When Does Advice Impact Startup Performance?

Aaron  Chatterji; Solene  Delecourt; Sharique  Hasan; Rembrand  Koning

Article | Strategic Management Journal | Forthcoming

When Does Advice Impact Startup Performance?

by Aaron Chatterji, Solene Delecourt, Sharique Hasan and Rembrand Koning

Abstract

Why do some entrepreneurs thrive while others fail? We explore whether the advice entrepreneurs receive about managing their employees influences their startup's performance. We conducted a randomized field experiment in India with 100 high-growth technology firms whose founders received in-person advice from other entrepreneurs who varied in their managerial style. We find that entrepreneurs who received advice from peers with a formal approach to managing people—instituting regular meetings, setting goals consistently, and providing frequent feedback to employees—grew 28% larger and were 10 percentage points less likely to fail than those who got advice from peers with an informal approach to managing people, two years after our intervention. Entrepreneurs with MBAs or accelerator experience did not respond to this intervention, suggesting that formal training can limit the spread of peer advice.

Keywords: entrepreneurial management; field experiment; peer effects; entrepreneurial ecosystems; advice; Management Style; Management Practices and Processes; Knowledge Dissemination; Entrepreneurship; Performance; India;

Format: Print

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Chatterji, Aaron, Solene Delecourt, Sharique Hasan, and Rembrand Koning. "When Does Advice Impact Startup Performance?" Strategic Management Journal (forthcoming).

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.

This case describes how Google designed and launched an internal matching market to assign individual workers with projects and managers. The case evaluates how marketplace design considerations—and several alternative staffing models—could affect the company’s goals and workers’ well-being. It discusses the details of implementation as well as the intended (and unintended) consequences of the internal match system. The case concludes with a debate about how the Chameleon marketplace could expand to include more Googlers and illustrates what to consider when thinking about launching new matching markets in organizations.

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When Does Advice Impact Startup Performance?

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