Can Entrepreneurial Activity Be Taught? Quasi-Experimental Evidence from Central America

We study the effect of entrepreneurial training on enterprise outcomes, in particular whether business training for (potential) entrepreneurs of small- and medium scale enterprises can lead to an increase in the number of business start-ups or an expansion in the size of existing businesses. We study this question by analyzing the results of business training programs that an NGO held in Central America between 2002 and 2005. To deal with endogenous selection into the training program, we exploit the fact that a fixed number of applicants are taken into the training program based on a pre-training score, which creates a discontinuity around which we can compare accepted and rejected applicants and estimate the effect of training with a regression-discontinuity design. We find that receiving business training significantly increases the probability that an applicant to the workshop starts a business or expands an existing business. Thus, entrepreneurial activity such as starting and expanding businesses can be fostered by training. Exploiting the fact that in the last stage the most successful participants of the program receive substantial monetary prizes (between US$ 6,000 and 15,000) we can also provide some experimental evidence that suggests the presence of financial constraints. Finally, we investigate gender differences, and find that females experience a much larger increase in the probability of starting a business if they win the monetary prize than men, suggesting financial constraints may be significantly larger for female entrepreneurs.

Klinger and Schündeln (2011) Not reported.Regression discontinuity design.TechnoServe business training program implemented between 2002-2005. The program is intended for both individuals who wish to start a business, as well as for those who already have a business. Those individuals with existing businesses have about 10 employees on average. Thus, unlike some other programs, this program targets businesses of a size beyond that of household enterprises.Business training significantly increases the probability that an applicant to the workshop starts a business (4-9 percentage points) or expands an existing business (25 to 56 percentage points). Differential impacts of different parts of the program on the start-up of new business and the expansion of existing businesses. Results suggest financial constraints to entrepreneurs are present, and financial constraints for women are greater than for men. The effect of the full training program on business start-up or expansion is larger for male participants. male and female current and potential entrepreneurs who have scored into the Technoserve program based on a score of entrepreneurial ability. (Comparison group is those who did not score into the program). Current entrepreneurs have about 10 employees (not household enterprises).