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or specific business human capital on small business outcomes. Instead, prior work

experience in a family member's business has an independent effect on small business

outcomes, which may in part be due to the acquisition of less formal or more general

business human capital.

Although many owners had a self-employed family member and previous work

experience in a family member's business, very few small businesses were inherited.

Estimates from the CBO indicate that only 1.6 percent of all small businesses were

inherited. We also find in the regression analysis that inherited businesses are more

successful on average than non-inherited businesses. However, their limited

representation among the population of small businesses suggests that business

inheritances are only a minor determinant of small business outcomes.

From a policy perspective the findings are important. Most disadvantaged

business development policies currently in place, such as set-asides and loan assistance

programs, are targeted towards alleviating financial constraints not towards providing

opportunities for work experience in small businesses. Even programs providing

mentoring, such as the Small Business Administration's 8(a) Business Development

Mentor-Protégé Program, generally focus on technical, management and financial

assistance, subcontract support, and assistance in performing prime contracts through

joint venture arrangements. These programs do not explicitly provide opportunities for

would-be entrepreneurs to acquire general and specific business human capital by

working for other small business owners.24 The findings from this research suggest that

24 The Kauffmann Foundation, however, has a program that provides students with opportunities to work as interns for entrepreneurial ventures. The Kauffmann Entrepreneurial Internship Program has grown rapidly over the past few years and placed 1,800 students at entrepreneurial companies and non-profit organizations in the past year.

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