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Even winners need to learn : How government entrepreneurship programs can support innovative ventures

Author

Listed:
  • Mickaël Buffart

    (Aalto University)

  • Gregoire Croidieu

    (EM - EMLyon Business School)

  • Phillip H. Kim

    (Babson College - Babson College)

  • Ray Bowman

    (EESC-GEM Grenoble Ecole de Management)

Abstract

Given the investment of public resources for supporting entrepreneurial growth, it is important to know whether such programs truly benefit innovative ventures. While prior research has indicated some benefits for growth outcomes, there is no clear consensus about the conditions for program effectiveness. We attribute this to the complex set of selection and treatment mechanisms associated with how programs navigate interlocking tradeoffs to maximize outcomes with their limited resources. To circumvent these challenges, policymakers often default to a "picking winners" approach based on past performance indicators. We develop and implement a carefully designed empirical strategy to determine whether this approach leads innovative ventures to achieve growth milestones and properly accounts for various observed and unobserved selection issues. We analyze data from the Small Business Development Center (SBDC), a government-sponsored program in the United States. Using a potential outcomes framework to investigate over 1,700 ventures that enrolled in SBDC advisory services from 2011 to 2016, we observe that treatment design is more crucial than selection for innovative firms to achieve growth. We found that treatment time and a client's willingness to learn collaboratively from their advisors are vital indicators of growth. Since treatment effectiveness is driven by support allocation, programs that desire to boost innovation outcomes must at a minimum formally prioritize innovation criteria to ensure these businesses receive sufficient support to address their growth objectives. Beyond this, we demonstrate that support effectiveness additionally depends on a willingness of participants to learn collaboratively by socializing their growth objectives with their advisors. Since even winners need to learn, programs must wrestle with the selection tradeoffs more acutely early on to ensure that the most promising clients can receive lengthier learning opportunities for growth.

Suggested Citation

  • Mickaël Buffart & Gregoire Croidieu & Phillip H. Kim & Ray Bowman, 2020. "Even winners need to learn : How government entrepreneurship programs can support innovative ventures," Post-Print hal-02927561, HAL.
    • Handle: RePEc:hal:journl:hal-02927561
    DOI: 10.1016/j.respol.2020.104052
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    Cited by:

    1. Dalziel, Margaret & Basir, Nada, 2024. "The technological imprinting of educational experiences on student startups," Research Policy, Elsevier, vol. 53(2).
    2. Alexander Kuan Daiy & Kao-Yi Shen & Jim-Yuh Huang & Tom Meng-Yen Lin, 2021. "A Hybrid MCDM Model for Evaluating Open Banking Business Partners," Mathematics, MDPI, vol. 9(6), pages 1-19, March.
    3. Grégory Guéneau & Didier Chabaud & Marie-Christine Chalus Sauvannet, 2022. "Opening entrepreneurial ecosystem’s black box: the power of networks in African low-income countries," International Entrepreneurship and Management Journal, Springer, vol. 18(2), pages 753-772, June.
    4. Audretsch, David & Colombelli, Alessandra & Grilli, Luca & Minola, Tommaso & Rasmussen, Einar, 2020. "Innovative start-ups and policy initiatives," Research Policy, Elsevier, vol. 49(10).
    5. McCarthy, Killian J & Aalbers, Hendrik Leendert, 2022. "Alliance-to-acquisition transitions: The technological performance implications of acquiring one's alliance partners," Research Policy, Elsevier, vol. 51(6).
    6. Moon Young Kang, 2020. "Sustainable Profit versus Unsustainable Growth: Are Venture Capital Investments and Governmental Support Medicines or Poisons?," Sustainability, MDPI, vol. 12(18), pages 1-11, September.
    7. Kleinhempel, Johannes & Estrin, Saul, 2024. "Realizing expectations?," MPRA Paper 120863, University Library of Munich, Germany.
    8. Clayton, Paige, 2024. "Mentored without incubation: Start-up survival, funding, and the role of entrepreneurial support organization services," Research Policy, Elsevier, vol. 53(4).
    9. Yu Gao & Xiuyun Yang & Shuangyan Li, 2022. "Government Supports, Digital Capability, and Organizational Resilience Capacity during COVID-19: The Moderation Role of Organizational Unlearning," Sustainability, MDPI, vol. 14(15), pages 1-19, August.
    10. Kleinhempel, Johannes & Estrin, Saul, 2024. "Realizing expectations? High-impact entrepreneurship across countries," LSE Research Online Documents on Economics 122409, London School of Economics and Political Science, LSE Library.
    11. Chen, Jieyi & Zhou, Zhao, 2023. "The effects of FDI on innovative entrepreneurship: A regional-level study," Technological Forecasting and Social Change, Elsevier, vol. 186(PB).
    12. Jing‐Yue Liu & Yue‐Jun Zhang & Charles H. Cho, 2023. "Corporate environmental information disclosure and green innovation: The moderating effect of CEO visibility," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 3020-3042, November.
    13. Fanbo Li & Hongfeng Zhang, 2022. "How the “Absorption Processes” of Urban Innovation Contribute to Sustainable Development—A Fussy Set Qualitative Comparative Analysis Based on Seventy-Two Cities in China," Sustainability, MDPI, vol. 14(23), pages 1-22, November.
    14. Reddi Kotha & Balagopal (Bala) Vissa & Yimin Lin & Anne‐Valérie Corboz, 2023. "Do ambitious entrepreneurs benefit more from training?," Strategic Management Journal, Wiley Blackwell, vol. 44(2), pages 549-575, February.
    15. James J. Chrisman & Donald O. Neubaum & Friederike Welter & Karl Wennberg, 2022. "Knowledge Accumulation in Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 46(3), pages 479-496, May.

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