Identifying and Spurring High-Growth Entrepreneurship : Experimental Evidence from a Business Plan Competition
Almost all firms in developing countries have fewer than 10 workers, with the modal firm consisting of just the owner. Are there potential high-growth entrepreneurs with the ability to grow their firms beyond this size? And, if so, can public polic...
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2015/08/24899889/identifying-spurring-high-growth-entrepreneurship-experimental-evidence-business-plan-competition http://hdl.handle.net/10986/22437 |
| Summary: | Almost all firms in developing countries
have fewer than 10 workers, with the modal firm consisting
of just the owner. Are there potential high-growth
entrepreneurs with the ability to grow their firms beyond
this size? And, if so, can public policy help alleviate the
constraints that prevent these entrepreneurs from doing so?
A large-scale national business plan competition in Nigeria
is used to help provide evidence on these two questions. The
competition was launched with much fanfare, and attracted
almost 24,000 entrants. Random assignment was used to select
some of the winners from a pool of semi-finalists, with
US$36 million in randomly allocated grant funding providing
each winner with an average of almost US$50,000. Surveys
tracking applicants over three years show that winning the
business plan competition leads to greater firm entry,
higher survival of existing businesses, higher profits and
sales, and higher employment, including increases of over 20
percentage points in the likelihood of a firm having 10 or
more workers. These effects appear to occur largely through
the grants enabling firms to purchase more capital and hire
more labor. |
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