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Identifying Gazelles: Expert Panels vs. Surveys as a Means to Identify Firms with Rapid Growth Potential

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  • Fafchamps, Marcel
  • Woodruff, Christopher

Abstract

We conduct a business plan competition to test whether survey instruments or panel judges are able to identify the fastest growing firms. Participants submitted six- to eight-page business plans and defended them before a three- or four-judge panel. We surveyed applicants shortly after they applied, and one and two years after the competition. We use follow-up surveys to construct measures of enterprise growth potential. We find that a measure of ability correlates strongly with future growth, but that panel scores add to predictive power even after controlling for ability and other survey variables. The survey questions have more power to explain the variance in growth. Participants presenting before the panel were given a chance to win customized management training. Fourteen months after the training, we find no positive effect of the training on growth of the business.

Suggested Citation

  • Fafchamps, Marcel & Woodruff, Christopher, 2015. "Identifying Gazelles: Expert Panels vs. Surveys as a Means to Identify Firms with Rapid Growth Potential," CEPR Discussion Papers 10597, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10597
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    References listed on IDEAS

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    1. Luís M B Cabral & José Mata, 2003. "On the Evolution of the Firm Size Distribution: Facts and Theory," American Economic Review, American Economic Association, vol. 93(4), pages 1075-1090, September.
    2. David McKenzie & Christopher Woodruff, 2014. "What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World?," World Bank Research Observer, World Bank Group, vol. 29(1), pages 48-82.
    3. Steven J. Davis & John Haltiwanger & Ronald S. Jarmin & C.J. Krizan & Javier Miranda & Alfred Nucci & Kristin Sandusky, 2009. "Measuring the Dynamics of Young and Small Businesses: Integrating the Employer and Nonemployer Universes," NBER Chapters, in: Producer Dynamics: New Evidence from Micro Data, pages 329-366, National Bureau of Economic Research, Inc.
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    Cited by:

    1. González-Uribe, Juanita & Reyes, Santiago, 2021. "Identifying and boosting “Gazelles”: Evidence from business accelerators," Journal of Financial Economics, Elsevier, vol. 139(1), pages 260-287.
    2. McKenzie, David & Sansone, Dario, 2019. "Predicting entrepreneurial success is hard: Evidence from a business plan competition in Nigeria," Journal of Development Economics, Elsevier, vol. 141(C).
    3. David McKenzie & Christopher Woodruff, 2017. "Business Practices in Small Firms in Developing Countries," Management Science, INFORMS, vol. 63(9), pages 2967-2981, September.
    4. Dalton, Patricio & Rüschenpöhler, Julius & Zia, Bilal, 2018. "Aspirations of Small-scale Entrepreneurs : Evidence from Urban Retailers in Indonesia," Other publications TiSEM bc573b53-32a8-497b-a67d-d, Tilburg University, School of Economics and Management.
    5. Xinshen Diao & Josaphat Kweka & Margaret McMillan, 2016. "Economic Transformation in Africa from the Bottom Up: Evidence from Tanzania," NBER Working Papers 22889, National Bureau of Economic Research, Inc.
    6. Marcel Fafchamps & Simon Quinn, 2017. "Aspire," Journal of Development Studies, Taylor & Francis Journals, vol. 53(10), pages 1615-1633, October.
    7. Dalton,Patricio S. & Ruschenpohler,Julius & Zia,Bilal Husnain, 2018. "Determinants and dynamics of business aspirations : evidence from small-scale entrepreneurs in an emerging market," Policy Research Working Paper Series 8400, The World Bank.
    8. 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.
    9. Erin L. Scott & Pian Shu & Roman M. Lubynsky, 2020. "Entrepreneurial Uncertainty and Expert Evaluation: An Empirical Analysis," Management Science, INFORMS, vol. 66(3), pages 1278-1299, March.
    10. Olivier Sterck & Antonia Delius, 2020. "Cash Transfers and Micro-Enterprise Performance: Theory and Quasi-Experimental Evidence from Kenya," CSAE Working Paper Series 2020-09, Centre for the Study of African Economies, University of Oxford.
    11. Erin L. Scott & Pian Shu & Roman M. Lubynsky, 2015. "Are “Better” Ideas More Likely to Succeed? An Empirical Analysis of Startup Evaluation," Harvard Business School Working Papers 16-013, Harvard Business School.
    12. McKenzie, David J. & Sansone, Dario, 2017. "Man vs. Machine in Predicting Successful Entrepreneurs: Evidence from a Business Plan Competition in Nigeria," CEPR Discussion Papers 12523, C.E.P.R. Discussion Papers.
    13. Lall, Saurabh A. & Chen, Li-Wei & Roberts, Peter W., 2020. "Are we accelerating equity investment into impact-oriented ventures?," World Development, Elsevier, vol. 131(C).

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    More about this item

    Keywords

    business plan competitions; firm growth; high growth entrepreneurship;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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