Entrepreneurship

Entrepreneurship is a featured research topic and an initiative at Harvard Business School
 
Our long tradition of research in Entrepreneurship goes back to the 1930's and 1940's with the “the father of venture capitalism,” General Georges Doriot, and Joseph Schumpeter’s theory of innovation as a process of “creative destruction.” Building on our intellectual roots, our scholars come from disciplines including economics, finance, sociology, strategy, business history, management, and social entrepreneurship. A number of our faculty come from practice as venture capitalists and start-up founders. We focus our research on the identification and pursuit of entrepreneurial opportunities; domestic and international funding of entrepreneurial endeavors; innovation, particularly technological innovation in international ventures; the environments in which entrepreneurs make decisions; and social entrepreneurship. As our research contributes new insights, we are advancing the world’s understanding of complex entrepreneurial issues and helping to increase the entrepreneurial success of our students and practitioners worldwide. 

Featured Works

 

  1. Case | HBS Case Collection | June 2020

    Breakthroughs at Blueprint Medicines

    Richard G. Hamermesh, Kathy Giusti and Susie L. Ma

    Precision medicine company Blueprint Medicines was building a successful track record for bringing drug therapies to market 40% faster than average. The company had spent $40 million dollars and two years building a compound library that became its drug development engine. Blueprint’s drug development strategy was twofold—it focused on creating a single drug compound for multiple disease indications, while at the same time developing drugs to track a disease through its progression. The company’s goal was to become a fully integrated biopharmaceutical company that could move from drug discovery to development to marketing. But it was increasingly challenging to prioritize and manage programs, personnel and partnerships.

    Keywords: precision medicine; cancer; technology; biotechnology; drug development; Strategy; Expansion; Science; Genetics; Entrepreneurship; Organizational Culture; Management; Growth and Development; Pharmaceutical Industry; United States; Cambridge; Massachusetts;

    Citation:

    Hamermesh, Richard G., Kathy Giusti, and Susie L. Ma. "Breakthroughs at Blueprint Medicines." Harvard Business School Case 820-001, June 2020.  View Details
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  2. Case | HBS Case Collection | June 2020

    Career Karma: Growth in a Time of Global Uncertainty (A)

    Laura Huang, Elizabeth Jiang and Brandon Yu

    Career Karma is a startup focused on helping individuals looking to transition careers into computer engineering roles or similar fields by preparing them for formal technical training programs, or “coding bootcamps,” that would lead to a successful career pivot upon graduating from the program. The platform also encouraged users to engage with each other in “squad” support groups and paired users with mentors (other users who successfully transitioned careers through Career Karma). This case explores the journey of Career Karma’s three founders and navigating growth through an unexpected recession caused by a global pandemic.

    Keywords: Business Ventures; Business Growth and Maturation; Business Plan; Business Startups; Education; Training; Entrepreneurship; Corporate Entrepreneurship; Social Entrepreneurship; Management; Goals and Objectives; Growth and Development Strategy; Growth Management; Marketing Strategy; Organizations; Mission and Purpose; Personal Development and Career; Technology Industry; Education Industry; Employment Industry;

    Citation:

    Huang, Laura, Elizabeth Jiang, and Brandon Yu. "Career Karma: Growth in a Time of Global Uncertainty (A)." Harvard Business School Case 420-121, June 2020.  View Details
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  3. Article | Administrative Science Quarterly | June 2020

    Parallel Play: Startups, Nascent Markets, and the Effective Design of a Business Model

    Rory McDonald and Kathleen Eisenhardt

    Prior research advances several explanations for entrepreneurial success in nascent markets but leaves a key imperative unexplored: the business model. By studying five ventures in the same nascent market, we develop a novel theoretical framework for understanding how entrepreneurs effectively design business models: parallel play. Similar to parallel play by preschoolers, entrepreneurs engaged in parallel play interweave action, cognition, and timing to accelerate learning about a novel world. Specifically, they (1) borrow from peers and focus on established substitutes, (2) test assumptions, then commit to a broad business-model template, and (3) pause before elaborating the activity system. The insights from our framework contribute to research on optimal distinctiveness, and to the learning and evolutionary-adjustment literature on search. More broadly, we blend organization theory with a fresh theoretical lens—business-model processes—to highlight how organizations actually work and create value.

