March 2019
Article
Strategic Management Journal

When Does Advice Impact Startup Performance?

By: Aaron Chatterji, Solène Delecourt, Sharique Hasan and Rembrand Koning

Format:Print

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

Citation

Chatterji, Aaron, Solène Delecourt, Sharique Hasan, and Rembrand Koning. "When Does Advice Impact Startup Performance?" Strategic Management Journal 40, no. 3 (March 2019): 331–356.