We study gender and race in high-impact entrepreneurship within a tightly controlled random field experiment. We sent out 80,000 pitch emails introducing promising but fictitious start-ups to 28,000 venture capitalists and business angels. Each email was sent by a fictitious entrepreneur with a randomly selected gender (male or female) and race (Asian or White). Female entrepreneurs received an 8% higher rate of interested replies than male entrepreneurs pitching identical projects. Asian entrepreneurs received a 6% higher rate than White entrepreneurs.
IGL Trials Database
IGL curates a database with randomised controlled trials in the field of innovation, entrepreneurship and growth. Browse our list of topics, see it as a map, or use the search function below.
A field experiment in Sri Lanka provided wage subsidies to randomly chosen microenterprises to test whether hiring additional labor benefits such firms, and whether a short-term subsidy can have a lasting impact on firm employment. Using 12 rounds of surveys to track dynamics four years after treatment, we find that firms increased employment during the subsidy period. Treated firms were more likely to survive, but there was no lasting impact on employment, and no effect on profitability or sales either during or after the subsidy period.
We explore how variation in entrepreneurs' displayed passion affects informal investor interest in start-up ventures by examining neural responses to entrepreneurs' pitches using functional Magnetic Resonance Imaging (fMRI). We find that founders displaying high passion increase investor neural engagement by 39% and investor interest in the venture by 26% over those displaying low passion. A one standard deviation increase in neural engagement is associated with an 8% percent increase in investors' interest in investing in a start-up company relative to the mean.
User entrepreneurs are responsible for the most important innovations in many industries, but little research has explored the performance of firms founded by user entrepreneurs. While user entrepreneurs have a deep knowledge of customer needs that facilitates the identification of innovative solutions, they tend to lack the relevant business knowledge (e.g., market, production, operational and organizational) to successfully exploit opportunities and grow their ventures.
While prior research shows a significant gender gap in traditional equity financing, with mostly male investors who prefer male founders, emerging evidence indicates that gender gaps in funding may not translate to rewards-based crowdfunding, where female entrepreneurs may have an advantage, particularly with female investors. We seek to examine founder gender preferences in the context of equity crowdfunding, which represents a direct counterpart to traditional equity financing and which is a “higher-stakes” context than rewards-based crowdfunding.
In this paper, meager jointly estimates the average effect and the heterogeneity in effects across seven studies using Bayesian hierarchical models.
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.
Accredited investors finance more than 75,000 U.S. startups annually. We explain how training aspiring entrepreneurs to pitch their new business ideas to these investors affects their odds of continued funding discussions. We model accredited investors’ decision to continue investigation as a real option whose value is a function of their experience and the information contained in the entrepreneurs’ pitches. We derive four hypotheses from the model, which we test through a field experiment that randomly assigns pitch training at four elevator pitch competitions.
Using a randomized control trial, we evaluated the effect of a financial literacy program on the level of debt and on formal access to credit in Chile. We use a sample of beneficiaries of a publicly run micro-entrepreneurship program. We evaluated the program using administrative data with information on the debt level, interest rates, and new loans provided by the formal sector. The program tends to decreased debt level in the short run while increasing the probability of having formal debt.
This study presents results from a randomized evaluation of two labor market interventions targeted to young women aged 18 to 19 years in three of Nairobi's poorest neighborhoods. One treatment offered participants a bundled intervention designed to simultaneously relieve credit and human capital constraints; a second treatment provided women with an unrestricted cash grant, but no training or other support.
Can improved access to credit jump-start microenterprise growth? We examine subjects in urban Hyderabad, India, six years after microfinance–an intervention commonly believed to lower the cost of credit and spark business creation–was randomly introduced to a subset of neighborhoods. We find large benefits both in business scale and performance from giving “gung-ho entrepreneurs” (GEs)–those who started a business before microfinance entered–more access to microfinance. Notably, these effects persist two years after microfinance was withdrawn from Hyderabad.
It is well-established that the effectiveness of pay-for-performance (PfP) schemes depends on employee- and organization-specific factors. However, less is known about the role of external forces. Investigating the role of market competition on the effectiveness of PfP, we theorize that there are two counteracting effects – business stealing and competitor response – that jointly generate an inverted U-shape relationship between PfP effectiveness and competition.
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.
In the context of rug-making in Egypt, the opportunity to export provides evidence that learning-by-exporting occurs, and can lead to production quality and cost improvements.