    Keywords: search; legitimacy; organizational innovation; organizational learning; mechanisms and processes; institutional entrepreneurship; qualitative methods; business model design; Business Model; Business Startups; Entrepreneurship; Emerging Markets; Adaptation; Competition; Strategy;

    Citation:

    McDonald, Rory, and Kathleen Eisenhardt. "Parallel Play: Startups, Nascent Markets, and the Effective Design of a Business Model." Administrative Science Quarterly 65, no. 2 (June 2020): 483–523.  View Details
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  4. Case | HBS Case Collection | May 2020

    M-Lab: Enabling Innovation at Mitsubishi Corporation

    Krishna Palepu and Allison M. Ciechanover

    M-Lab’s founding goals were to infuse an innovation mindset into Mitsubishi Corporation; to catalyze new business opportunities; and to enable a dialogue between Japanese business and Silicon Valley. M-Lab housed representatives from each of Mitsubishi Corporation’s verticals who were joined by executives from other prominent Japanese corporations. While M-Lab was still early in its history, its leader, Tsunehiko Yanagihara, was pleased with its progress: the ecosystem was fertile with research on cutting edge technology; resident executives collaborated across industries on a daily basis; several investments and proof of concept projects were underway; staff had launched an innovation learning program; and soon, an on-site retail-tech accelerator would welcome its first participants. As some of the projects born out of M-Lab now evolved to commercial businesses, Yanagihara saw yet a new role for M-Lab – that of startup advisor. How might he harness Silicon Valley insights on scaling technology ventures and feed them back to the young ventures made possible by M-Lab? And how might he help those now responsible for implementing and executing at these new businesses apply these learnings to the hurdles they faced?

    Keywords: Business Ventures; Disruption; Transformation; Corporate Entrepreneurship; Multinational Firms and Management; Innovation and Management; Innovation Strategy; Organizational Change and Adaptation; Japan; United States;

    Citation:

    Palepu, Krishna, and Allison M. Ciechanover. "M-Lab: Enabling Innovation at Mitsubishi Corporation." Harvard Business School Case 120-061, May 2020.  View Details
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  5. Case | HBS Case Collection | May 2020

    Trust Merchant Bank

    Ramon Casadesus-Masanell, Pippa Tubman Armerding, Dilyana Karadzhova Botha and Salim Dewji

    Trust Merchant Bank, a leading bank in the Democratic Republic of Congo, needs to decide whether to enter the soon-to-be-liberalized insurance industry. Since its founding in 2004, TMB has played a pivotal role in reshaping the DRC banking landscape. In TMB’s early years, existing banks in the DRC were almost exclusively focused on corporate clients in the major cities. In contrast, TMB targeted underserved towns and focused on retail clients across all income levels, offering them no fees for deposits or withdrawals. These services distinguished TMB from competitors and enabled its rapid growth to become one of the largest banks in the DRC. More recently, TMB’s launch of the mobile banking platform Pepele Mobile, the first of its kind in the country, strengthened TMB’s mission of inclusive finance by providing access to a broader population.
    In 2018, the Congolese government decided to open up the insurance industry, formerly a monopoly of the state-owned and acutely mismanaged Société National d’Assurances (SONAS). TMB is considering applying for the newly available insurance licenses as the bank is well-positioned to capitalize on its existing banking infrastructure to begin selling insurance. On the one hand, if TMB enters insurance, there is no guarantee that the Congolese people will react favorably to the bank’s new offering. Furthermore, TMB will need significant resources and internal capabilities to successfully navigate this uncharted territory. On the other hand, perhaps growth potential for TMB in banking will become increasingly limited as its competitors also focus on financial inclusion. In this new context, perhaps it is time to try something new. The benefits of TMB’s focus on customer service and financial inclusion could carry over to the insurance sector.

    Keywords: retail banking; financial services; Financial inclusion; turnaround; fintech; Banks and Banking; Financial Condition; Insurance; Corporate Strategy; Expansion; Business Model; Family Business; Entrepreneurship; Technology; Monopoly; Banking Industry; Insurance Industry; Africa; Congo, Democratic Republic of the;

    Citation:

    Casadesus-Masanell, Ramon, Pippa Tubman Armerding, Dilyana Karadzhova Botha, and Salim Dewji. "Trust Merchant Bank." Harvard Business School Case 720-449, May 2020.  View Details
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  6. Case | HBS Case Collection | May 2020 (Revised May 2020)

