Start-up Competitions as an Instrument of Entrepreneurship Policy: The German Experience

Abstract

The number of aspiring entrepreneurs in high-tech industries who successfully complete the transition from a nascent start-up project towards an operational new venture is comparatively low in Germany. Since the mid-1990s, policy-makers have initiated numerous start-up competitions (SUCs or business plan competitions) to facilitate this important step in the venture creation process. SUCs have two key objectives. They are aimed at increasing start-up activity by motivating potential entrepreneurs, while they should also help to increase the likelihood of subsequent entrepreneurial success through providing necessary entrepreneurial skills to prospective entrepreneurs. With our explorative study, we provide the first comprehensive empirical evidence from a cross-sectional survey of existing SUCs in Germany. Overall, 71 SUCs are identified which are analysed regarding their development, regional distribution, and main structural characteristics. Finally, we outline an agenda of future research questions concerning the effectiveness and efficiency of SUCs as an instrument of entrepreneurship policy.

Notes

1 For Germany, FhG-ISI (2001) or Thierauf and Voigt (2000) focused on particular competitions, whereas some studies provide somewhat broader overviews (Harms & Schmengler, 2002; FhG-ISI, 2002; Dippe & Müller, 2005; Schefczyk & Pankotsch, 2009; Kerlen & Prescher, 2010).

2 Studies using data from the GEM and the PSED define a nascent entrepreneur as “a person who is (alone or with others) now trying to start a new business; who expects to be the owner or part owner of the new firm, who has been active in trying to start the new and independent firm in the past 12 months”.

3 While the PSED, started in 1998, covers the US primarily, the GEM project (Sternberg & Wennekers, 2005), started in 1999, covers 54 countries worldwide (in 2009). Both projects perform representative surveys of the adult population with the objective to measure several dimensions of entrepreneurial activity. In the annual GEM reports, the results of additional expert interviews are provided. More recently, the German Panel of Nascent Entrepreneurs (GEPANE) has been developed out of GEM data for Germany. First results are given in Brixy et al. (2010).

4 http://www.biz-awards.de, http://www.foerderland.de, http://www.impulse-gruenderzeit.de, http://www.fgf-ev.de

5 For all SUCs, we collected data on their funding institutions. It must be mentioned, however, that only few SUCs publish their funding institutions in full and, additionally, the composition of funding institutions is dynamically changing from year to year for most SUCs.

6 Research also clearly demonstrates that the effects of the formation of new firms is very positive and the strongest in densely populated, agglomerated areas (Fritsch & Mueller, 2008; van Stel & Suddle, 2008; Fritsch & Schröter, 2011).

7 Different approaches have been used and discussed in the literature. For instance, first sales (Kessler & Frank, 2009), official registration in the commercial register (Wolf et al., 2010) and self-reported measures (e.g. Carter et al., 1996; Diochon et al., 2003; Parker & Belghitar, 2006) are applied to operationalize successful new business creation.