Entrepreneurship

Entrepreneurship is a featured research topic and an initiative at Harvard Business School
 
Our long tradition of research in Entrepreneurship goes back to the 1930's and 1940's with the “the father of venture capitalism,” General Georges Doriot, and Joseph Schumpeter’s theory of innovation as a process of “creative destruction.” Building on our intellectual roots, our scholars come from disciplines including economics, finance, sociology, strategy, business history, management, and social entrepreneurship. A number of our faculty come from practice as venture capitalists and start-up founders. We focus our research on the identification and pursuit of entrepreneurial opportunities; domestic and international funding of entrepreneurial endeavors; innovation, particularly technological innovation in international ventures; the environments in which entrepreneurs make decisions; and social entrepreneurship. As our research contributes new insights, we are advancing the world’s understanding of complex entrepreneurial issues and helping to increase the entrepreneurial success of our students and practitioners worldwide. 
  1. Taxation, Corruption, and Growth

    Philippe Aghion, Ufuk Akcigit, Julia Cagé and William R. Kerr

    We build an endogenous growth model to analyze the relationships between taxation, corruption, and economic growth. Entrepreneurs lie at the center of the model and face disincentive effects from taxation but acquire positive benefits from public infrastructure. Political corruption governs the efficiency with which tax revenues are translated into infrastructure. The model predicts an inverted-U relationship between taxation and growth, with corruption reducing the optimal taxation level. We find evidence consistent with these predictions and the entrepreneurial channel using data from the Longitudinal Business Database of the US Census Bureau. The marginal effect of taxation for growth for a state at the 10th or 25th percentile of corruption is significantly positive; on the other hand, the marginal effects of taxation for growth for a state at the 90th percentile of corruption are much lower across the board. We make progress towards causality through Granger-style tests and by considering periphery counties where effective tax policy is largely driven by bordering states. Finally, we calibrate our model and find that the calibrated taxation rate of 37% is fairly close to the model's estimated welfare maximizing taxation rate of 42%. Reducing corruption provides the largest potential impact for welfare gain through its impact on the uses of tax revenues.

    Keywords: Endogenous Growth; taxation; public goods; corruption; entrepreneurship; Crime and Corruption; Entrepreneurship; Taxation; Economic Growth;

    Citation:

    Aghion, Philippe, Ufuk Akcigit, Julia Cagé, and William R. Kerr. "Taxation, Corruption, and Growth." Special Issue on The Economics of Entrepreneurship. European Economic Review 86 (July 2016): 24–51. View Details
  2. Entrepreneurs and the Co-Creation of Ecotourism in Costa Rica

    Geoffrey Jones and Andrew Spadafora

    Between the 1970s and the 2000s Costa Rica became established as the world’s leading ecotourism destination. This working paper suggests that although Costa Rica benefited from biodiversity and a pleasant climate, the country’s preeminence in ecotourism requires more than a natural resource endowment explanation. The paper argues that the ecotourism industry was a co-creation of the public, private, and tertiary sectors. While the role of the government and conservation NGOs is acknowledged in the existing literature, this study draws attention to the critical role of small entrepreneurs. Making extensive use of oral history, the working paper demonstrates the role of tour companies in drawing affluent Western ecotourists to the country, and of the creators of ecolodges and other forms of accommodation in providing them with somewhere to stay. These entrepreneurs, many of them expatriate Americans, helped ensure that formally protected areas remained sustainable parks and reserves, by providing revenues, education in conservation to tourists, and community development and jobs. Clustering created positive externalities for new entrepreneurs to enter the industry, who could also learn from knowledge spillovers. There were downsides to the new industry, however. The creation of the national image of a natural paradise enabled many businesses which were not environmentally sustainable to free-ride on the green image. Even values-driven ecotourism entrepreneurs faced questions about their impact as they expanded the scale of their operations. While scaling was a sign of success and delivered many benefits to Costa Rica, there were distinct drawbacks from a sustainability perspective.

    Keywords: tourism; Latin America; business history; sustainable strategy; sustainability; nonprofit; entrepreneurs; environment; Entrepreneurship; History; Tourism Industry; Costa Rica;

    Citation:

    Jones, Geoffrey, and Andrew Spadafora. "Entrepreneurs and the Co-Creation of Ecotourism in Costa Rica." Harvard Business School Working Paper, No. 16-136, June 2016. View Details
  3. Emaar: The Center of Tomorrow, Today

    Sid Yog, Esel Cekin and Marc Homsy

    Starting in 1997, Mohammad Alabbar, Chairman of Emaar, has been largely associated with Dubai's most renowned real estate projects: the world's tallest building, largest mall and biggest fountain show. Emaar's pioneering success attracted a large number of private sector entrepreneurs as well as the Government of Dubai to follow in its footsteps. Consequently, land at prime locations in Dubai was not as readily available as it used to be. Emaar tried to venture outside of Dubai, but later faced challenges in choosing the right partners and maintaining control over management. Being 'stuck' between an overcrowded competitive landscape in Dubai and challenging conditions abroad, Alabbar wondered how he could maintain his company's growth while staying prepared for any upcoming financial downturn.

    Keywords: Middle East; Market Entry and Exit; Competitive Strategy; Entrepreneurship; Global Strategy; Real Estate Industry; Middle East; Dubai;

    Citation:

    Yog, Sid, Esel Cekin, and Marc Homsy. "Emaar: The Center of Tomorrow, Today." Harvard Business School Case 216-051, March 2016. View Details
  4. Advanced Leadership Pathways: Doug Rauch and the Daily Table

    Rosabeth Moss Kanter, Peter Zimmerman and Penelope Rossano

    Former Trader Joe’s President Doug Rauch developed an innovative idea to address the challenge of food insecurity, food waste, and nutrition. His concept was a new retail grocery model, offering nutritious affordable food to a food insecure population in the inner city using excess inventory. His path was not an easy one, but by April 2015, Rauch was celebrating the upcoming launch of his Boston pilot and flagship store, Daily Table. Daily Table would be able to test its operating model and impact, better understand its customer base, and establish community partnerships. After further expansion to other sites in Boston, Daily Table planned to expand nationally. But there were questions about whether acceptance by one community would transfer to others and what could Rauch do to prepare himself and his team.

    Keywords: Food; Social Entrepreneurship; Social Enterprise; Nonprofit Organizations;

    Citation:

    Kanter, Rosabeth Moss, Peter Zimmerman, and Penelope Rossano. "Advanced Leadership Pathways: Doug Rauch and the Daily Table." Harvard Business School Case 316-105, March 2016. View Details
  5. Hello Alfred: Come Home Happy

    Joseph B. Fuller and Carin-Isabel Knoop

    On a mission to "automate the on-demand economy," Harvard Business School classmates Marcela Sapone and Jessica Beck launched Hello Alfred in 2013 to provide subscribers with an "Alfred" to complete various chores for a monthly fee. In early 2016, the company has built an infrastructure, including a mobile app, to develop Alfreds' routes and respond to customer requests in conjunction with other service providers, for example grocery delivery services, in what the founders describe as their "B2B2C" business model. Alfred won the coveted TechCrunch San Francisco Disrupt Cup in 2014, and by April 2015 had secured $12.5 million in seed and Series A funding. The founders must determine the best growth strategy for Alfred. Should they expand Alfred beyond their present operating cities, New York and Boston, or should they focus on their current markets? Should they increase public visibility to attract more customers, or should they enroll landlords in Alfred and reach consumers in that way?

    Keywords: on-demand economy; sharing economy; technology startup; technology; growth strategy; Business Startups; Business Growth and Maturation; Entrepreneurship; Mobile Technology; Strategic Planning; Service Industry; United States; Boston; Cambridge; New York (city, NY); California;

    Citation:

    Fuller, Joseph B., and Carin-Isabel Knoop. "Hello Alfred: Come Home Happy." Harvard Business School Case 316-154, March 2016. (Revised June 2016.) View Details
  6. Michael Milken: The Junk Bond King

    Tom Nicholas and Matthew G. Preble

    Michael Milken, an investment banker who dominated the junk bond market in the 1980s, was sentenced to jail in 1990 after pleading guilty to a number of securities and tax related felonies. In the preceding decade, Milken had helped usher in a new wave of leveraged buy outs (LBOs) and greatly changed the structure of corporate America. By the late 1980s though, Milken and junk bonds became more heavily scrutinized, and Milken was eventually implicated in a number of felonious acts. Even after his admission of guilt, however, observers remained divided on what Milken's true impact had been. Was he simply a misunderstood financial innovator who democratized access to capital? Or was he driven purely by greed and by nefarious personal financial motives?

    Keywords: junk bonds; high-yield bonds; financial innovation; shareholder value; Bonds; Capital; Capital Structure; Cost of Capital; Crime and Corruption; Entrepreneurship; Ethics; Finance; Investment Banking; Leveraged Buyouts; Mergers and Acquisitions; Ownership; Private Equity; Restructuring; United States;

    Citation:

    Nicholas, Tom, and Matthew G. Preble. "Michael Milken: The Junk Bond King." Harvard Business School Case 816-050, March 2016. View Details
  7. Slack Time and Innovation

    Ajay Agrawal, Christian Catalini, Avi Goldfarb and Hong Luo

    Traditional innovation models assume that new ideas are developed up to the point where the benefit of the marginal project is just equal to the cost. Because labor is a key input to innovation, when the opportunity cost of time is lower, such as during school breaks or time off from work, then such models predict that the number of ideas developed will be greater, but the average quality will be lower due to the lower expected value of marginal ideas. However, we posit that slack time such as school breaks may be qualitatively different than work time because contiguous blocks may be particularly beneficial for working on complex projects. We present a model incorporating this idea that predicts that although more ideas will be produced during slack time, they will have higher average complexity and perhaps even higher average value. Using data on 165,410 projects posted on Kickstarter (2009–2015), we report findings consistent with the model's predictions.

    Keywords: crowdfunding; entrepreneurship; slack time; internet; Quality; Internet; Entrepreneurship; Innovation and Invention;

    Citation:

    Agrawal, Ajay, Christian Catalini, Avi Goldfarb, and Hong Luo. "Slack Time and Innovation." Harvard Business School Working Paper, No. 16-106, March 2016. View Details
  8. Lean Strategy

    David Collis

    Strategy and entrepreneurship are often seen as polar opposites. Yet the two desperately need each other: strategy without entrepreneurship is central planning; entrepreneurship without strategy leads to chaos. The two approaches can be reconciled through the Lean Strategy process which ensures that startups innovate in a disciplined fashion and make the most of their limited resources by knowing "what not to do". Deliberate strategy sets the bounds within which entrepreneurial experimentation takes place, while the results of that innovation leads to learning that reshapes the strategy. Lean Strategy enables company builders to pursue viable opportunities, stay focused, and align the entire organisation while supporting front-line entrepreneurial activities.

    Keywords: strategy; strategy implementation; entrepreneurship; strategy alignment; Strategy; Entrepreneurship;

    Citation:

    Collis, David. "Lean Strategy." Harvard Business Review 94, no. 3 (March 2016): 62–68. View Details
  9. Neurotrack and the Alzheimer's Puzzle

    Richard G. Hamermesh, Liz Kind and Carin-Isabel Knoop

    Elli Kaplan founded Neurotrack in 2012 with a breakthrough non-invasive cognitive diagnostics test that will detect Alzheimer's Disease in its earliest pre-symptomatic stages. While the company has gained great traction in the three years since it was started, with no therapeutic product available in the foreseeable future Kaplan is considering whether it is time to change the company's business model.

    Keywords: Alzheimer's Disease; diagnostics; healthcare; Entrepreneurship; Health; Science-Based Business; Medical Devices and Supplies Industry; United States;

    Citation:

    Hamermesh, Richard G., Liz Kind, and Carin-Isabel Knoop. "Neurotrack and the Alzheimer's Puzzle." Harvard Business School Case 816-072, February 2016. View Details
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