    Justice-as-a-Service at RightNow

    Shikhar Ghosh and Amir Reza Rezvani

    The case examines the focus of an early stage company, and how an unexpected external incidence can threaten or void the business model. It encompasses issues such as minimal viable product, defining and pivoting a business model, organizational requirements for a pivot, investor relations, disruptive business models, as well as business conduct in continental Europe. In 2017, Dr. Torben Antretter, a former competitive tennis player and academic researcher, founded RightNow with his two co-founders. RightNow was set out to provide consumers with “Justice-as-a-Service” by purchasing their legal claims that they would not pursue otherwise. Just one year after its inception, the company had closed a €25 million financing to increase its market share and leverage further growth opportunities. Upon closing of this financing round, matters took a sudden and unexpected turn when the National Supreme Court announced a ruling that airlines were no longer required to refund flight tickets. This decision wiped out RightNow’s profit margins. Antretter and his co-founders had to decide what they should do with the business. How should the founders approach investors? Should they quit and walk away from their entrepreneurial dream or try to reinvent the business with a different focus? What would be the strategy going forward?

    Keywords: legacy business; teams; Startup; business models; Pivot; Entrepreneurship; Law; Venture Capital; Business Startups; Business Model; Organizational Change and Adaptation; Strategy; Legal Services Industry; Germany;

    Citation:

    Ghosh, Shikhar, and Amir Reza Rezvani. "Justice-as-a-Service at RightNow." Harvard Business School Case 820-117, May 2020. (Revised May 2020.)  View Details
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  7. Working Paper | HBS Working Paper Series | 2020

    The Evolution of CEO Compensation in Venture Capital Backed Startups

    Michael Ewens, Ramana Nanda and Christopher Stanton

    We use individual-level data to shed light on the evolution of founder-CEO compensation in venture capital-backed startups. We document that having a tangible, marketable product is a fundamental milestone in CEOs’ compensation contracts, marking the point at which liquid cash compensation begins to increase significantly – well before a liquidity event. “Product market fit” also coincides with key human capital in the startup becoming more replaceable, marking an apparent transition in the firm's lifecycle from ‘differentiation’ to ‘standardization’. Although substantial increases in cash compensation for founder-CEOs in response to milestones improves the certainty equivalent of attempting entrepreneurship relative to flat pay, low cash compensation in the very early years can still deter entrepreneurship for potential entrants. We characterize the types of individuals most likely to be impacted by this constraint and hence those whose ideas are unlikely to be commercialized through VC-backed entrepreneurship.

    Keywords: Entrepreneurship; Venture Capital; Executive Compensation;

    Citation:

    Ewens, Michael, Ramana Nanda, and Christopher Stanton. "The Evolution of CEO Compensation in Venture Capital Backed Startups." Harvard Business School Working Paper, No. 20-119, May 2020.  View Details
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  8. Case | HBS Case Collection | May 2020

    Soofa: Displaying the Right Path?

    Jeffrey J. Bussgang, Amy Klopfenstein and Amram Migdal

    In November 2019, Sandra Richter, co-founder and CEO of Soofa, a network of advertising-supported digital bulletin boards, must decide between two different fundraising and expansion plans for her company. One plan entails raising $15 million in a Series A round and pursuing an aggressive expansion strategy, while the other represents a more modest $3 million raise to bring the company to operating profitability. Richter had developed the $15 million plan with an executive introduced to her by her venture capital board members with extensive fundraising and startup experience; however, after months of pitching to investors, the aggressive expansion plan had failed to produce a term sheet. Richter must decide whether the rapid expansion is the right course of action for the company as she begins to question whether her business could realistically meet the plan’s projections even if she could secure the financing to fund it. Meanwhile, Soofa’s capital was rapidly dwindling. Richter must raise another round of capital by early 2020, or will be forced to lay off the majority of her staff and close her operations. Should she continue pursuing the aggressive expansion plan, pivot to the more modest plan based on operating profitability, or attempt to pursue both plans simultaneously? And how should she navigate the growing tension on her board given the company’s struggles?

    Keywords: Business Ventures; Business Model; Business Plan; Business Startups; Entrepreneurship; Decision Making; Decisions; Ethics; Geography; Geopolitical Units; Finance; Investment; Markets; Market Entry and Exit; Demand and Consumers; Network Effects; Media; Society; Urban Development; Sustainable Cities; Technology; Hardware; Technology Platform; Strategy; Business Strategy; Expansion; Relationships; Partners and Partnerships; Capital; Venture Capital; Advertising Industry; Technology Industry; Media and Broadcasting Industry; North and Central America; United States; Massachusetts; Cambridge;

    Citation:

    Bussgang, Jeffrey J., Amy Klopfenstein, and Amram Migdal. "Soofa: Displaying the Right Path?" Harvard Business School Case 820-098, May 2020.  View Details
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  9. Case | HBS Case Collection | May 2020

    Big Boom Beverages: Fight or Flight?

