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Formal and informal support and the performance of new start-ups: a quantile regression analysis

Author

Listed:
  • Tomohiro Sakai

    (Northeastern University at Qinhuangdao)

  • Mototsugu Fukushige

    (Osaka University)

Abstract

Using survey data from the Japan Finance Corporation, we investigate whether formal or informal support contributes to the performance of new start-up enterprises. We apply ordinary least squares (OLS) and quantile regression to explain the achievement rate of monthly sales. The results of the OLS estimation suggest that formal support has negative effects on the achievement rate, whereas informal support has positive effects. From the results of the quantile regression analysis, the estimated coefficients by quantiles indicate that high-performing enterprises are not affected significantly by formal and informal supports in positive or negative directions, whereas low-performing enterprises are affected strongly in positive or negative directions. These results imply that encouraging the start-ups through formal/informal supports has negative/positive effects on achieving their expected performance. Although it is difficult to predict whether entrepreneurs will perform well before they start an enterprise, informal support has little effect on high-performing enterprises.

Suggested Citation

  • Tomohiro Sakai & Mototsugu Fukushige, 2021. "Formal and informal support and the performance of new start-ups: a quantile regression analysis," SN Business & Economics, Springer, vol. 1(9), pages 1-21, September.
    • Handle: RePEc:spr:snbeco:v:1:y:2021:i:9:d:10.1007_s43546-021-00117-x
    DOI: 10.1007/s43546-021-00117-x
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Start-up enterprises; Formal support; Informal support; Quantile regression;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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