Working Paper: CEPR ID: DP10597
Authors: Marcel Fafchamps; Christopher Woodruff
Abstract: We conduct a business plan competition to test whether survey instruments or panel judges are able to identify the fastest growing firms. Participants submitted six- to eight-page business plans and defended them before a three- or four-judge panel. We surveyed applicants shortly after they applied, and one and two years after the competition. We use follow-up surveys to construct measures of enterprise growth potential. We find that a measure of ability correlates strongly with future growth, but that panel scores add to predictive power even after controlling for ability and other survey variables. The survey questions have more power to explain the variance in growth. Participants presenting before the panel were given a chance to win customized management training. Fourteen months after the training, we find no positive effect of the training on growth of the business.
Keywords: business plan competitions; firm growth; high growth entrepreneurship
JEL Codes: J24; L26; O1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Ability measure derived from survey responses (C83) | Future growth of enterprises (D25) |
| Panel scores (Y10) | Subsequent growth (O41) |
| Customized management training (M53) | Business growth (O49) |
| Customized management training (M53) | Firm growth (L25) |
| Survey measures (C83) | Variance in growth (O41) |
| Panel rankings + Survey measures (Y10) | Growth outcomes (O40) |