The impact of government support programs for the development of businesses in Chile

Abstract

Purpose – The purpose of this paper is to analyze the impact on businesses in Chile of the Seed Capital Program (SCP) implemented by Chile’s Technical Cooperation Services. Design/methodology/approach – In order to analyze the impact of this SCP, a counter-factual scenario was used that entailed a combination of the propensity score matching with difference in difference methods. A total of 682 businesses were surveyed (378 in the treatment group and the rest in the control group), 164 of which gave complete responses to the surveys, 89 belonging to the treatment group and 75 to the control group. Findings – The results are mixed. On the one hand, the impact of sales is positive but its statistical significance depends on the model used. With regard to the number of employees, however, the results are positive and statistically significant regardless of the model used. The results also show that participating in the program has no incidence on the probability of later obtaining financing. Research limitations/implications – This study highlights the importance of differentiating between opportunity-driven entrepreneurship programs and necessity-driven entrepreneurship programs. Practical implications – It also suggests improvements in public policy to develop entrepreneurship in small businesses in Chile. These suggestions may also be interesting for other countries facing similar challenges in terms of developing private entrepreneurship as a vehicle to generate economic development. Originality/value – This exploratory work may be interesting to those in charge of designing, implementing and evaluating public programs in support of small- and mid-sized enterprise development.