Government Support, Entrepreneurial Activity and Firm Growth

This paper summarizes the arguments and counterarguments within the scientific discussion on the issue of state and local governments' support of small businesses in U.S. states. The main purpose of the research is to determine whether state or local government's support positively affects entrepreneurial activity, firm growth, and business owner's optimism in the United States. Non-parametric methods of estimation and analysis of statistical hypotheses were used as the methodological basis of the conducted research, based on which 41 country were analyzed. 2013 was chosen as the study period. The study of the impact of state support on business, company growth and optimism of business owners is carried out in the following logical sequence: each state is assigned to one of two groups, based on their estimates of the level of support of state authorities. First, each state is assigned into one of two groups based on their score on state government support. The states that have a score higher than the mean state were assigned into the “High-State Govt Support” group and the others were assigned into the “Low-State Govt Support” group. Then, the two groups were compared in terms of entrepreneurial activity, firm performance, and optimism. Then, the same procedure is followed for local government support. The study empirically confirmed that greater support from the state or local government has a positive effect on the growth and optimism of the firm. The article presents the results of an empirical analysis for small firms in these countries, which showed that government support is an important driver of company growth and business owner optimism. The paper presents the results of an empirical analysis for small firms in these states, which showed that government support is important for firm growth and owner's optimism. The research empirically confirms and theoretically proves that more state or local government support positively affects firm growth and optimism. The results of the research can be useful for governments that consider supporting small businesses in their region/area.