Do Network Dynamics Undermine Idea-based Network Advantages? Experimental Results from an Entrepreneurship Bootcamp

Rembrand  Koning

Working Paper | 2016

Do Network Dynamics Undermine Idea-based Network Advantages? Experimental Results from an Entrepreneurship Bootcamp

Abstract

Do networks plentiful in ideas provide early stage startups with performance advantages? On the one hand, network positions that provide access to a multitude of ideas are thought to increase team performance. On the other hand, research on network formation argues that such positional advantages should be fleeting as entrepreneurs strategically compete over the most valuable network positions. To investigate these competing views, I embed a field experiment in a startup bootcamp to test if networks that are plentiful in ideas lead to sustainable network- based performance advantages. Leveraging data on each participant’s creative potential, I use peer randomizations and detailed data on network formation to show that ties to more creative individuals improve team performance. Despite the performance benefits of such connections, I find little evidence that entrepreneurs strategically connect to others who have greater creative potential. Instead, entrepreneurs seek feedback from others on dimensions that are more socially salient and verifiable. Beyond providing causal evidence for the durability of network-based performance advantages, these findings provide micro-level support to the importance of knowledge spillovers within bootcamps, accelerators, and startup ecosystems more generally.

Keywords: Networks; Performance; Business Startups; Business Strategy;

Language: English

Format: Print

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Citation:

Koning, Rembrand. "Do Network Dynamics Undermine Idea-based Network Advantages? Experimental Results from an Entrepreneurship Bootcamp." Working Paper, August 2016.

Does public ownership improve employment diversity? Organizational researchers theorize that increased transparency to regulators and the public should lead firms to conform to legal and social norms; but also that social closure and decoupling should preserve the status quo. Empirical research has been difficult because we lack data on comparable private firms and because firms likely self-select into going public. We construct a new, nationally representative dataset that links firms' filings for initial public offerings to longitudinal data on employment composition from the Equal Employment Opportunity Commission. We construct a set of comparable firms by looking at companies that filed and then withdrew a plan for an IPO. To account for selection bias in withdrawal and IPO success, we instrument the transition to public ownership using market returns in the book-building phase of the firms' IPO attempts. We find no evidence that moving from private to public ownership increases the representation of women or nonwhite workers or managers. We discuss the implications of this finding for our ability to generalize findings in organizational research.

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Do Network Dynamics Undermine Idea-based Network Advantages? Experimental Results from an Entrepreneurship Bootcamp

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