Does winning a venture competition encourage entrepreneurial exploration? Evidence from China

This paper examines whether winning venture competition spurs entrepreneurs to carry out entrepreneurial exploration. We use data from new venture competitions organized by Shanghai municipal government that are open to innovative small ventures. Using a regression discontinuity design, we show that winning leads to a higher level of entrepreneurial explorations in the year following the competition. However, this effect is reduced for female entrepreneurs, and entrepreneurs whose affiliated ventures have a shorter time of operation. Our findings are consistent with existing theories about entrepreneurship and behavioral economics, including entrepreneurial experimentation and “house money” effect.