Fostering entrepreneurship: the crucial role of monitoring schemes
Journal of Entrepreneurship and Public Policy
ISSN: 2045-2101
Article publication date: 19 August 2021
Issue publication date: 16 November 2021
Abstract
Purpose
The purpose of this paper is to investigate the effect of government-led programs on the engagement of individuals in entrepreneurship.
Design/methodology/approach
The authors worked with government-led programs of 16 European countries between 2003 and 2014 and were able to benefit from the 2008 natural experiment (i.e. the global financial crisis) to produce a robust investigation using a regression kink design (RKD).
Findings
The work shows that government-led programs that are designed to include monitoring schemes can significantly increase individuals' engagement in opportunity-driven entrepreneurship. The authors found that monitoring schemes do not have the same relevance for necessity-driven entrepreneurship. Therefore, the authors believe the difference occurs because monitoring design avoids problems related to moral hazard and adverse selection when it comes to individuals choosing whether to participate (or not) in government-led programs.
Originality/value
While it is important for governments to provide an enabling environment for entrepreneurship, this study showed that not all types of public program have positive results. In fact, it has been demonstrated that poorly-designed programs can actually decrease the likelihood of individuals engaging in entrepreneurial activities. The efficiency of programs is substantially improved, however, when they are designed to include monitoring schemes.
Keywords
Acknowledgements
This work was originated from a project that received financial support from the Coordenação de Aperfeiçoamento de Pessoal de Nível Superior - Brasil (CAPES) - Finance Code 001. The authors benefited from the comments of members of the Annual Conference of the Academic of Management, Boston, Victor Eduardo da Motta, Guilherme Monteiro and Nicolas Bastardoz.
Citation
Cunha, G.G.d. and Arvate, P. (2021), "Fostering entrepreneurship: the crucial role of monitoring schemes", Journal of Entrepreneurship and Public Policy, Vol. 10 No. 4, pp. 527-554. https://doi.org/10.1108/JEPP-01-2021-0007
Publisher
:Emerald Publishing Limited
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