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Do Entrepreneurship Policies Work? Evidence From 460 Start-Up Program Competitions Across the Globe

Geoffrey Barrows

No 2018.02, Policy Papers from FAERE - French Association of Environmental and Resource Economists

Abstract: Many organizations around the world implement programs designed to encourage entrepreneurship, including grant prize awards, accelerator programs, incubators, etc. The goal of these programs is to supply entrepreneurs with early-stage support and visibility to help develop ideas and attract capital; but, if capital markets are efficient, good business ideas should find funding anyways. In this paper, I present evidence from the first global-scale, quasi-experimental study of whether entrepreneurship programs improve outcomes for start-up firms. I employ a regression discontinuity design to test whether winners of start-up program competitions perform better ex-post than losers, where the threshold rank for winning the competition provides exogenous variation in program participation. With 460 competitions across 113 countries and over 20,000 competing firms, I find that winning a competitions increases the probability of firm survival by 64%, the total amount of follow-on financing by $260,000 USD, and total employment by 47%, as well as other web-based metrics of firm success. Impacts are driven by medium-size prize competitions, and are precisely estimated both in countries where the costs of starting a business are low and where these costs are high. These results suggest that capital market frictions indeed prohibit start-up growth in many parts of the world.

Keywords: Start-ups; Entrepreneurship; Credit Constraints; Prizes; Accelerators (search for similar items in EconPapers)
JEL-codes: G24 L26 M13 O16 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2018-01
New Economics Papers: this item is included in nep-bec and nep-sbm
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http://faere.fr/pub/PolicyPapers/Barrows_FAERE_PP2018.02.pdf First version, 2018 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:fae:ppaper:2018.02

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