Evaluating the Impact of Entrepreneurship Policies on New Venture Performance

Governments worldwide are implementing policies designed to promote entrepreneurial ventures and encourage firms to innovate. However, limited evidence in the literature exists that demonstrates the effective impact of such policies on firm performance. Using firm-level panel data from 2006–2019, we evaluate the impact of the Startup India (SUI) initiative on the performance of new ventures in India using the Difference-in-Differences method. The findings of our study show enhanced performance of startups in the domestic market, but a significant decline in their international performance after the launch of the SUI initiative in 2016. Our findings indicate higher incentives for startups to compete and innovate in the domestic market than in the foreign markets. Furthermore, our extended DID model on returnee startups shows that fiscal incentives under the SUI initiative enhanced domestic competitiveness. However, the policy had no significant impact on their international performance, contrary to popular returnee firm performance literature.