Background and Relevance
Fostering economic growth by supporting innovation is an increasingly relevant impact of public sector activity. Particularly technology-based ventures have the potential to accelerate knowledge-transfer to the market. Various support schemes focusing on advice-oriented services have emerged, yet little is known about their effect. This research project addresses the challenge of how to effectively allocate scarce public financial resources to support regional innovation by quantitatively measuring the effect of tactical business coaching on venture survival.
Planning and conducting a Randomized Controlled Trial using a unique database of early-stage technology-based ventures originating from the German regional state Baden-Württemberg, the effectiveness of coaching as a support intervention is being researched over the next three years. New firm failure rates are high, making insights into effective support interventions valuable to a range of stakeholders such as the public sector being interested in yielding positive returns on investments. Little quantitative research has been conducted on the effectiveness of advice concepts in supporting founders. Coaching fosters learning, enabling entrepreneurial teams to acquire needed skills to successfully run their business and deal with organizational change. Though literature suggests various effects of coaching in different case settings, empirical studies hardly exist.
Presumably due to a lack of suitable data, literature generally lacks quantitative research on technological ventures. This study has the potential to provide very valuable insights into factors relevant for ventures to acquire survival capabilities. The planned RCT aims at addressing a research gap rendered by business coaching being accepted as important support intervention for venture teams while being only marginally researched with respect to identifying causal effects. A deeper understanding of the impact of coaching activities and underlying reasons may enable accelerators and entrepreneurship program providers to optimize their activities, which would in the long-run accelerate startup business growth.
The research project investigates the relationship between tactical knowledge coaching and survival capabilities of newly founded technological businesses, which builds the basis for the RCT design. The research project is deemed successful when a deeper understanding of the correlation between tactical coaching and the survival capabilities of newly founded firms is gained and empirical insights into effective business coaching for technology-based ventures is obtained.
Baden-Württemberg, one of the most innovative regions within the EU, is spending 12 million Euros on supporting local early-stage ventures with individual coaching and consulting between 2015 and 2017, in collaboration with the European Social Fund (ESF). Within the scope of that initiative, our delivery partner bwcon GmbH, Baden-Württemberg’s leading business initiative in high-tech industries with longstanding experience in supporting early-stage technology-based ventures, is providing such support for that segment. The program budget of 1.75 million Euros is distributed by allocating so-called EXI-Hightech founder vouchers. This early-stage startup support initiative combined with the related business plan competition CyberOne Hightech award covers most of the technology-based venture activities in Baden-Württemberg, according to estimates about 50% of all newly founded technological businesses approach bwcon. For the RCT study, a longitudinal sample of 450 early-stage startups will be recruited over three years by our project delivery partner bwcon. The IST Institute has been granted access to venture data representing the basis for data analysis.