Capital social en la acción voluntaria

The studies contained in this thesis do not evaluate single policy schemes but aggregate measures of different, albeit similar, programs. This is an effective evaluation approach in light of the bewildering range of ever-changing policy schemes. However, less fragmented business assistance schemes would clearly facilitate quantitative evaluations by providing a meaningful number of cases. This thesis thus points out the necessity of restructuring the provision of assistance throughout the entrepreneurial process and the high desirability of taking into consideration how policies will be evaluated at the time the policies are being designed, e.g., by realizing more experimental designs to strengthen causal inferences. In short, a stronger “evaluation spirit and culture” at all levels of policy design, implementation, and delivery is needed. This is all the more important, since evaluations have to investigate long-run effects of policy interventions. Like most other evaluations, only short-run effects are investigated in this thesis. For example, in Chapters 2 and 5, the simultaneous impact of financial subsidies is investigated, since the subsidization had occurred sometime between the first and third business year and the outcome variables were measured in the third business year. The effect of business assistance in the nascent phase was studied with respect to performance differences in the third business year (Chapter 3).

In addition to having a sound rationale for policy intervention (either positive external effects, capital market imperfections, or sociopolitical reasons in case of labor market policies) and estimating the effectiveness of policy support, policymakers must consider the opportunity costs of interventions. Hence, the efficiency of existing policy schemes must be investigated, which was not attempted in this thesis. Future evaluations should consider not only the direct effects of policy intervention but also the costs of programs, including the costs of higher taxes to fund the programs and the market distortions arising due to the rich subsidy environment. Information about indirect effects of public policy intervention would shed light on whether, in aggregate, policy schemes really do improve the overall situation for nascent and young entrepreneurs. However, indirect effects like market distortions arising on input or output markets of subsidized start-ups are virtually impossible to track – let alone distortions resulting from the tax system and their influence on entrepreneurial activity.

Furthermore, policymakers need to acknowledge the scope of support policies for entrepreneurs along the founding process. Sternberg (1996) points out that many policy initiatives are oriented toward backward regions in an effort to spur high-tech growth, but policy support measures for innovative entrepreneurship will not level out regional disparities for two reasons.

First, the strategy of stimulating innovative entrepreneurship in backward regions will be hampered by the high persistence and path-dependency of start-up-rates over time. Analyzing data from West Germany for the period from 1983 to 2002, Fritsch and Mueller (2007) find that a region’s entrepreneurial culture and its level of innovative activity exert a strong impact on subsequent new firm formation. Therefore, changes in regional start-up activity are small and emerge only over a long time period. Similarly, Minniti (2005) highlights the importance of a community’s entrepreneurial history in explaining the effectiveness of entrepreneurship policy measures, since an entrepreneurial climate (as indicated by a large concentration of entrepreneurs) encourages individuals to become entrepreneurs themselves. The long-run time horizon of policy intervention supports the use of enabling policies that pursue a strategy of “building winners”. Such a policy focus would require a major shift in actual policymaking – away from targeting start-ups and established firms and toward empowering the individual (potential) entrepreneur. Enabling policies could encompass the kind of programs suggested by Schmitt-Rodermund and Vondracek (2002). Since career interests are formed early in adolescence, these scholars recommend helping adolescents to discover their interests and abilities and making them aware of entrepreneurship as a career option. To effectively “build winners”, this kind of entrepreneurship education should be offered to all adolescents, i.e., all potential future entrepreneurs. Thereafter, special training should be provided for those who have the right combination of personality and entrepreneurial orientation.

Second, not only is it difficult to change the level of path-dependent entrepreneurial activity over time, but the effects of entrepreneurial activity also differ across regions. Since the impact of new firm formation is strongly dependent on the interplay between contextual factors and firms, the impact of start-ups can be expected to be shaped by the regional availability of, e.g., venture capital, a qualified workforce, and other innovative

In summary, policymakers need to be aware that entrepreneurial activity is of a long-term nature, and can barely be “created” in the short-run. Moreover, the effects of entrepreneurial activity also are only observable in the very long-run and depend on regional characteristics. Therefore, the effectiveness and efficiency of policy support measures for innovative entrepreneurship differ across regions. To date, policymakers have been mainly in favor of balanced regional growth, which is reflected in start-up subsidies given for sociopolitical reasons. However, Sternberg (1996) points out that policy support for high-tech regions that strengthens international competitive advantage has to accept the fact of increasing interregional disparities between growing and lagging regions.

Public choice considerations

In contrast to welfare economics, public choice scholars do not assume a benevolent dictator as the single policymaker, but instead consider utility-maximizing politicians, bureaucrats, and voters interacting on a political market. Rooted in this very different assumption, public choice theory offers several explanations for the subsidy environment currently experienced by entrepreneurs (i.e., potential, nascent or young entrepreneurs).

First, public choice theory suggests that policymakers and funding authorities may have incentives that actually conflict with a policy targeting market failure. For instance, policymakers and program officials may wish to be seen as the engineers of success (Lerner, 1999) and thus they choose projects that have a high probability of success instead of funding projects which are likely to be affected by market failure (Stiglitz and Wallsten, 2000). The frequent absence of specific objectives in entrepreneurship policy programs (as criticized by Storey, 2000) can also be explained by public choice theory. Policymakers with only fuzzy objectives, if they have any at all, can more easily emphasize the successful parts of their programs and even reinterpret its goals in a self-serving manner during an election period to maximize votes.

Second, the multitude and extent of policy schemes (coming from innovation policy, SME policy, entrepreneurship policy, and labor market policy) which are delivered at the local, Länder, federal, and European level finds some explanation in Niskanen’s (1971) model of the budget maximizing bureaucrat. According to Niskanen, rational bureaucrats maximize – among other things – influence, reputation, and power, which are in total approximated by budget size. Increases of budgets (and the consequent increase in influence, reputation, and power) can be achieved by promoting and implementing more and more policy schemes targeted at the entrepreneurial process. Pages et al. (2003, p. 256) label this phenomenon “program-itis” and it has the potential to result in redundancy and

ineffectiveness when these schemes are not part of a comprehensive entrepreneurship strategy.

Third, in contrast to economic development strategies that target established firms, policy support of innovative entrepreneurship encompasses measures targeted at the individual (potential, nascent, or young) entrepreneur. These enabling policies can take a very long time before they eventually may manifest in increased start-up rates. Moreover, their effects are difficult to track and are often not obvious to the public. The theory of political business cycles (e.g., Nordhaus, 1975) suggests that opportunistic utility- maximizing incumbent policymakers try to use expansionary economic policy to create favorable macroeconomic conditions so as to increase their chances of re-election. However, entrepreneurship policies with their very long lead times and no obvious impact cannot be timed to have a positive effect on the economy at the end of a specific legislative period. Therefore, Pages et al. (2003) suggest that policymakers will favor more direct types of policy intervention, which explains why enabling policies focused on “soft” policy measures like consulting and awareness building still constitute a tiny fraction of economic policy measures.

Future researchers making policy recommendations for effectively supporting innovative entrepreneurship should thus consider the potentially distortive policy response to their advice (Jones and Cullis, 1993). Since the “policy process always influences the content of policy” (Pages et al., 2003, p. 228), taking this precaution will ensure that alleged market failure (which is accused of hampering innovative entrepreneurial activity) does not result in proven policy failure.

A—Appendix to Chapter 2