The Effectiveness of Business Coaching on Technology-Based Ventures' Survival Capabilities

Last registered on January 14, 2016

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Pre-Trial

Trial Information

General Information

Title

The Effectiveness of Business Coaching on Technology-Based Ventures' Survival Capabilities

RCT ID

AEARCTR-0000973

Initial registration date

December 08, 2015

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published

December 08, 2015, 5:05 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated

January 14, 2016, 10:50 AM EST

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Country

Germany

Region

Baden-Württemberg

Primary Investigator

Name

Christina Ungerer

Affiliation

Institute for Strategic Innovation & Technology Management (IST), Constance University of Applied Sciences

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Other Primary Investigator(s)

PI Name

Marc König

PI Affiliation

bwcon GmbH

Contact Investigator

PI Name

Guido Baltes

PI Affiliation

Institute for Strategic Innovation & Technology Management (IST), Constance University of Applied Sciences

Contact Investigator

Additional Trial Information

Status

On going

Start date

2015-03-23

End date

2018-01-01

Keywords

Education, Finance & Microfinance, Governance

Additional Keywords

Innovation, Entrepreneurship, Business Coaching, Venture

JEL code(s)

Secondary IDs

Abstract

In order to enable offering more effective business coaching activities in the future, this research program analyzes the impact of such coaching on venture survival capabilities. The entrepreneurship research initiative, conducted by the Institute for Strategic Innovation & Technology (IST) at the Constance University of Applied Sciences, Germany, is supported by Nesta with an Innovation Growth Lab grant.

Technology-based ventures foster economic growth by accelerating the transfer of new technological knowledge to the market. Regional innovation activity is stimulated by expanding the technology-based venture eco-system. As a consequence, the industrial landscape is modernized and additional jobs are created. Hence, the public sector is interested in increasing technology-based ventures’ survival prospects by effectively allocating limited financial resources to support them.

Business coaching is an important support measure that positively impacts venture team performance because it helps to address the challenges of high-speed organizational change which founders face. Though not much research has investigated this type of supportive intervention applied to technology-oriented startups, it is a key value proposition provided by incubation and acceleration programs. But how do we know that business coaching actually affects survival capabilities, and thus the growth of ventures?

Following the conceptual design of a Randomized Controlled Trial (RCT) study, this research program applies quantitative research methods in a business context to investigate the cause-and-effect-relationship between business coaching and venture survival. RCTs represent a specific experimental study design, achieving the highest hierarchy of evidence in primary research. RCT studies first appeared in the fields of psychology and medicine to test the effectiveness of treatments on patients. Within business contexts, the method has hardly been applied yet – though it is seen as the gold standard for analyzing the effectiveness of an observed intervention.

For the RCT study, a longitudinal sample of 450 early-stage, technology-based ventures will be recruited in Germany over three years (2015-2017) by the project delivery partner bwcon GmbH. bwcon is an expert in supporting technology-based ventures and will selectively offer business coaching to the sampled ventures following the defined RCT experiment design. Six months post-intervention, the survival capabilities of those ventures which received coaching are compared with those which did not receive the support intervention. Survival capabilities will be measured based on indicators for the maturity of the ventures’ value-networks in various market dimensions. It is expected that the survival capabilities significantly differ between the two groups, thus proving the effectiveness of business coaching.

Accordingly, by using the unique database of early-stage, technology-based ventures from the German regional state Baden-Württemberg, a deeper understanding of the impact of coaching activities will be gained. Identifying underlying causal effects of the effectiveness of business coaching on venture survival capabilities enables accelerators and entrepreneurship program providers to become more effective, which accelerates startup business growth in the long-run.

External Link(s)

Project homepage

Registration Citation

Citation

Baltes, Guido, Marc König and Christina Ungerer. 2016. "The Effectiveness of Business Coaching on Technology-Based Ventures' Survival Capabilities." AEA RCT Registry. January 14. https://doi.org/10.1257/rct.973-5.0

Former Citation

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Experimental Details

Interventions

Intervention(s)

External support is needed to enable venture teams to develop their business activities efficiently. The coaching intervention will focus on tactical knowledge, which is designed to help founders building appropriate networks and enhance their know-how where needed capabilities cannot be derived from books. Our delivery partner bwcon has had an efficient business coaching concept in place since 2005 which serves as support intervention in the planned RCT. Content-wise, the coaching sessions do not only provide business and technological expertise to new business founders, but particularly aim at accelerating the creation of networks and tactical implementation of venture development activities during the growth phase. Business as usual refers to venture teams with different levels and exposure to explicit business knowledge gained for instance through prior work experience or by non-tactical coaching input.

Intervention Start Date

2015-03-23

Intervention End Date

2017-09-01

Primary Outcomes

Primary Outcomes (end points)

The primary outcome of interest to the research team is venture survival capability. In conformity with the main research goal and the primary research question, the effectiveness of tactical business coaching in increasing survival capabilities of newly founded businesses is detected.

