The GEN Atlas Spotlight series identifies interesting individual examples of innovative policy making. The first selection of case studies spotlighted have been chosen for the differing approaches to providing evidence of impact. GEN Atlas categorizes programs into five groups based on type of evidence provide:
- No Evidence: programs that provide no metrics to evaluate the impact of their work
- Level 1 – Participation: programs that reveal only basic information such as number of participants, program completion rates, and levels of activity
- Level 2 - Outcomes: programs that demonstrate they have hit specific goals relating to entrepreneurship such as number of course graduates going on to start a business, number of products successfully developed, number of business relocations, costs saved for startups etc.
- Level 3 – Wider Economic Impact: policymakers can cite improved economic stats that correlate to their program such as an increased investment, GVA, job creation, survival rates, business creation, increased exports etc.
- Level 4 – Direct Proof Impact: policymakers have used academic methods to demonstrate the direct impact their program has had on economic measures
Erasmus for Young Entrepreneurs (EYE) is a Europe-wide initiative that pairs youth entrepreneurs with experienced entrepreneurs in a different country, enabling them to receive direct experience of working in an established startup. Crucially, the program is designed to be a mutually beneficial experience for both the youth and host entrepreneur, providing the former with on-the-job training and the later with an ambitious and motivated employee for up to six months. The ultimate goal of the program is to facilitate the transfer of knowledge, promote youth entrepreneurial activity and create employment opportunities more broadly.
The program was launched in 2009 by the European Commission with an initial budget of €3 million which has risen to around €16 million per year as the program has grown. The program is aimed at tackling two main challenges facing entrepreneurship policymakers:
It is a simple fact that entrepreneurial ecosystems suffer when large chunks of society are excluded. Innovative ideas emerge quickest from a diverse pool of individuals but the reality is that across the world many potential entrepreneurs face fewer opportunities to become founders and often lack the self-confidence required to take the huge risk of launching a startup. Policies that aim to broaden the appeal of entrepreneurship to marginalized groups in society have the potential to both transform the lives of the individual entrepreneurs but also massively expand the quality and quantity of innovative startups operating within local ecosystems, generating growth, employment, and wider societal benefits.
Becoming an entrepreneur is a career path that often does not seem immediately obvious to pupils and students who lack exposure to immediate role models and experience of startup culture. Policymakers can rectify this by embedding enterprise and entrepreneurship into education as well as offering stand-alone courses. Likewise, providing existing and potential entrepreneurs with mentoring, training and support increases widens the skills and pool of founders creating innovative startups. Skills training also plays a critical role in providing startups with access to talented employees able to help grow the business and fill specialist roles.
Erasmus for Young Entrepreneurs (EYE) uses three policy mechanisms to address these issues:
EYE expands access to entrepreneurship by targeting the scheme at young people who generally lack the means and experience to launch a business without additional support. Although there is no age limit to join the program, to be accepted they must demonstrate both that they are in the early stages of entrepreneurial development and wish to gain more skills. In particular the program provides all participants with a €6,600 grant that covers travel, accommodation, food and related costs in their stay in the host country.
The program ensures new entrepreneurs benefit from in-work training with the host company that allows them to develop their entrepreneurial skills, and gain business knowledge and experience on managing a small business from their direct collaboration with the host entrepreneur for up to six months.
The program is also designed to facilitate the transfer of knowledge both from the host entrepreneur to the youth entrepreneur but also vice versa. The program aims to ensure that host entrepreneurs benefit from innovative ideas from a motivated new entrepreneur. Research has shown that informal contact plays a critical role in the sharing of new ideas and best practice with an outsized impact on the performance of a startup ecosystem.
Impact Level 3: wider economic impact
EYE has claimed that during the period of 2016-2021, over 250 new companies and more than 2000 jobs were created as a result of the program. They also revealed that almost 11,000 exchanges had taken place with 36.5% of those participating in the program going on to create their own business. However, they have not published an impact report demonstrating a causal link between the jobs and companies created and the program itself. Consequently, it is not possible to assess the true impact of the program.
The program achieves the GEN impact rating of level 3 as it has tracked the activities of its participants on key metrics including job creation and business creation without demonstrating direct proof of impact. Crucially, it is not possible to prove that these jobs and businesses wouldn’t have been created in the absence of EYE. It is possible – or even likely – that many of the entrepreneurs who launched startups after the program would have done so anyway as they already had developed business plans. Without evidence from a control group to compare results with it is not possible to know how many businesses would have formed or how they would have performed in the absence of EYE.
Having accurate and compelling evidence for the success of entrepreneurship policy is essential in the spreading of ideas and effective support. Nevertheless, there is substantial lack of reliable impact evaluation in this field. To help remedy this, the OECD has published a framework for the evaluation of SME and entrepreneurship policies and programs which can be accessed here. In particular, the report outlines the central importance of using Randomized Control Trials (RCTs) to generate robust evidence that can be used to demonstrate true value for money and effectiveness.
Read the full case study on EYE by clicking here.