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

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  • David McKenzie

Abstract

Almost all firms in developing countries have fewer than ten workers, with a modal size of one. Are there potential high-growth entrepreneurs, and can public policy help identify them and facilitate their growth? A large-scale national business plan competition in Nigeria provides evidence on these questions. Random assignment of US$34 million in grants provided each winner with approximately US$50,000. Surveys tracking applicants over five years show that winning leads to greater firm entry, more survival, higher profits and sales, and higher employment, including increases of over 20 percentage points in the likelihood of a firm having ten or more workers.

Suggested Citation

  • David McKenzie, 2017. "Identifying and Spurring High-Growth Entrepreneurship: Experimental Evidence from a Business Plan Competition," American Economic Review, American Economic Association, vol. 107(8), pages 2278-2307, August.
  • Handle: RePEc:aea:aecrev:v:107:y:2017:i:8:p:2278-2307
    Note: DOI: 10.1257/aer.20151404
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Geoffrey Barrows, 2018. "Do Entrepreneurship Policies Work? Evidence From 460 Start-Up Program Competitions Across the Globe," Working Papers 2018.02, FAERE - French Association of Environmental and Resource Economists.
    2. Jing Cai & Adam Szeidl, 2016. "Interfirm Relationships and Business Performance," Natural Field Experiments 00562, The Field Experiments Website.
    3. Thomas Farole & Yoonyoung Cho, 2017. "Bangladesh Jobs Diagnostic," World Bank Other Operational Studies 28498, The World Bank.
    4. David McKenzie & Christopher Woodruff, 2015. "Business Practices in Small Firms in Developing Countries," NBER Working Papers 21505, National Bureau of Economic Research, Inc.
    5. Francesco Amodio & Jieun Choi & Giacomo de Giorgi & Aminur Rahman, 2018. "Bribes vs. Taxes: Market Structure and Incentives," Working Papers id:12919, eSocialSciences.
    6. Andrabi, Tahir & Das, Jishnu & Khwaja, Asim Ijaz & Ozyurt, Selcuk & Singh, Niharika, 2018. "Upping the Ante: The Equilibrium Effects of Unconditional Grants to Private Schools," Working Paper Series rwp18-019, Harvard University, John F. Kennedy School of Government.
    7. Chaurey, Ritam & Le, Duong Trung, 2018. "Infrastructure Grants and the Performance of Microenterprises," IZA Discussion Papers 11749, Institute for the Study of Labor (IZA).
    8. repec:eee:wdevel:v:109:y:2018:i:c:p:511-522 is not listed on IDEAS
    9. Pierrick Baraton & Florian Léon, 2016. "Financial Constraint, Entrepreneurship and Sectoral Migrations ," CREA Discussion Paper Series 16-09, Center for Research in Economic Analysis, University of Luxembourg.
    10. repec:eee:wdevel:v:105:y:2018:i:c:p:400-415 is not listed on IDEAS

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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