Andy Wu is an assistant professor of business administration in the Strategy unit, teaching the Strategy course in the MBA required curriculum. Using the lenses of organizational economics and strategic management, he studies organizational structure as a capability for the acquisition and utilization of human, financial, and social capital in technology-focused entrepreneurial ventures.
Professor Wu is a founder and investor in Identified Technologies, which delivers cloud-hosted aerial data—collected via proprietary unmanned aerial vehicles and dock stations—to the upstream energy industry. He has 11 patents granted or pending across rapid prototyping, medical imaging, robotics, and e-commerce. He is passionate about linking theory with the practice of technology commercialization entrepreneurship, and he advises high technology companies in both an informal capacity and as a board member.
Professor Wu received his PhD and MS in applied economics from the Wharton School of the University of Pennsylvania, where he is a senior fellow at the school’s Mack Institute for Innovation Management. While at Wharton, he received a Kauffman Dissertation Fellowship. Professor Wu also taught in Wharton’s MBA, Executive MBA, and undergraduate programs and was recognized as one of the top 10 graduate teachers across the university. He earned his SB in economics and mathematics at the Massachusetts Institute of Technology.
We study information aggregation in organizational decision-making for the financing of entrepreneurial ventures. We introduce a formal model of voting where agents face costly tacit information to improve their decision quality. Equilibrium outcomes suggest a theoretical tension for group decision-making between the benefits of information aggregation and a cost from the participation of uninformed agents, and this tension presents a boundary condition for when a group decision is superior to an individual decision. We test the implications of the model for a particular phenomenon in venture capital: private angel investments by the partners outside of their employer, which represent investments passed on by the employer. Venture capital partners, acting independently with their personal funds, make investments into younger firms with less educated and younger founding teams than their employing VC firms, but these investments perform financially similarly or better on some metrics even when controlling for investment size, stage, and industry. Geographic distance and technological inexperience by the VC increase the probability the investment is taken up by a partner and not the VC. This work contributes to an emerging stream of literature on information aggregation in organizations and the established literatures on resource allocation and incumbent spin-outs.
This chapter presents an overview of the literature on collaborative relationships between start-ups and incumbent firms, focusing on the implications of these relationships for start-up innovation and performance. Value creation in such relationships occurs when assets are exchanged by the parties involved: collaboration allows for passive knowledge flows and active knowledge creation; in addition, collaboration provides start-ups with access to the complementary assets of the incumbent. At the same time, value creation presents opportunities for value capture by either party, where value capture by the start-up is determined by their knowledge appropriation regime and social capital. The form in which the start-up appropriates value has implications for the assets that enable value creation. The framework for value creation and capture in bilateral start-up-incumbent collaborations extends to start-up-incumbent collaborations in a platform and ecosystem context where there are fruitful future research opportunities.
Equity compensation is widely used for incentivizing skilled employees, particularly in new technology businesses. Traditional theories explaining why firms offer equity suggest that workers with higher rank should receive compensation packages more heavily weighted in equity. However, we observe the puzzle that many firms adopt an equality-in-equity strategy: they offer different cash salaries across all jobs but the same equity compensation. We propose a behavioral theory of domain-contingent inequality aversion to explain this finding: we argue that workers view salary and equity as two domains and are more inequality averse in the equity domain. Inequality in equity has a negative asymmetric effect on effort whereas the effect of inequality in salary can be positive. Our experimental findings are consistent with the existence of domain-contingent inequality aversion; we also find that inequality aversion in equity is more severe than in salary because of the perceived scarcity of equity.
We document and analyze board committee structures utilizing a novel dataset containing full board committee membership for over 6,000 firms. Board committees provide benefits (specialization, efficiency, and accountability benefits) and costs (information segregation). Consistent with these benefits and costs, we find that committee activity increases with firm size, the proportion of outside directors, board tenure and size, and public information available to outside directors. Moreover, boards allocate directors in ways to alleviate information segregation through multi-committee directors. Specifically, multi-committee directors tend to serve on related committees and be outside directors with more expertise and experience. Also, busy directors are less likely to serve on multiple committees, possibly to avoid being overloaded.
Wu, Andy, Fujie Jin, and Lorin Hitt. "Social Is the New Financial: How Startups' Social Media Activities Influence Funding Outcomes." Working Paper, July 2015.
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Wu, Andy, David H. Hsu, and Vikas A. Aggarwal. "R&D Production Team Organization and Firm-Level Innovation." Working Paper, December 2015.
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New approach to accelerating the development of innovation through corporate venturing by creating partnerships between startup venture and established corporations through the launch of the Global Sports Venture Studios created by R/GA Ventures and the Los Angeles Dodgers.
Wu, Andy, Grant Son, and Aastha Thakar. "R/GA: Corporate Venture Studio vs. Accelerator." Harvard Business School Case 719-414, December 2018.
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Wu, Andy, and George Gonzalez. "Rise of the Drones: Identified Technologies." Harvard Business School Teaching Note 719-419, September 2018.
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With more than 72,000 employees and revenues approaching the $50B mark, Cisco Systems is one of the largest information technology and networking firms globally. As the company grew and expanded into different lines of businesses, Cisco consistently looked outwards for acquisition targets that could supplement its considerable size and reach. As a follow-up to its well-received $2.7B acquisition of SourceFire in 2013, which seamlessly integrated new cybersecurity offerings into the Security business group, Cisco began conversations with OpenDNS. OpenDNS was a fast-growing start-up with credibility in the cloud security space, but there were also concerns about how its Silicon Valley culture and flat organizational culture would mesh with Cisco’s more staid corporate environment. This case considers the dilemmas that two Cisco executives, Karen Ashley and Dianne Nakanishi, face as they make a final decision about whether and how to acquire and integrate OpenDNS.
The founder and CEO of Identified Technologies, a Pittsburgh-based drone software and services company, faces a dilemma when San Francisco-based DroneDeploy begins to disrupt the industry with its drone software platform. Identified Technologies needs to consider network effects, customer needs, and the overall state of the drone industry to determine its future path.
Cotopaxi, an innovative outdoor gear business targeting millennials, focuses on profit and social impact. This registered benefit corporation was formed by Davis Smith who coalesced his experiences as a Wharton MBA student along with professional knowledge from an unpaid internship in Peru and his previous e-commerce startups in the U.S. and Brazil. Cotopaxi’s social cause is fighting global poverty; their target is to donate 10% of their profits, but as a new capital-intensive business they give 2% of their revenue. Their income streams are mainly direct-to-consumer sales along with corporate sales and a special experience-based event—Questival. Their direct-to-consumer model lowers costs compared to competitors and allows Cotopaxi to offer lower prices, but they face a challenge in positioning their products as high quality.
The Digital Initiative is a cross-unit venture that unites scholars and practitioners to explore and impact the transformation of business in today’s digital, networked, and media-rich environment.
