The Effects of Human Capital Interventions on Entrepreneurial Performance in Industrialized Countries

Abstract

This paper provides a systematic review of studies on the effects of human capital interventions on entrepreneurial performance in industrialized countries. We identify 21 experimental and quasi‐experimental studies published before September 2018. These studies examine the effects of business training, formal education, and entrepreneurship education. Their performance outcomes include firm profits, firm size, and entrepreneurial earnings. The main finding across these studies is that these interventions do not have statistically significant effects. Formal education is the only exception, showing positive effects on firm profits and entrepreneurial earnings, yet these effects are small in magnitude. Evidence is inconclusive regarding effect duration. These findings stand in stark contrast to correlational studies, which tend to find large positive correlations between human capital interventions and entrepreneurial performance. We therefore conclude that correlational studies tend to overestimate the benefits of human capital interventions. Moreover, our estimates show that the interventions are associated with moderately low additionality.

Training, human capital, and gender gaps in entrepreneurial performance

“…The theoretical reasoning underpinning this finding is that the more skilled and experienced are the entrepreneurs, the more successful they are in identifying and seizing business opportunities as well as in running successful and sustainable firms (Bates, 1990;Honig, 1998;Ucbasaran et al, 2008). In contrast, the empirical literature on the impact of entrepreneurial training on firm performance is inconclusive, as elaborated in Hogendoorn et al (2019) for advanced economies, and Cho and Honorati (2014) for developing countries.…”

“…Personal characteristics of entrepreneurs, on which our paper focuses, include skills, demographic factors, and entrepreneurs' sociological background, among others. While the literature on human capital and entrepreneurship is substantial, evidence on the effectiveness of human capital interventions for entrepreneurial performance remains mixed (Hogendoorn et al, 2019 andCho andHonorati, 2014). Almost no research has been conducted with respect to whether and which non-cognitive skills make training programs more effective in terms of entrepreneurial perfromance.…”

The Effects of Micro-entrepreneurship Programs on Labor Market Performance: Experimental Evidence from Chile

“…Average monthly per capita income in our sample is US$98 (US$155 in PPP terms), i.e., US$5.1 per day in PPP. These income levels are high compared to the sample of six low income countries inBanerjee et al (2015), where 48 percent of the sample exhibit consumption below $1.25 per day PPP, and compared to the sample inBlattman et al (2016), where the average income is below US$1 per day in Uganda 4. To the best of our knowledge, this is the first paper that evaluates a micro-entrepreneurship program that combines training and transfers using two different asset transfer levels.…”

“…Second, we include two different levels of asset transfer, allowing examination of the optimal asset level required for the growth of small-scale entrepreneurs. 4 Third, we use administrative data from the Unemployment Insurance (UI) system, allowing the analysis of program impacts in the formal labor market over almost four years. An occupational choice model framework is useful for the interpretation of our results: individuals choose between self-employment and wage employment, depending on returns.…”

Educational curriculum and entrepreneurship culture among the youth: a case study of university of Zululand

“…To this end, Becker identified etiquette, experience, skills, knowledge and health as human capital indicators that increased a human being's value. According to the Human capital theory, education and skills development programmes are indispensable processes in the development of the human capital (Hogendoorn et al 2019). Becker further argued that like traditional capital, higher capital values were better than lower ones, and different individuals can accumulate different levels of human capital based on factors like opportunity, levels of commitment, and the environment (Becker, 1994& Martin et al 2013.…”