Why do nascent entrepreneurs use external assistance programs?

Abstract

Purpose

The purpose of this paper is to study support factors influencing the entrepreneur's use of external assistance programs and explain why some entrepreneurs obtain support from these programs while others do not. The proposed framework suggests that outside assistance programs are a support option of last resort that entrepreneurs utilize only when the start‐up team and personal network are incapable of providing support.

Design/methodology/approach

Data from the Panel Study of Entrepreneurial Dynamics I are used to perform logistic regression of use of assistance programs on the entrepreneur's human capital and characteristics of the start‐up team and personal network.

Findings

A total of 26 percent of entrepreneurs in the sample made contact with assistance programs. Regression results suggest that entrepreneurs who are more educated and experienced, rely extensively on the start‐up team, have a less experienced start‐up team, and have larger personal networks are more likely to use assistance programs.

Practical implications

This study informs policy and support practices about the different factors that drive entrepreneurs to use assistance programs provided by public agencies, professional organizations, and educational institutions.

Originality/value

This research fills the gap in existing research of entrepreneurial assistance programs by studying both entrepreneurs who do and do not obtain support, thus addressing the selection bias problem.

Citation

Yusuf, J.(W). (2012), "Why do nascent entrepreneurs use external assistance programs?", Journal of Entrepreneurship and Public Policy, Vol. 1 No. 2, pp. 166-182. https://doi.org/10.1108/20452101211261444