Does State or Local Government Support for Small Businesses Attract Better Entrepreneurs?

  • Halil Dincer KAYA Department of Accounting and Finance College of Business and Technology, Northeastern State University , Oklahoma, United States


In this study, we examine the relation between government support for small businesses and owner characteristics. Does government support attract certain types of entrepreneurs into an area? We find that more experienced and politically more conservative entrepreneurs tend to concentrate in the high-state government support score states. Also, there are fewer community college graduates and more technical college graduates among the owners in these states. When we examine the impact of local government support, we find that less experienced owners tend to concentrate more in the high-local government support score states while more experienced owners tend to concentrate more in the low-local government support score states. We also find that more experienced entrepreneurs and more conservative people tend to concentrate in the high-local government support score states. Our results show that there are more owners with technical college diplomas and fewer owners with an undergraduate degree among the owners in the high-score states. These findings indicate that entrepreneurs with certain characteristics are more concentrated in the high-government (i.e. state or local) support score states. Therefore, if a state or a city/town wants to attract certain types of entrepreneurs into their area, they can use the findings here when making their policy decisions.


[1] Ariff, M. and Abubakar, S.Y. 2003. Strengtheningntrepreneurship in Malaysia. Malaysian Institute of Economic Research, Kuala Lumpur, 1-22 pp.
[2] Bennett, R. 2008. SME policy support in Britain since the 1990s: What have we learnt? Environment and planning C: Government and Policy, 26(2): 375- 397.
[3] Carland, J.C. 2004. Economic development: Changing the policy to support entrepreneurship. Academy of Entrepreneurship Journal, 10(2): 104-114.
[4] Carlsson, B. and Mudambi, R. 2003. Globalization, entrepreneurship, and public policy: A systems view. Industry and Innovation, 10(1): 103-116.
[5] Fatoki, O.O. and Chindoga, L. 2011. An investigation into the obstacles to youth entrepreneurship in South Africa. International Business Research, 4(2): 161-169. Available at: 38c5e55fd3d9aa43ab1483d2263456a25312.pdf
[6] Fischer, E. and Reuber, A.R. 2003. Support for rapid‐growth firms: A comparison of the views of founders, government policymakers, and private sector resource providers. Journal of Small Business Management, 41(4): 346-365.
[7] Gilbert, B.A., Audretsch, D.B. and McDougall, P.P. 2004. The emergence of entrepreneurship policy. Small Business Economics, 22(3-4): 313-323.
[8] Henrekson, M. and Rosenberg, N. 2001. Designing efficient institutions for science-based entrepreneurship: Lesson from the US and Sweden. The Journal of Technology Transfer, 26(3): 207-231.
[9] Keuschnigg, C. and Nielsen, S.B. 2001. Public policy for venture capital. International Tax and Public Finance, 8(4): 557-572.
[10] Korosec, R.L. and Berman, E.M. 2006. Municipal support for social entrepreneurship. Public Administration Review, 66(3): 448-462.
[11] Kropp, F. and Zolin, R. 2005. Technological entrepreneurship and small business innovation research programs. Academy of Marketing Science Review, 2005(7): 1-14.
[12] Lee, S.M., Lim, S.B., Pathak, R.D., Chang, D. and Li, W. 2006. Influences on students’ attitudes toward entrepreneurship: a multi-country study. The International Entrepreneurship and Management Journal, 2(3): 351-366.
[13] Li, W. 2002. Entrepreneurship and government subsidies: A general equilibrium analysis. Journal of Economic Dynamics and Control, 26(11): 1815-1844.
[14] Markman, G.D., Gianiodis, P.T., Phan, P.H. and Balkin, D.B. 2004. Entrepreneurship from the Ivory tower: do incentive systems matter? The Journal of Technology Transfer, 29(3-4): 353-364.
[15] McQuaid, R.W. 2002. Entrepreneurship and ICT industries: Support from regional and local policies. Regional Studies, 36(8): 909-919.
[16] Michael, S.C. and Pearce, J.A. 2009. The need for innovation as a rationale for government involvement in entrepreneurship. Entrepreneurship and Regional Development, 21(3): 285-302.
[17] Rasmussen, E. 2008. Government instruments to support the commercialization of university research: Lessons from Canada. Technovation, 28(8): 506-517.
[18] Rasmussen, E. and Borch, O.J. 2010. University capabilities in facilitating entrepreneurship: A longitudinal study of spin-off ventures at mid-range universities. Research Policy, 39(5): 602-612.
[19] Rothwell, R. and Zegveld, W. 1982. Innovation and the small and medium sized firm. Springer Netherlands, ISBN: 978-0-89838-099-6
[20] Sebora, T.C., Lee, S.M. and Sukasame, N. 2009. Critical success factors for e-commerce entrepreneurship: An empirical study of Thailand. Small Business Economics, 32(3): 303-316.
[21] Todd, P.R. and Javalgi, R.R.G. 2007. Internationalization of SMEs in India: Fostering entrepreneurship by leveraging information technology. International Journal of Emerging Markets, 2(2): 166-180.
[22] Trajtenberg, M. 2002. Government support for commercial R&D: Lessons from the Israeli experience. NBER chapters in Innovation Policy and the Economy, 2: 79-134. National Bureau of Economic Research, Inc. Available at:
[23] Wiklund, J. and Shepherd, D.A. 2008. Portfolio entrepreneurship: Habitual and novice founders, new entry, and mode of organizing. Entrepreneurship Theory and Practice, 32(4): 701-725.
How to Cite
KAYA, Halil Dincer. Does State or Local Government Support for Small Businesses Attract Better Entrepreneurs?. Journal of Advanced Research in Management, [S.l.], v. 9, n. 1, p. 5-14, nov. 2018. ISSN 2068-7532. Available at: <>. Date accessed: 19 may 2019. doi: