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. Immigrant Entrepreneurship

    Sari Pekkala Kerr and William R. Kerr

    We examine immigrant entrepreneurship and the survival and growth of immigrant-founded businesses over time relative to native-founded companies. Our work quanti.es immigrant contributions to new firm creation in a wide variety of fields and using multiple definitions. While significant research effort has gone into understanding the economic impact of immigration into the United States, comprehensive data for quantifying immigrant entrepreneurship are difficult to assemble. We combine several restricted-access U.S. Census Bureau data sets to create a unique longitudinal data platform that covers 1992-2008 and many states. We describe differences in the types of businesses initially formed by immigrants and their medium-term growth patterns. We also consider the relationship of these outcomes to the immigrants’ age at arrival to the United States.

    Keywords: Immigrants; entrepreneurs; entrepreneurship; immigration; entry; firms; Growth; venture capital; high-tech marketing; Venture Capital; Entrepreneurship; Immigration; United States;

    Citation:

    Pekkala Kerr, Sari, and William R. Kerr. "Immigrant Entrepreneurship." Harvard Business School Working Paper, No. 17-011, July 2016. (NBER Working Paper Series, No. 22385, July 2016.) View Details
  3. Stick to the Strategy or Make the Sale?: A Manufacturer of High-tech Streetlights Considers an Exception to Its New Subscription Model

    Mitchell Weiss

    A manufacturer of high-tech streetlights considers an exception to its new subscription model. A fictionalized case study based on the HBS Case 816-005, "Bigbelly," by Mitchell Weiss and Christine Snively. This case is an example of public entrepreneurship.

    Keywords: public entrepreneurship; smart cities; anything as a service; Xaas; Bigbelly; Entrepreneurship;

    Citation:

    Weiss, Mitchell. "Stick to the Strategy or Make the Sale? A Manufacturer of High-tech Streetlights Considers an Exception to Its New Subscription Model." Harvard Business Review 94, nos. 7-8 (July–August 2016): 119–121. (Published online as “Case Study: Should You Adjust Your Business Model for a Major Customer?") View Details
  4. The Cheese and the Oligarchs: The Politics, the Media, and Israel's Dream of a Start-Up Nation

    Rafael Di Tella and Christine Snively

    Israel enjoyed the highest concentration of technology start-ups in the world per capita. Despite regional instability, the country maintained strong economic growth and was considered a high-tech powerhouse. But not all Israelis benefited. Between the 1980s and 2010s, income distribution had widened. By 2015, 20 business groups -- nearly all family-owned -- controlled one in four listed companies through corporate pyramids. Public anger over the high cost of living, which many believed was due to a lack of competition, led to a series of protests. Some academics and members of the Knesset (Parliament) called for reforms to limit the activities of corporate pyramids.

    Keywords: Entrepreneurship; Technology; Business Conglomerates; Business Startups; Israel;

    Citation:

    Di Tella, Rafael, and Christine Snively. "The Cheese and the Oligarchs: The Politics, the Media, and Israel's Dream of a Start-Up Nation." Harvard Business School Case 716-060, June 2016. View Details
  5. 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, this working paper demonstrates the role of tour companies in drawing affluent Western ecotourists to the country, as well as profiling the creators of ecolodges and other forms of accommodation in providing them with a place to stay. These entrepreneurs, many of them expatriate Americans, helped ensure that formally protected areas remained sustainable parks and reserves by providing revenues, conservation education 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 that 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
  6. AnswerDash

    Elie Ofek and Jeffrey D. Shulman

    It is 2014 and AnswerDash, a startup backed by venture capital, has not seen the widespread adoption of their online self-service customer support solution that they were expecting based on early success in helping clients save and generate substantial amounts of money. Dr. Jacob O. Wobbrock and Dr. Andrew J. Ko are revisiting their go to market strategy to determine how to build a viable business out of their groundbreaking technology. The case raises issues in entrepreneurship and B2B marketing such as analyzing economic value to the customer, designing optimal price metrics, aligning pricing with marketing strategy, customer life-time value, organizational selling, and influencing innovation adoption.

