Selection or More Capital ? Experimental Evidence on High-Growth Entrepreneurs in Kenya

Francisco Campos, Abla Safir, Celine Koffka, David McKenzie and Bilal Zia

No 11432, Policy Research Working Paper Series from The World Bank

Abstract: Business plan competitions aim to identify and spur high-growth entrepreneurs. Two experiments were embedded into a Kenyan competition to test how intensity of selection and of capital determine entrepreneurial outcomes. Applicants received a US$9,000 grant after a streamlined process or went through multiple selection stages and were randomly assigned US$9,000 or US$36,000. All grants initially generated jobs, but the impacts only persisted over three years under multi-stage selection. The larger grants did not yield greater long-term impacts than the multi-stage US$9,000 grant, suggesting diminishing returns to capital and limited lumpy investment opportunities. Selection, rather than grant size, determines long-run firm growth.

Date: 2026-07-27
New Economics Papers: this item is included in nep-bec, nep-ent, nep-exp and nep-sbm
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