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Can government intervention make firms more investment-ready ? a randomized experiment in the Western Balkans

Author

Listed:
  • Cusolito,Ana Paula
  • Dautovic,Ernest
  • Mckenzie,David J.

Abstract

Many innovative start-ups and small and medium-size enterprises have good ideas, but do not have these ideas fine-tuned to the stage where they can attract outside funding. Investment readiness programs attempt to help firms to become ready to attract and accept outside equity funding through a combination of training, mentoring, master classes, and networking. This study conducted a five-country randomized experiment in the Western Balkans that worked with 346 firms and delivered an investment readiness program to half of the firms, with the control group receiving an inexpensive online program instead. A pitch event was then held for these firms to pitch their ideas to independent judges. The investment readiness program resulted in a 0.3 standard deviation increase in the investment readiness score, with this increase occurring throughout the distribution. Two follow-up surveys show that the judges'scores predicted investment readiness and investment outcomes over the subsequent two years. Treated firms attained significantly more media attention and were 5 percentage points more likely to have made a deal with an outside investor, although this increase is not statistically significant (95 confidence interval of -4.7 to +14.7 percentage points).

Suggested Citation

  • Cusolito,Ana Paula & Dautovic,Ernest & Mckenzie,David J., 2018. "Can government intervention make firms more investment-ready ? a randomized experiment in the Western Balkans," Policy Research Working Paper Series 8541, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8541
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    Citations

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    Cited by:

    1. Diego Javier Ubfal, 2023. "What Works in Supporting Women-led Businesses?," World Bank Publications - Reports 38564, The World Bank Group.
    2. Cusolito, Ana P. & Darova, Ornella & McKenzie, David, 2023. "Capacity building as a route to export market expansion: A six-country experiment in the Western Balkans," Journal of International Economics, Elsevier, vol. 144(C).
    3. Cheng, Bo & Guo, Zhuming & Xiong, Ting & Qiu, Baoyin, 2023. "Does the administrative approval reform impact firm's investment decisions?," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 1052-1067.
    4. Alexakis, Christos & Gogas, Periklis & Petrella, Giovanni & Polemis, Michael & Salvadè, Federica, 2025. "Investigating the investment readiness of European SMEs: A machine learning approach," International Review of Financial Analysis, Elsevier, vol. 105(C).
    5. Periklis Gogas & Theophilos Papadimitriou & Panagiotis Goumenidis & Andreas Kontos & Nikolaos Giannakis, 2025. "Identification of Investment-Ready SMEs: A Machine Learning Framework to Enhance Equity Access and Economic Growth," Forecasting, MDPI, vol. 7(3), pages 1-36, September.
    6. Lafortune, Jeanne & Pugatch, Todd & Tessada, José & Ubfal, Diego, 2022. "Can interactive online training make high school students more entrepreneurial? Experimental evidence from Rwanda," GLO Discussion Paper Series 1041, Global Labor Organization (GLO).
    7. repec:wbk:wbrwps:10256 is not listed on IDEAS
    8. Lafortune, Jeanne & Pugatch, Todd & Tessada, José & Ubfal, Diego, 2024. "Can gamified online training make high school students more entrepreneurial? Experimental evidence from Rwanda," Economics of Education Review, Elsevier, vol. 101(C).
    9. Maran, Raluca, 2022. "Improving MSMEs’ access to start-up financing in ASEAN countries," MPRA Paper 114501, University Library of Munich, Germany.
    10. Gonzalez-Uribe, Juanita & Hmaddi, Ouafaa, 2022. "The multi-dimensional impacts of business accelerators: what does the research tell us?," LSE Research Online Documents on Economics 115461, London School of Economics and Political Science, LSE Library.

    More about this item

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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