    Keywords: pricing; economic value estimation; price metrics; organizational selling; innovation adoption; business to business; marketing; customer lifetime value; Venture Capital; Customer Relationship Management; Price; Marketing Strategy; Entrepreneurship; Technology Adoption; Business Startups; Sales; Innovation and Invention; Product Marketing; Financial Services Industry;

    Citation:

    Ofek, Elie, and Jeffrey D. Shulman. "AnswerDash." Harvard Business School Case 516-106, June 2016. View Details
  7. Wisdom or Madness? Comparing Crowds with Expert Evaluation in Funding the Arts

    Ethan Mollick and Ramana Nanda

    In fields as diverse as technology entrepreneurship and the arts, crowds of interested stakeholders are increasingly responsible for deciding which innovations to fund, a privilege that was previously reserved for a few experts, such as venture capitalists and grant‐making bodies. Little is known about the degree to which the crowd differs from experts in judging which ideas to fund, and, indeed, whether the crowd is even rational in making funding decisions. Drawing on a panel of national experts and comprehensive data from the largest crowdfunding site, we examine funding decisions for proposed theater projects, a category where expert and crowd preferences might be expected to differ greatly. We instead find significant agreement between the funding decisions of crowds and experts. Where crowds and experts disagree, it is far more likely to be a case where the crowd is willing to fund projects that experts may not. Examining the outcomes of these projects, we find no quantitative or qualitative differences between projects funded by the crowd alone, and those that were selected by both the crowd and experts. Our findings suggest that crowdfunding can play an important role in complementing expert decisions, particularly in sectors where the crowds are end users, by allowing projects the option to receive multiple evaluations and thereby lowering the incidence of "false negatives."

    Keywords: Decision Choices and Conditions; Entrepreneurship; Investment; Fine Arts Industry; Technology Industry;

    Citation:

    Mollick, Ethan, and Ramana Nanda. "Wisdom or Madness? Comparing Crowds with Expert Evaluation in Funding the Arts." Management Science 62, no. 6 (June 2016): 1533–1553. View Details
  8. College Tuition, Public Finance and New Business Starts

    Gareth Olds

    A growing public discourse cites the rising cost of education and student debt overhang as a contributor to slow economic growth. A parallel discussion explores the causes of the secular decline in business dynamism and entrepreneurship rates in the United States over the past several decades. This study is an attempt to connect these two narratives. I provide early evidence that the growth of public university tuition over the previous two decades is negatively associated with movement into self-employment. Because labor market and education decisions are often made together, I focus on shocks to in-state tuition among parents of near-college-age children, who may internalize the cost of their children’s education but are less likely to be attending college themselves. Using state budget surpluses and shortfalls as an instrument for in-state tuition in a triple-difference framework, I find that a 10% increase in the average price of in-state tuition is associated with a 13.9% decrease in new business starts of parents with college-age children in the CPS, relative to both non-parents and parents of younger children. A one percentage-point increase in the growth rate of in-state tuition is associated with a 3.8% decline in new firm births. The effect is similar in size and significance when aggregating to the household level and when including a standard battery of covariates. The instrument is orthogonal to private school tuition rates, and the effects are stronger for households with more children and those with children closest to college age. Taken together, the results indicate that the rising cost of higher education may be partially responsible for the decline in new business starts in the United States.

    Keywords: Cost; Higher Education; Entrepreneurship;

    Citation:

    Olds, Gareth. "College Tuition, Public Finance and New Business Starts." Harvard Business School Working Paper, No. 16-145, June 2016. View Details
  9. Financing Entrepreneurial Experimentation

    Ramana Nanda and Matthew Rhodes-Kropf

    Keywords: innovation; venture capital; Investing; abandonment option; failure tolerance; Risk and Uncertainty; Technological Innovation; Venture Capital; Entrepreneurship;

    Citation:

    Nanda, Ramana, and Matthew Rhodes-Kropf. "Financing Entrepreneurial Experimentation." Chap. 1 in Innovation Policy and the Economy, Volume 16, edited by William R. Kerr, Josh Lerner, and Scott Stern, 1–23. National Bureau of Economic Research, and University of Chicago Press, 2016. View Details
  10. 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
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