    Stephen A. Greyser and William Ellet

    Four college friends market a beverage that combines ingredients like those in a drink they consumed in college bars. It includes a caffeinated energy drink, malt liquor, and a soft drink flavoring. They launch the business, Big Boom Beverages (BBB), with their own money and funds from friends and family members. Their initial product sells reasonably well, but not enough to remain profitable. When they introduce a reformulated product, Totaled, its social media presence explodes. Young consumers upload many videos to YouTube that record the impacts of consuming large quantities of Totaled that earn millions of views. Totaled becomes a star brand on social media and sales skyrocket. The company is inundated with distribution requests. The founders see success looming. As sales of Totaled and similar products increase, so do reports of binge drinking and its negative consequences. Emergency room doctors and public health officials express concern about the combination of high levels of alcohol and caffeine in these products. Rapidly expanding distribution of the beverage through convenience stores gives underage drinkers easier access to the beverage. All these factors attract national media coverage. The founders are unprepared to deal with the bad reputation their product is gaining and regulatory and public-relations crisis they face. As the case ends, they are deciding how to respond. "Big Boom Beverages: Fight or Flight?" can be used with undergraduate and MBA courses in entrepreneurship, marketing, business ethics, corporate social responsibility, general management, and public health.

    Keywords: alcoholic beverages; energy drinks; regulation; Entrepreneurship; Ethics; Marketing Communications; Corporate Social Responsibility and Impact; Reputation; Communication Strategy; Decision Making;

    Citation:

    Greyser, Stephen A., and William Ellet. "Big Boom Beverages: Fight or Flight?" Harvard Business School Brief Case 920-557, May 2020.  View Details
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  10. Article | Journal of Financial Economics | May 2020

    The Creation and Evolution of Entrepreneurial Public Markets

    Shai Bernstein, Abhishek Dev and Josh Lerner

    This paper explores the creation and evolution of new stock exchanges around the world geared towards entrepreneurial companies, known as second-tier exchanges. Using hand-collected novel data, we document the proliferation of these new stock exchanges that were created in a large number of countries, attracted a significant volume of global IPOs, were introduced fairly cyclically, and had lower listing requirements when compared to first-tier stock exchanges. We find that increases in demand for entrepreneurial capital—as proxied for by patenting, IPOs, and stock market valuations—led to a higher likelihood of the introduction of second-tier exchanges. We find no evidence that new second-tier exchanges diverted the existing flow of IPOs from established stock exchanges. Shareholder protection strongly predicted exchange success, even in countries with high levels of venture capital activity, patenting, and financial market development. Second-tier exchanges in countries with better shareholder protection allowed younger, less profitable, but faster-growing companies to raise more capital. These results highlight the importance of institutions in enabling the provision of entrepreneurial capital to young companies.

    Keywords: entrepreneurial finance; stock exchanges; Entrepreneurship; Finance; Initial Public Offering; Capital;

    Citation:

    Bernstein, Shai, Abhishek Dev, and Josh Lerner. "The Creation and Evolution of Entrepreneurial Public Markets." Journal of Financial Economics 136, no. 2 (May 2020): 307–329.  View Details
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    11.  
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Initiatives & Projects

  • Entrepreneurship

    The Arthur Rock Center for Entrepreneurship supports Harvard Business School's mission to "educate leaders who make a difference in the world" by infusing this leadership perspective with an entrepreneurial point of view.

  • Social Enterprise

    The Social Enterprise Initiative at HBS applies innovative business practices and managerial disciplines to drive sustained, high-impact social change.

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Faculty

HBS Working Knowledge

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re Josh Lerner
Even though many public policy efforts on entrepreneurship are well intentioned, the success rate has been disappointing. This essay explores these policies, focusing on financial incentives to entre
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re Josh Lerner and Ramana Nanda
Common wisdom holds that VC investment and VC-backed startups are relatively insulated from downturns. This study shows that the relative quantity and quality of innovation declines more for VC-backe
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re A. Shawn Cole
3Questions A startup fund's ability to attract a major first investor is a signal to others that the investment pool is just fine for entering. Shawn Cole and Rob Zochowski answer questions about anc

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Harvard Business Publishing

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by Deepak Malhotra
Case
by Laura Huang, Elizabeth Jiang and Brandon Yu
Press Book
by Richard S. Ruback and Royce Yudkoff

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