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How Different Types of Entrepreneurs Leverage Government Funding

December 20, 2016

 

Long-time GIST community educator and mentor, Chuck Eesley, is the Assistant Professor and Morgenthaler Faculty Fellow in the Department of Management Science and Engineering at Stanford University. He recently co-authored a paper for Strategic Management Journal on how entrepreneurs in emerging economies leverage institutional intermediaries to acquire public resources. Below is a brief overview of the findings.

Most entrepreneurs face a common dilemma: how to finance their ventures. While startups in developed economies have access to VC or angel investment, entrepreneurs in emerging economies often need to pursue potential government funding opportunities. Governments in emerging economies often use institutional intermediaries such as science parks to bridge the void between ventures and public funding. Science parks also help support existing government programs, which provide entrepreneurs with access to resources such as:

  • office space
  • development of management skills
  • networking
  • a community of other entrepreneurs

 

But how do government intermediaries support different types of entrepreneurs?

By comparing science park and non-science park firms in Beijing and across China, Eesley and his colleagues identified several types of entrepreneurs:

  • Well-connected entrepreneurs with political ties.
  • Less-connected entrepreneurs who rely on resources offered by science parks.
  • Returnees who gain experience from studying abroad.
  • Technically skilled entrepreneurs who lack business skills.

 

The researchers found that different types of entrepreneurs benefitted more from certain resources. For example:

  • Technically skilled entrepreneurs, such as engineers, benefited most from the development of management skills provided by the science parks and incubators.
  • Returnees benefited most from the "certification" or legitimacy provided by gaining admission to the science park.
  • Entrepreneurs who lacked any ties to government officials benefited from the networking with government officials provided by the science parks.
  • Well-connected entrepreneurs leveraged their political ties to acquire funding. 

 

Additionally, the first three groups were more likely to receive subsequent funding from other government programs for entrepreneurs as a result of their participation in the science parks and incubators.

Watch an overview of Professor Eesley’s findings.

About Chuck Eesley

Chuck Eesley is an Assistant Professor and Morgenthaler Faculty Fellow in the Department of Management Science and Engineering at Stanford University. As part of the Stanford Technology Ventures Program, his research focuses on the role of the institutional and university environment in high-growth, technology entrepreneurship. Prof. Eesley was selected in 2015 as an Inaugural Schulze Distinguished Professor. His National Science Foundation of China and Kauffman award supported research focuses on rethinking how the educational and policy environment shapes the economic and entrepreneurial impact of university alumni.

Over the past three years, Prof. Eesley has been playing a growing role in national and international meetings on fostering high-tech entrepreneurship, including advising the U.S. State Department in the Global Innovation through Science and Technology (GIST) program, Chile (CORFO), Taiwan (ITRI), and the Korean Ministry of Science and Technology. Before coming to Stanford, Prof. Eesley completed his Ph.D. at the M.I.T. Sloan School of Management in 2009 where he won BPS Division and Kauffman Dissertation Awards for his work on high-tech entrepreneurship in China.

[Image credit: Shutterstock]

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