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Why some nascent entrepreneurs do not seek professional assistance

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  • U. Brixy
  • R. Sternberg
  • H. Stüber

Abstract

As the high share of failed new businesses shows, the marked success of new firms is still rather low. Hence, enhancing the quality of new firms is an important goal of entrepreneurship support policies. Schemes that give professional assistance to individuals who want to start up a business are a key feature of most developed countries' policies towards improving the performance of new firms. In our sample, only approximately half of nascent entrepreneurs seek professional assistance. Given that assistance is highly subsidized and available to everyone interested in starting up a firm, we ask why certain nascent entrepreneurs do not seek assistance. By using survey data consisting of an initial screening interview and a follow-up interview after 1 year, we are able to show that men and well-educated founders tend to refrain from professional assistance. Notably, those without any experience in the industry of the planned business are more apt not to seek assistance. This finding suggests that cognitive biases such as overconfidence might play a role in explaining the assistance-avoiding behaviour. Policy measures aiming at improving the knowledge of potential entrepreneurs are therefore well advised to target well-educated males in particular.

Suggested Citation

  • U. Brixy & R. Sternberg & H. Stüber, 2013. "Why some nascent entrepreneurs do not seek professional assistance," Applied Economics Letters, Taylor & Francis Journals, vol. 20(2), pages 157-161, February.
    • Handle: RePEc:taf:apeclt:v:20:y:2013:i:2:p:157-161
    DOI: 10.1080/13504851.2012.684783
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    References listed on IDEAS

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    1. Scott Shane, 2009. "Why encouraging more people to become entrepreneurs is bad public policy," Small Business Economics, Springer, vol. 33(2), pages 141-149, August.
    2. Marco Gelderen & Roy Thurik & Niels Bosma, 2006. "Success and Risk Factors in the Pre-Startup Phase," Small Business Economics, Springer, vol. 26(4), pages 319-335, May.
    3. Forbes, Daniel P., 2005. "Are some entrepreneurs more overconfident than others?," Journal of Business Venturing, Elsevier, vol. 20(5), pages 623-640, September.
    4. Busenitz, Lowell W. & Barney, Jay B., 1997. "Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision-making," Journal of Business Venturing, Elsevier, vol. 12(1), pages 9-30, January.
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    Cited by:

    1. van Weele, Marijn & van Rijnsoever, Frank J. & Nauta, Frans, 2017. "You can't always get what you want: How entrepreneur's perceived resource needs affect the incubator's assertiveness," Technovation, Elsevier, vol. 59(C), pages 18-33.
    2. Martin G.A. Svensson, 2015. "When being wrong might be right: on overconfidence as an evolutionary mechanism of nascent entrepreneurs," Chapters, in: Charlie Karlsson & Urban Gråsjö & Sofia Wixe (ed.), Innovation and Entrepreneurship in the Global Economy, chapter 10, pages 237-258, Edward Elgar Publishing.
    3. Amezcua, Alejandro & Ratinho, Tiago & Plummer, Lawrence A. & Jayamohan, Parvathi, 2020. "Organizational sponsorship and the economics of place: How regional urbanization and localization shape incubator outcomes," Journal of Business Venturing, Elsevier, vol. 35(4).
    4. Mingfeng Tang & Hao Huang & Grace Walsh & Maribel Guerrero, 2023. "The impact of entrepreneurial overconfidence on incubator effectiveness," The Journal of Technology Transfer, Springer, vol. 48(1), pages 416-440, February.
    5. Buffart, Mickaël & Croidieu, Grégoire & Kim, Phillip H. & Bowman, Ray, 2020. "Even winners need to learn: How government entrepreneurship programs can support innovative ventures," Research Policy, Elsevier, vol. 49(10).
    6. Sternberg Rolf & Bloh Johannes von & Coduras Alicia, 2019. "A new framework to measure entrepreneurial ecosystems at the regional level," ZFW – Advances in Economic Geography, De Gruyter, vol. 63(2-4), pages 103-117, November.
    7. Bob Bastian & Antonella Zucchella, 2022. "Entrepreneurial metacognition: a study on nascent entrepreneurs," International Entrepreneurship and Management Journal, Springer, vol. 18(4), pages 1775-1805, December.

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