Assessing the Impact on Entrepreneurial Outcomes of Publicly Funded Business Advisory Services

Abstract:     
Given the mixed evidence for the impact of various publicly funded initiatives that aim to foster entrepreneurial activity, this paper empirically examines the efficacy of publicly funded business advisory services in relation to entrepreneurial outcomes. Based on a sample of 228 early-stage firms, of which 101 used business advisory services focused on helping companies secure 1st rounds of financing and start generating revenues, we examine the firm-level impact such services can have on sales growth, innovation, finance and alliances. We find services are positively associated with firms’ sales growth, patents, finance and alliances. We assess statistical and economic significance, and assess robustness to controls for the non-randomness of the firm’s matching with the business advisory service program, as well as endogeneity of advisors’ hours spent with firms, among other robustness checks. We find significant robustness of hours spent on sales and finance, but sensitivity of the effect of hours on patents and alliances after controlling for endogeneity.

Number of Pages in PDF File: 34

Keywords: Entrepreneurship, Business Advisory Services, Alliances, Angel Equity Finance, Patents, Public Policy

JEL Classification: L26, L50, M13, O3, G24

working papers series