I use a field experiment in rural Kenya to study how temporary incentives to save impact long run economic outcomes. Study participants randomly selected to receive large temporary interest rates on an individual bank account had significantly more income and assets 2.5 years after the interest rates expired. These changes are much larger than the short-run impacts on experimental bank account use and almost entirely driven by growth in entrepreneurship.
While small and medium enterprises (SMEs) represent a large segment of activity and employment, there has been little research on how their growth is affected by financial constraints. Indeed, because the credit needs of SMEs are too big for microfinance products, but that they lack the collateral to borrow from the traditional banking sector, SMEs are in some way the “missing middle” of credit constraint research. This project addresses this evidence gap by evaluating the impact of a new loan product, designed specifically for SMEs, on firm growth and other market outcomes.
In this meta-analysis what particularly stands out is the effect of microcredit on female empowerment. With respect to entrepreneurship and economic development outcomes, microcredit appears to have the most value in deprived contexts, but overall, results are highly dependent on context.
Firms may face short term barriers when deciding to become exporters. Their production costs may be too high to compete with international prices, or they may perceive quality standard testing to be too risky of an investment. At the same time, the Tunisian government is keen to see more firms become exporters, tapping into international markets for further growth. The government wishes to see its firms produce higher value-added goods.
This on-going project explores how much market protection patents provide. This is being tested in a randomized control trial, where a partner company is abandoning or maintaining patent protection based on whether that patent is in the treatment or control group. We are then analyzing market outcomes for the related products.
Many innovative start-ups and SMEs 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 more ready to attract and accept outside equity funding through a combination of training, mentoring, master classes, and networking.
Crowdfunding is a recent and rapidly growing method of raising funds for early-stage companies. It minimises the cost and effort involved in raising start-up funds compared to traditional equity funding methods such as venture capital investment. Very little systematic, non-survey research has been conducted into these methods of funding new ventures, however. ‘The wisdom of crowds in equity crowdfunding’ aims to fill this gap.
A loan programme for SMEs in the Philippines. Results forthcoming.
This RCT will pilot Self-Accelerated Startups (SAS), a new peer-selection based entrepreneurship support model for idea-stage companies and student startups that uses collective bootstrapping on the lines of self-help groups in the social sector. In this model, prospective entrepreneurs meet regularly in groups for a pre-defined mentorship period and make small monthly contributions to a “seed fund”. At the end of this phase, the self-mobilized corpus is awarded as startup capital to one or two members by the rest of the peer group in return for equity in these startups.
In the context of SME's in Colombia, researchers are evaluating the impact on firm performance of a legal reform which will provide a framework for the use and enforcement of movable collateral. Results forthcoming.
Microentrepreneurs in developing countries face complex financial management challenges. Many entrepreneurs do not have the financial skills to address these challenges and traditional classroom-based financial training has not been shown effective in changing behavior or improving financial outcomes. What is the most effective way to equip microentrepreneurs with the necessary skills to address their financial management challenges? Traditional financial education curricula have shown very mixed results for improving knowledge and financial practices among microentrepreneurs.
By randomising the information sent to potential investors on AngelList over e-mail, this experiment finds evidence that the founding team of a startup has strong influence over the investor's decision to invest.
The Good Exporting Practices program in Argentina aims to increase the success in the foreign markets of small and medium enterprises (SMEs) through supporting better practices in 7 core areas: i) strategy, ii) identification and segmentation of markets, iii) design and adaptation of the product, iv) production, v) communication, vi) distribution, and vii) administration. The Good Exporting Practices program targets firms that produce differentiated food products in various geographical regions in Argentina.
The income flows of micro and small business owners in developing countries are usually quite irregular and hard to predict. Microloans by microfinance institutions (MFIs) from around the developing world generally follow very rigid repayment schedules beginning immediately after the loan disbursement. Such repayment structures are unfit to support investments in technology or other solutions to expand the business, as these generally take longer to pay off.
Micro-entrepreneurs often lack the financial literacy required to make important financial decisions. We conducted a randomized evaluation with a bank in the Dominican Republic to compare the impact of two distinct programs: standard accounting training versus a simplified, rule-of-thumb training that taught basic financial heuristics. The rule-of-thumb training significantly improved firms' financial practices, objective reporting quality, and revenues.
This trial focuses on micro-enterprises in Kenya which have low productivity, surveying firms weekly about lost sales.