was generated for the state of Bahia and it is hoped that this study will contribute to the development of public policies and new strategies for the innovation scenario.