Paradoxes of accelerator programs and new venture performance: Do varieties of experiences make a difference?

Small Bus Econ https://doi.org/10.1007/s11187-023-00778-y RESEARCH ARTICLE Paradoxes of accelerator programs and new venture performance: Do varieties of experiences make a difference? Farzana Chowdhury · David B. Audretsch Accepted: 22 April 2023 © The Author(s) 2023 Abstract Incubators and accelerators have proliferated, but their impact on new ventures’ performance remains unclear. This article explores whether all ventures benefit equally from participating in accelerator programs. We propose that the entrepreneurs’ human capital resources influence the benefits extracted from accelerator program participation. Using application data from the accelerator programs across developed and developing countries, we find participation in accelerator programs positively impacts the ventures’ innovation performance but has a mixed impact on social performance. Founders with high education benefit from participating in accelerator programs for innovation and social performance. However, entrepreneurial experience and vast industry experience do not significantly influence ventures’ social and innovation-related performance from accelerator participation. The result is consistent for both solo and team founders. Plain English Summary Entrepreneurs with high education and experience get more value-added F. Chowdhury (*) Durham University Business School, Durham, UK e-mail: ; farzana. D. B. Audretsch School of Public and Environmental Affairs, Indiana University, Bloomington, IN 47405, USA e-mail: benefits from accelerators. The accelerator programs can help create a ’community of organizations, institutions, and individuals that impact the enterprise and the enterprise’s customers and suppliers; entrepreneurs’ resources help create an environment that increases the potential of the new ventures. Additionally, a team of entrepreneurs with education, industry, and entrepreneurial experience can help with the venture’s performance. Therefore, accelerator programs should focus on firms with highly educated entrepreneurs since entrepreneurs with high education and experience get more value-added benefits from accelerators. For the corporate managers engaged in corporate/intrapreneurship, employees with industry and entrepreneurial experience can be a great resource, and human resource managers can help with recruiting these individuals. Policymakers should pay close attention to younger firms since they are vulnerable. Further, policymakers should pay close attention to ventures with entrepreneurs with educational experience since entrepreneurs’ industry and entrepreneurial experience can complement their lacking. Keywords Accelerator · Innovation · New Ventures · Human Capital · Industry Experience · Entrepreneurial Experience JEL Classification M13 · 05 · L2 · L25 Vol.: (0123456789) 13 F. Chowdhury, D. B. Audretsch 1 Introduction Successful new ventures contribute to the local and national economies through innovative activity and job creation (Haltiwanger et al., 2012; Wennekers et al., 2005). In recent years, accelerators and incubators have gained attention from academics and policymakers since these programs help with generating entrepreneurial activity (Bergman and McMullen 2021; Cohen, 2013; Cohen et al., 2019a, 2019b; Hallen et al., 2020, 2023; Hayter et al., 2018; Hochberg, 2016; Kher et al., 2022; Peters et al., 2004; Cohen & Hochberg, 2014; Amezcua et al., 2013, 2020; Radojevich-Kelley & Hoffman, 2012; Venâncio & Jorge, 2022). While the existing research suggests that incubators and accelerators provide some similar services, others consider them as distinct types of organizations (Gliedt et al., 2018; Hausberg & Korreck, 2018; Cohen, 2013; Pauwels et al., 2016; Miller & Bound, 2011; Crisan et al. 2021), in this paper, we are using accelerator as an umbrella term. An emerging body of literature examines the importance of accelerators in entrepreneurship (Sohail et al., 2023; Bergman and McMullen 2021; Cohen, 2013; Cohen et al., 2019a, 2019b; Hallen et al., 2020, 2023; Cohen & Hochberg, 2014; Gonzalez-Uribe & Leatherbee, 2018; Smith & Hannigan, 2015; Hallen et al., 2016; Yu, 2020) and their influence on firm performance and survival (Chan et al., 2020; Gonzalez-Uribe & Leatherbee, 2018; Lyons & Zhang, 2018; Yu, 2020). One consistent observation from these studies is that accelerator programs influence new venture performance and demonstrate the importance of determining what affects new ventures’ performance (Crișan et al. 2020; Drori & Wright, 2018; Battistella et al., 2017; Cohen, 2013; Cohen & Hochberg, 2014) as suggested by Pauwels (2016, p. 23), "there is a need for studies that compare accelerated ventures to a control group of non-accelerated ventures to provide robust insights into the contribution of accelerators." However, a critical gap that remains in the literature is that despite participation in accelerator programs, new ventures’ performance differs. Vol:. (1234567890) 13 To address this gap in the literature, we address the following question: How do entrepreneurs’1 resources influence new venture performance that participates in the accelerator programs? From an entrepreneur’s perspective, the decision to participate in an accelerator program and the benefits accruing from the participation are unknown and are typically presented as a ’black box’; thus, our ability to truly understand how personal resources influence the relationship between performance and accelerator program participation is essential and constitutes a significant and novel contribution to the entrepreneurship literature. Additionally, our study sheds light on the ’contribution of accelerators" (Pauwels 2016, p. 23). Accelerator programs are a great support system for entrepreneurs. They can be an essential means to access physical resources, office spaces, and networking services (Cohen, 2013; Cohen & Hochberg, 2014) and act as intermediaries by providing support services to new ventures. These organizations also link multiple parties for a specific objective/activity (Bergman and McMullen 2021; Cohen, 2013; Cohen et al., 2019a, b; Hallen et al., 2020, 2023; Mair et al., 2012; McDermott et al., 2009), thereby creating opportunities for new ventures by developing new markets (Dutt et al., 2016). Most of the programs included in this study have three to six months long programs, with smaller numbers having less than three months and more than six months long. Determining new ventures’ performance following the accelerator program participation is critical because new ventures’ performances vary as many new ventures fail in the early years (Chan et al., 2020; Mas-Verdú et al., 2015; Schwartz, 2009). These differences in performance have been attributed to different abilities and characteristics of the CEO/founder(s) (Bosma et al., 2004; Colombo & Grilli, 2005, 2010) and access to and development of their resources and capabilities at the various life-cycle stages (Helfa (...truncated)