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New Study by Turner College Management Professor Kirk Heriot Explores Relationship between Small Business Development Funding and Firm Births and Deaths

A recently published study by Turner College management professor Kirk Heriot, Andres Jauregui of Fresno State University, Lori Dickes of Clemson University, and Universidad ORT Uruguay's Marcos Segantini points out that there has been considerable research on the types of programming available for entrepreneurs in the United States, with some studies evaluating the impacts of different programming types on firm success. The authors note, however, that there have been few studies to evaluate the relationship of federal entrepreneurship programming on firm success over time. The primary federal agency tasked with helping small businesses is the US Small Business Administration (SBA). In their study, which appears in the latest issue of the American Journal of Entrepreneurship, Heriot et al. critically evaluate the relationship between Small Business Development Center (SBDC) funding and programming on firm births and deaths across the U.S. states from 2000-2013. Their study uses a unique data set of SBDC expenditures by state that has never before been used in empirical research. This study evaluates 10 different models to test the relationship between firm births or deaths and state SBDC funding. These results provide evidence that SBDC funding may be a factor in determining the percentage of firm births and deaths across the U.S. states and over time. More specifically, the authors point out that while their models provide a range of results, they were not surprised to find that SBDC funding does not exhibit as much significance in explaining the annual percentage of firm births as it does in explaining the annual percentage of firm deaths.  As the authors explain, much of the funding from SBDC programming goes to incumbent firms, albeit sometimes very nascent ones. Lastly, given that their data are highly sensitive to heterogeneous effects, additional research in this area is needed in order to better understand of the sensitivity of the relationships examined to both time and spatial effects.
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