Effectiveness of government entrepreneurial support on start-ups: a supply chain economy perspective

Purpose This study aims to analyse the heterogeneous effectiveness of government entrepreneurial support on start-ups by differentiating between two industry types, the supply chain (SC) economy, which supplies goods and services to other businesses, and the business-to-consumer economy (B2C), which serves final consumers. Design/methodology/approach The authors examine 1,956 start-ups that received participative loans from the Spanish governmental agency ENISA between 2014 and 2019. Using a difference-in-differences approach with the Callaway and Sant’Anna estimator, the authors estimate the heterogeneous effects on turnover and employment growth across SC and B2C categories and their subcategories (SC Local, SC Traded, B2C Local, B2C Traded). Findings SC start-ups experience a significant 29.2% increase in turnover alongside a significant 25.2% decline in employment; B2C start-ups show no significant effects on either outcome. Within subcategories, SC Traded industries drive the positive turnover result (31.9% increase). Event-study analysis confirms that effects emerge at loan receipt and remain positive one year after treatment, with no pre-treatment differences, and survival analysis shows no differential firm exit across sectors. Practical implications Public support programmes for start-ups should account for sectoral heterogeneity. Policymakers can use the SC/B2C framework as a tractable criterion to target resources towards the SC economy, where participative loans yield the largest marginal effect. Managers of B2B start-ups can interpret participative loans as an instrument that relaxes binding financial constraints and enables productivity-enhancing investments. Originality/value This study moves beyond traditional high-tech vs non-high-tech classifications, offering a novel framework for evaluating public entrepreneurial finance. The findings indicate that start-ups in the SC economy, particularly those serving traded markets, are more responsive to public financial support, offering new evidence for policymakers designing industry-sensitive support programmes.