Managerial or entrepreneurial capital? Untangling the constraints of innovative entrepreneurs

Despite the growing popularity of business accelerators, a fundamental question remains unanswered: what type of support each type of entrepreneur need the most? While all accelerators provide training, mentorship, and access to networks and investors, they differ in their core focus: some prioritise managerial capital, that is, developing skills for operational efficiency, while others emphasise entrepreneurial capital by fostering opportunity recogni on and network expansion. This randomised controlled trial is the first to rigorously evaluate the effectiveness of these distinct approaches for different types of opportunity-led entrepreneurs. The results challenge the one-size-fits-all model: For the average participant, managerial capital training proved most effective. Training helped them operate their businesses more efficiently, improved business practices, and achieved 18% faster growth than those who received entrepreneurial capital training. Conversely, enhancing entrepreneurial capital in high-growth potential firms unlocked extraordinary performance. These top entrepreneurs grew 43% faster than their peers who did not receive entrepreneurial capital training and generated more employment opportunites. Leveraging regional variation in program access to compare similar entrepreneurs with and without support, the results highlight the importance of targeting. While it is true that the average participant benefited from accessing the program, the result is driven mainly by those average ventures that received managerial capabilites. These findings suggest that accelerators could significantly enhance their impact by offering differenated training based on entrepreneurial potenal.

Key facts

Stage: Working paper
Year: 2024
Location: Colombia