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Working Paper HBS Working Paper Series 2019 Experimentation and Startup Performance: Evidence from A/B testing |
Recent work argues that experimentation is the appropriate framework for entrepreneurial strategy. We investigate this proposition by exploiting the time-varying adoption of A/B testing technology, which has drastically reduced the cost of experimentally testing business ideas. This paper provides the first evidence of how digital experimentation affects the performance of a large sample of high-technology startups using data that tracks their growth, technology use, and product launches. We find that, despite its prominence in the business press, relatively few firms have adopted A/B testing. However, among those that do, we find increased performance on several critical dimensions, including page views and new product features. Furthermore, A/B testing is positively related to tail outcomes, with younger ventures failing faster and older firms being more likely to scale. Firms with experienced managers also derive more benefits from A/B testing. Our results inform the emerging literature on entrepreneurial strategy and how digitization and data-driven decision-making are shaping strategy.
Keywords: experimentation; A/B Testing; Entrepreneurship; Strategy; Business Startups; Technology; Performance;
Koning, Rembrand, Sharique Hasan, and Aaron Chatterji. "Experimentation and Startup Performance: Evidence from A/B testing." Harvard Business School Working Paper, No. 20-018, August 2019. (SSRN Working Paper Series, No. 3440291, August 2019.)
