Direct, Indirect and Cross-Lagged: The Effects of Cultural Policy on Nascent Cultural Entrepreneurship

While the topic of nascent entrepreneurship (NE) has received coverage in the scientific literature, we still have little knowledge concerning the characteristics of nascent firms in the cultural and creative sector. This study uses the Amadeus database for a sample of firms from 28 European Union countries in the period 2007 to 2016 to examine the effects of cultural policy, in terms of public budgets for culture, on NE. The authors model the effects as a mediation problem and show that while cultural policy has an effect on the general performance of cultural firms, it is mediated through its indirect effect on nascent cultural and creative firms and that this mediation occurs with a time delay. This finding is robust to numerous cultural policy variables, definitions of NE, performance indicators and model specifications. The article concludes with policy and research recommendations and reflections.