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Public Business Advice in the Founding Process: An Empirical Evaluation of Subjective and Economic Effects

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  • Sarah Kösters

    (Department of Economics, Graduate College ‘The Economics of Innovative Change’ (DFG-GK-1411), Friedrich-Schiller-University Jena, Carl-Zeiss Straße 3, 07743 Jena, Germany)

  • Martin Obschonka

    (Department of Developmental Psychology, Friedrich-Schiller-University Jena, Am Steiger 3/1, 07743 Jena, Germany)

Abstract

We investigate economic and subjective effects of public business advice delivered to nascent entrepreneurs in Germany. We analyze data from the Thuringian Founder Study, an interdisciplinary research project on innovative entrepreneurship. Employing cluster analysis, we first explore the actual scope and intensity of business advice used. Two distinct groups of policy take-up can be identified: (1) use of intense assistance across all areas, and (2) use of less-intensive assistance being limited to operational issues. Then we analyze personal entrepreneurial resources (human and social capital, entrepreneurial personality profile) as predictors of take-up and perceived usefulness taking into account the different patterns of utilized advice. Finally, we assess economic effects by studying subsequent business performance employing propensity score matching. We cannot reveal that business advice translated into better start-up performance, but our results indicate that advice may help founders with fewer resources to overcome barriers in the founding process. We find that a lack of personal entrepreneurial resources predicts take-up of business advice in general as well as perceived usefulness of comprehensive business advice.

Suggested Citation

  • Sarah Kösters & Martin Obschonka, 2011. "Public Business Advice in the Founding Process: An Empirical Evaluation of Subjective and Economic Effects," Environment and Planning C, , vol. 29(4), pages 577-604, August.
    • Handle: RePEc:sae:envirc:v:29:y:2011:i:4:p:577-604
    DOI: 10.1068/c10126r
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