Primary Outcomes (explanation)

Measuring the absolute rate of survival entails the challenge of limited comparing opportunities due to the fact that the sample is drawn over time. A more refined measurement of survival thus was introduced by breaking down the outcome measure ‘survival’ into survival capability classes. Based on network theory and the assumption that the likelihood of survival increases as the venture’s value-network of transactions with partners in various dimensions (selling, procurement, HR, and capital markets) matures, we are measuring five distinct survival capability classes in these four categories summing up to a total survival capability score.

Secondary Outcomes

Secondary Outcomes (end points)

Secondary Outcomes (explanation)

Experimental Design

A pragmatic two-armed Randomized Controlled Trial represents the basic study design testing the effect of tactical knowledge coaching on the survival capabilities of technology-based early-stage ventures. Over three years, 450 ventures from the German regional state Baden-Württemberg will be recruited. Accredited, experienced coaches are imparting certain tactical knowledge to the founder teams in the form of individual support sessions. The treatment group (T) encompasses 150 startups in total, each year about 50 being subject to the intervention. Not having been coached with a focus on tactical knowledge, another 300 ventures serve as the control group (C). After three years, ventures' survival capability (total score) six months post-intervention is compared.

Experimental Design Details

SAMPLE:
The RCT sample will be gained over time (3 years) out of participants of a new venture support program managed by our delivery partner bwcon GmbH. Based on experience from the past 10 years, at least about 150 ventures will be recruited per year, adding to a total sample size of N=450 after three years. Budget restrictions limit the number of ventures being sampled into the treatment group to 50 per year, adding up to N=150 (T) after three years. Ventures in the treatment group will enjoy an intensive support intervention, namely business coaching that will provide them with tactical business knowledge. The control group is thus N=300 (C).

Based on past experience, each year about 300 venture teams (restricted by being based in Baden-Württemberg and presenting technology-orientation in their business model) will register their venture on bwcon’s VDS online platform (total number of registered ventures in 2015: 452, adjusted by removing incomplete files, doublings, non-Baden-Württemberg residence, non-technology-orientation etc. about 300 ventures remained). This number corresponds to a study from the Centre for European Economic Research which estimated the population of technology-based ventures in Baden-Württemberg at about 300 / year. However, the definitions used in this study differ somewhat from the entry criteria for the VDS online platform. Thus, the numbers cannot be considered to describe exactly the same population. Nevertheless, it can fairly be estimated that the adjusted VDS online platform registrations represent at least 70-80% of the relevant population of ventures in Baden-Württemberg.

These registered 300 ventures are then invited to join a compact training event provided by bwcon 24 times per year. Here, the attending ventures will be provided with basic, explicit knowledge on how to start-up, how to create a business plan and the like. In addition, they are provided with information about available support programs. Based on past experience, at least 150 ventures, i.e. about 50%, will follow the invitation and join the event. These at least 150 ventures taking part and attending the compact training event will be subject to the rct sampling. Thus, the attendance at the compact training represents the entry point to the experiment.

DATA:
Structured data will be gathered via the bwcon Venture Development Platform, an online database allowing venture teams to submit and work on their business plan, simultaneously documenting coaching interventions and development. Evaluations by experts on the basis of an index comprise the primary outcome measure items as explained in section seven. Additional information will be gathered by making use of questionnaires, directly asking founder teams to update their data at regular intervals. Currently planned are half-yearly updates via the Venture Development System platform starting post-intervention. These data include ventures’ growth indicators such as revenue, employees, and capital acquired which are used for analyzing the secondary research questions.

Randomization Method

Randomization will be done computer-based:
Restricted blocked randomization will be used to ensure the budget-limited number of interventions (50/year) is entirely reached. Each block encompasses six ventures. The allocation ratio is 2:1, meaning two out of six ventures are randomly allocated to the treatment group. An Excel script provided by a statistician who is not involved in the project will be used to randomize the beforehand anonymized ventures.

Randomization Unit

Randomization is done on a venture team level.

Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters

450 venture teams

Sample size: planned number of observations

450 venture teams

Sample size (or number of clusters) by treatment arms

In this business coaching RCT, 150 venture teams are subject to the intervention, while 300 are in the control group.

Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

The trial design provides adequate statistical power. In a very conservative setting assuming an unrealistically high pooled standard deviation (4.2) drawn from an extreme-outcome pre-sample, a two-sided t-test, α=0.05, and power against alternative hypothesis = 0.8, results suggest that the minimum required sample size to detect an effect size of 0.2 (comparison of groups 6 months after the intervention) is 321, meaning 107 for the treatment group and 214 for the control group. Given a sample size of 360 (conservative estimation of sample size reached at the time the final analysis for the RCT is planned) and an allocation ratio of ventures receiving tactical coaching to those of the control group of 1:2, the minimum detectable effect size (MDES) is 0.18.

Supporting Documents and Materials

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