Impact of start-up support through guided preparation
| Published date | 14 April 2014 |
| DOI | https://doi.org/10.1108/JEPP-01-2012-0004 |
| Date | 14 April 2014 |
| Pages | 72-95 |
| Author | Juita-Elena (Wie) Yusuf |
| Subject Matter | Strategy,Entrepreneurship,Business climate/policy |
Impact of start-up support
through guided preparation
Juita-Elena (Wie) Yusuf
Department of Urban Studies and Public Administration,
Old Dominion University, Norfollk, Virginia, USA
Abstract
Purpose – The purpose of this paper is to examine if and how entrepreneurial assistance programs,
through guided preparation, affect start-up success.
Design/methodology/approach –This study uses Heckman’s two-stage sample selection model
to predict the effect of contact and interactions with entrepreneurial support programs on start-up
outcomes while taking into account the entrepreneur’s self-selection into obtaining support from
these programs.
Findings – The results indicate that, after controlling for individual characteristics, activities
undertaken during the start-up process, organizational characteristics and external factors, guided
preparation contributes to a greater likelihood of achieving positive start-up outcome. This finding
holds even after controlling for the entrepreneur’s self-selection into contacting and using outside
assistance.
Research limitations/implications – Results suggest that self-selection bias remains a concern
when studying the impact of assistance programs on start-up outcomes. Future research should make
sure to address self-selection in their analysis.
Practical implications – The study’s results haveimplications fo r the design of start-up programs.
It highlights the importance of delivery str uctures that are fluid, flexible, interactive, experiential, and
tailored to the individual entrepreneur’s needs.
Originality/value – This study focusses on assistance programs broadly defined (includes many
different types of programs) and provides an empirical analysis that addresses self-selection.
Keywords Resources, Business development, Learning, Planning, Start-ups, New ventures
Paper type Research paper
Introduction
This study focusses on nascent entrepreneurs, their contact with and use of
entrepreneurial assistance programs during the start-up process, and the outcomes of
this process. The objective isto determine if and how assistance programs impact start-
up outcomes, by focussing on what Chrisman and McMullan (2000) term “guided
preparation,”which is the combination of planning activitiesthe entrepreneur engagesin
during the start-up process and the entrepreneur’s contact with the outside assistance
program. Building on the theory of outsider assistance as a knowledge resource
(Chrisman et al., 2005; Chrisman and McMullan, 2000), this study hypothesizes that
guided preparation positively affects start-up outcomes.
Aldrich (1999) notes that “the founding process appears complex, c haotic and
compressed in time” (p. 75) and its outcomes highly uncertain, with many organizing
attempts failing and many opportunities remaining unrealized. Nascent entrepreneurs
are especially vulnerable during the start-up or gestati on phase of the entrepreneurial
process, as many fail to navigate the obstacles and challenges of the process and are
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/2045-2101.htm
Received 12 January 2012
Revised 1 August 2012
Accepted 1 August 2012
Journal of Entrepreneurship and
Public Policy
Vol. 3 No. 1, 2014
pp. 72-95
rEmeraldGroup PublishingLimited
2045-2101
DOI 10.1108/JEPP-01-2012-0004
This research was funded in part by the Ewing Marion Kauffman Foundation. The contents of
this publication are solely the responsibility of the author.
72
JEPP
3,1
unable to achieve successful outcomes. Considerable amounts of public resources are
spent on efforts to assist and support entrepreneurs, esp ecially during the start-up
phase (Yusuf, 2010a). Government intervention at the start-up stage is argued to reduce
the known high failure rates of start-up efforts (Deakins et al., 2000). Policymakers at
many levels of government have created support or assistance programs to help
entrepreneurs overcome these obstacles and challenges. Subsidized or partly subsidized
programs are the most common approaches to support new and emerging businesses.
There have been many studies that examine the impact of assistance programs on
entrepreneurial outcomes, with disparate findings. The purpose of this study is to
obtain a more definitive answer to the question of the impact of assistance programs,
specifically to determine if contact with and use of such programs result in more
positive start-up outcomes. This evaluation of the impact of assistance programs is an
important contribution to the practice of and research on entrepreneursh ip policy.
Three aspects of this evaluation make this study stand out from other assessments
of support programs. First, it examines one sp ecific facet of the entrepreneur-
assistance program interaction by focussing on guided preparation as the mechanism
through which assistance programs support the entrepreneur. Second, the evaluation
methodology is more rigorous than most other studies that have been conducted and
addresses concerns raised in the literature regarding sampling and selection. Because
entrepreneurs choose whether to use assistance program s, self-selection issues are
important in assessing the impact of assistance prog rams. However, while there
have been many studies of the effectiveness or impact of entrepreneurial assistance
programs (see e.g. Chrisman et al., 2005; Chrisman and McMullan, 2000; Nahavandi
and Chesteen, 1988), very few evaluations explicitly account for selection.
An important contribution of this study, beyond answering the basic question of the
impact of assistance programs, is that it provides an answer that is free from selection
bias. In addition, this study uses a sample of entrepreneurs who are concurrently in the
process of starting a business and reflects all start-up attempts, not just those that
succeed. This feature of the sample allows for analysis of start-up success and failure
simultaneously, which overcomes issues of survivorship bias. Third, in contrast to
other studies that focus exclusively on specifi c assistance programs, this study covers
the wide spectrum of assistance programs available to entrepreneurs in the USA,
including those offered by government agencies, universities, non-profit organizations,
and private firms. This more inclusive approac h allows for a comprehensive
understanding of assistance programs, broadly defined, rather than narrowly focussed
on individual programs.
This paper begins with a brief review of the literature on the effectiveness of outside
assistance programs and their impact on entrepreneurial outcome s, including a
discussion of methodological concerns. This is followed by a discussion of the theory of
outside assistance as a knowledge resource as the conceptual framework underpinning
the research. The research methodology is discussed including the research framework,
sample, variables, and method to address self-selection bias. The empirical results and
findings are reviewed and the paper wraps up with a discussion of the conc lusions
and research and policy implications.
Outside assistance programs and their impact on entrepreneurial
outcomes: a review of the literature
Many types of entrepreneurial support organizations are available to help entrepreneurs
address the challenges that arise during the start-up process. However, the effectiveness
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Impact of start-
up support
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