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.