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

Last registered on December 08, 2015

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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

December 08, 2015, 5:10 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

Contact Primary Investigator

Other Primary Investigator(s)

PI Name

Marc König

PI Affiliation

bwcon GmbH

Contact Investigator

PI Name

Dr.-Ing. 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, Dr.-Ing. Guido, Marc König and Christina Ungerer. 2015. "The Effectiveness of Business Coaching on Technology-Based Ventures' Survival Capabilities." AEA RCT Registry. December 08. https://doi.org/10.1257/rct.973-2.0

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 (Hidden)

Providers of the support intervention are experienced managers and entrepreneurs from high-tech industries as well as former venture capitalists. Being members of the bwcon Management Coaching Group, they are required to be highly qualified in the area of management coaching. To ensure intervention quality, the accredited coaches have to attend professional development courses on a regular basis. In addition, coaching sessions are systemically reviewed by an external research institute. The tactical coaching intervention is provided in the form of direct, personal consulting sessions with the respective management coaching expert. Duration varies depending on whether a single founder or a venture team is subject to the intervention. Usually, single founders take advantage of 5 intensive contact days while teams are coached for a total of 10 days. In special cases support sessions may be extended to 15 days.

Ventures pay for the coaching intervention in advance, while the coach receives payment only after the venture team confirms the agreed number of hours/days has taken place. Thus, contact hours/days can be traced back based on the invoices. Blinding will be realized with respect to the recipients of the intervention. They will not be informed about differences between tactical and explicit knowledge coaching or about the planned investigation. Ventures are mostly run by a team of founders. Not always do all founders attend all coaching sessions, but coaching reports are sent to all team members.

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

The RCT sample will be gained over time from a new venture support program introduced by our delivery partner bwcon GmbH. Based on past experience, at least about 150 ventures are recruited per year, creating a total sample size of N=450 after three years. Budget restrictions limit the number of ventures being subject to the intensive support program focusing on imparting and developing tactical business knowledge (treatment group) to 50 per year, which sums up to N=150 (T) after three years. The control group is N=300 (C) accordingly.

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

Restricted blocked randomization will be used to ensure the budget-limited number of interventions (50/year) is entirely reached. One ‘block’ in this specific context refers to a one-year budget of 50 coaching contracts, randonly allocated to venture teams by bwcon consultants.

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

IRB