Essays On Entrepreneurship and Contests Using Experiments

The research underlying this dissertation contributes to the literature on entrepreneurship and contests by conducting field, natural and lab experi­ ments. The first essay of the thesis evaluates a governmental backed program in the UK that provides small and medium­sized enterprises (SMEs) with financial incentives to engage the services of external experts when pursuing an innovation-related project within the firm. This Innovation Voucher Program operates as a randomized controlled trial (RCT) and thus allows estimating the causal effect of the voucher on innovation and growth measures as well as business outcomes of beneficiaries. The second essay addresses the effect of pressure on performance in contests by using a regression discontinuity (RD) design. The study investigates whether and why performance differences exist between two groups of contestants having the same level of skills, but competing against more skilled or less skilled contestants. In sum, the study presents first evidence that both rational and psychological factors explain performance differentials of equally skilled contestants that compete in groups characterized by different levels of peer pressure. The third essay of the dissertation is intended to further elaborate on the effect of pressure due to different contest compositions on stress, behavior and performance of contestants by conducting a lab experiment. In particular, the experiment focuses on how individuals experience stress when they are informed about their relative skills compared to other contestants.