Can Government Intervention Make Firms More Investment-Ready? A Randomized Experiment in the Western Balkans

95 Pages Posted: 20 Apr 2020

See all articles by Ana Paula Cusolito

Ana Paula Cusolito

affiliation not provided to SSRN

Ernest Dautović

European Central Bank (ECB)

David J. McKenzie

World Bank - Development Research Group (DECRG); IZA Institute of Labor Economics

Date Written: April, 2020

Abstract

Innovative firms with good ideas may still struggle to fine-tune them to the stage where they can attract outside funding. We conduct a five-country randomized experiment that tests the impact of an investment readiness program. Firms then pitched their ideas to independent judges. The program resulted in a 0.3 standard deviation increase in the investment readiness score. Two years later, the average impacts on firm investment outcomes are positive, but small in magnitude, and not statistically significant. Larger and statistically significant impacts on receiving outside funding occur for smaller firms, and for firms with lower likelihoods of otherwise being funded.

Keywords: entrepreneurship, equity investment, innovation, randomized controlled trial, start-ups

JEL Classification: L26, M2, M13, O1

Suggested Citation

Cusolito, Ana Paula and Dautović, Ernest and McKenzie, David John, Can Government Intervention Make Firms More Investment-Ready? A Randomized Experiment in the Western Balkans (April, 2020). ECB Working Paper No. 2391, Available at SSRN: https://ssrn.com/abstract=3577672

Ana Paula Cusolito

affiliation not provided to SSRN

No Address Available

Ernest Dautović (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

David John McKenzie

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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