Science to perfect the art: Experimental evidence gaps in entrepreneurship and business support

By Sara Garcia Arteagoitia and Anna Segura on Tuesday, 31 May 2022.

Policymakers want to effectively support entrepreneurs and business owners. They aspire to invest the available resources in programmes that will best foster entrepreneurship and help businesses prosper and grow. So they continuously grapple with questions about what works regarding programme design, content, distribution channels, and target groups.

But experimental evidence to guide these choices is not always available. Policymakers often rely on their own experiences, on peer learning, and on descriptive and qualitative evidence that helps them understand the challenges but does not ultimately answer the question about the effectiveness of their programmes. 

We want to help, so we are charting a clear course: highlighting what we know about what works through our evidence portal and detailing what research we are still missing to guide effective programme design. We have written on how to extend our knowledge on the margins of Entrepreneurship Education, Business Consulting, and Business Training, and are here focusing on policy-relevant areas lacking a body of experimental evidence. We want policymakers to have a clear and full picture of the things they should care about when designing and implementing entrepreneurship and business support schemes – and academics to have new research avenues based on what policymakers are demanding.

IGL Evidence Bites: A space for policymakers seeking to improve their entrepreneurship and business support programmes

In an effort to help increase the effectiveness of entrepreneurship and business support programmes, we have developed Evidence Bites, funded by the Ewing Marion Kauffman Foundation. The portal contains a series of evidence summaries that make it easier for policymakers and business support providers to access and act on the most rigorous evidence on how to effectively support entrepreneurs and businesses. 

The evidence summaries are organised using what we have named bitesize questions: specific questions that our work with stakeholders shows policymakers face when designing and rethinking support schemes. Along with the summaries, the portal includes actionable insights to take into account in the form of ‘Ideas worth trying’ and ‘Things to avoid’.

The Evidence Bites portal offers concrete recommendations on Entrepreneurship Education, Business Consulting, and Business Training. It provides an overview of what we know regarding design elements such as the inclusion of role models, the role of diversity in training, or the type of skills that are most effective at each developmental stage. It also summarises the experimental research regarding subsidising consulting, encouraging sign-ups to consulting services, and the relationship between consulting and target group sizes. And it compiles the evidence regarding skills policymakers should focus on in training programmes: decision-making, production management, interpersonal skills, and an entrepreneurial mindset. 

Evidence deserts: What are the most pressing research questions in entrepreneurship and business support?

Through our engagements with global stakeholders, we have identified a series of topics and questions that policymakers are especially interested in, but where research is insufficient. The experimental evidence is scarce or nonexistent and the available research is not solid enough to make recommendations about programme design. These open questions encompass exciting and often underexplored research agendas well positioned to both expand the frontier of knowledge and produce policy-relevant research. 

  • Recruitment and programme completion 

The existing research on recruitment focuses on tweaking programmes to make their publicity more salient, the sign-up easier, and encourage programme completion through nudges. The metrics of success are typically the number of people who register and complete the programmes.

But policymakers also care about how these tweaks are helping them reach the right people. They want to reach those businesses that would profit most from the programme, whose productivity has the most room to improve and those who might fail without timely support – but might thrive with the right skills. They want to reach those people who are normally left out – because they do not have the time or financial resources to access programmes or are disconnected from support networks (e.g. rural businesses). 

Therefore, the research needed in this space has to look into the ways in which tweaks to recruitment processes and programme design, changes the population that is being reached. Changes in language, ease of access, distribution channels and subsidies need to be rigorously examined for their effects on recruitment and retention of specific target populations. 

  • Equity, diversity and inclusion 

Policymakers want to reach a diverse pool of entrepreneurs and business owners, in terms of race, ethnicity and gender, among others. Women and minoritised business leaders face specific barriers to access the resources that would help their businesses and enterprises thrive.

But these barriers to participation in entrepreneurship and business support programmes are still poorly understood. Representation matters, as does tailoring the programmes to the specific needs of a group. Yet entrepreneurs often sit at the intersection of multiple barriers, so what works for one group cannot necessarily be expected to work well for another.

Without a good understanding of the barriers women and minorities face it is difficult for programmes to recruit effectively, retain successfully, and be transformative for their audiences. More research should focus on understanding the specific barriers faced by diverse audiences, and evaluations should be designed to capture heterogeneous effects.

  • Business incubation

Despite the proliferation in business incubators, evidence on how they work best is limited. Supporting nascent businesses through these programmes has become a policy priority over the last decade and numerous forms of support have emerged, with many design choices to be made in each arrangement.

The existing research supports the positive effect of business incubators and accelerators for start-ups. Participation appears to be positively correlated with higher survival rates, growth in employee numbers, and funds raised. But the selection bias inherent to only including the best start-ups in these programmes makes it difficult to assess the effect of the incubator on the business’ success.

Furthermore, the current evidence is not specific enough to make concrete design recommendations as to what types of support should be provided, for how long, and conditional (or not) on what outputs. Experimental approaches could help better estimate the effect of these programmes as well as help policymakers understand how different tweaks affect different dimensions of start-up success. 

I am a researcher/practitioner working on these topics and I am interested in testing new ideas and contributing to building rigorous evidence on how to make business support more impactful. What should I do?

Get in touch! Our work at IGL is focused on building bridges between policymakers and research(ers). We help develop new ideas, test them, and amplify existing evidence.
So, contact us if you are:

(1) Working on projects related to these topics and would like to share your work with the right policymakers, or 

(2) Would like to explore the viability of ideas you are considering, or 

(3) Would like to collaborate on making them happen.

We can support you! Send us an email and we’ll continue from there!