Unlocking the power of accelerators: the crucial role of institutions in boosting new venture performance

Abstract

Accelerators are gaining popularity in the entrepreneurship ecosystem for accelerating new ventures by providing benefits such as sorting, signaling, and learning. However, existing empirical evidence on the impact of accelerators on new venture performance does not take into account the role of the institutional environment. In this paper, I argue and test for the importance of institutions and empirically examine the impact of accelerators on new venture performance using a generalized difference-in-differences technique on a worldwide accelerator database. At the baseline, the findings are consistent with previous literature, which shows a positive impact of accelerators on the revenues and equity funding of new ventures. However, I find that the positive impact is higher in countries with strong institutions. This paper demonstrates that institutions are a crucial boundary condition for assessing the impact of accelerators on new ventures. These findings contribute to nascent empirical research that assesses the impact of business accelerators on new venture performance.