Identifying and Spurring High-Growth Entrepreneurship: Experimental Evidence from a Business Plan Competition

By David J. McKenzie. 2015

294 citations recorded by the source corpus.

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.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/4766c9d8f5909cc46abdbdef1a2b50c2dc7882a1

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Citations in the corpus

Dodging the Taxman: Firm Misreporting and Limits to Tax Enforcement (2017, unknown): “This form of enforcement is often considered the primary mechanism by which modern governments are able to collect taxes (Long and Swingden 1990, Slemrod 2008, Kleven et al. 2011, and Gillitzer and Skov 2013). Since the notifications refer to previously filed returns, all responses reflect changes i”
The effects of cash transfers on adult labor market outcomes (2018, background): “…getting individuals to start firms, or to invest in growing their firms to earn higher profits and increase survival.15 Fafchamps et al. (2014) and McKenzie (2017b) note that an unconditional grant given to a firm owner facing no liquidity constraints would be predicted to have no effect on these…”
Entrepreneurship and Financial Frictions: A Macrodevelopment Perspective (2015, unknown): “Recent experimental work by McKenzie (2014) examines the impact of large grants given to entrepreneurs in Nigeria.”
THE SHORT-TERM IMPACT OF UNCONDITIONAL CASH TRANSFERS TO THE POOR: EXPERIMENTAL EVIDENCE FROM KENYA (2016, unknown): “Following McKenzie (2012), we condition on the baseline level of the outcome variable when available, yvhiB, to improve statistical power.”
Elasticities and the Inverse Hyperbolic Sine Transformation (2019, unknown): “2 For examples of the arcsinh transformation in practice, see Bahar and Rapoport (2018), Clemens and Tiongson (2017), Jayachandran et al. (2017), McKenzie (2017), or Muehlenbachs, Staubli and Chu (2017).”