There is a wide consensus that entrepreneurship plays a key role in economic growth and the structural transformation of nations. Start-ups and small businesses in particular have been a central focus of development policies and programmes in low-income countries due to their disproportionate roles at least in job intensity, poverty reduction, and industrial development. Recently, business plan competitions have been considered as a potential policy option to unlock the potential of growth-oriented enterprises through their financial and non-financial supports. However, empirical studies that disentangle the causal impact of these new forms of intervention are scant. This project examines the causal impact of entrepreneurship competition on start-ups’ business establishment and expansion.
The project will pool data from two similar business plan competitions called Bruh and EDC startups held in early 2021 by the Jobs Creation Commission and Entrepreneurship Development Center of Ethiopia. Administrative records provide information on some key variable for each business’, their plan of, the scores given by judges for each business plan, the cut-off points of the scores used to select winners in each round, and the interventions each contestant received if successful. A follow-up survey is conducted to obtain key outcome variables. By exploiting the scores given by judges and the exogenous cut off points, a regression discontinuity design is used to analyse how winning the prize money and various non-monetary interventions impact business outcomes, combined and separately. In addition, a qualitative survey will be conducted to complement findings from the quantitative data and understand the mechanisms behind the success or failure of the programme.
Governments and development organisations make substantial investments every year into the development of small businesses with the aim of catalysing local industrialisation. The Bruh and EDC start-up programmes are flagship policies in Ethiopia, however, little is known about their impact. This project will deepen understanding of the effectiveness of business plan competitions in nurturing entrepreneurship in low-income countries, a policy which is of interest far beyond Ethiopia. With little causal evidence on these programmes, this project makes a clear contribution to the literature and further pushes the frontier by examining an innovative delivery mechanism of entrepreneurship training, a bootcamp that combines competition with incubation and training in order to win financial support.