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Entrepreneurship

Entrepreneurship

    • Article

    Entrepreneurship as Experimentation

    By: William R. Kerr, Ramana Nanda and Matthew Rhodes-Kropf

    Entrepreneurship research is on the rise, but many questions about its fundamental nature still exist. We argue that entrepreneurship is about experimentation: the probabilities of success are low, extremely skewed, and unknowable until an investment is made. At a macro level, experimentation by new firms underlies the Schumpeterian notion of creative destruction. However, at a micro level, investment and continuation decisions are not always made in a competitive Darwinian contest. Instead, a few investors make decisions that are impacted by incentive, agency, and coordination problems, often before a new idea even has a chance to compete in a market. We contend that costs and constraints on the ability to experiment alter the type of organizational form surrounding innovation and influence when innovation is more likely to occur. These factors not only govern how much experimentation is undertaken in the economy, but also the trajectory of experimentation, with potentially very deep economic consequences.

    • Article

    Entrepreneurship as Experimentation

    By: William R. Kerr, Ramana Nanda and Matthew Rhodes-Kropf

    Entrepreneurship research is on the rise, but many questions about its fundamental nature still exist. We argue that entrepreneurship is about experimentation: the probabilities of success are low, extremely skewed, and unknowable until an investment is made. At a macro level, experimentation by new firms underlies the Schumpeterian notion of...

    • January 2014 (Revised October 2014)
    • Case

    Andreessen Horowitz

    By: Thomas R. Eisenmann and Liz Kind

    Andreessen Horowitz (a16z), a venture capital firm launched in 2009, has quickly broken into the VC industry's top ranks, in terms of its ability to invest in Silicon Valley's most promising startups. The case recounts the firm's history; describes its co-founders' motivations and their strategy for disrupting an industry in the midst of dramatic structural change; and asks whether a16z's success to date has been due to its novel organization structure. a16z's 22 investment professionals are supported by 43 recruiting and marketing specialists—an "operating team" that is an order of magnitude larger than that of any other VC firm. Furthermore, the operating team aims to not only assist a16z portfolio companies, but also to be broadly helpful to all parties in the Silicon Valley ecosystem, including search firms, journalists, PR agencies, and Fortune 500 executives. The bet: by providing "no-strings-attached" help to ecosystem partners, the partners might someday reciprocate by steering founders seeking funding to a16z. The case closes by asking whether a16z should seek to double its scale over the next years.

    • January 2014 (Revised October 2014)
    • Case

    Andreessen Horowitz

    By: Thomas R. Eisenmann and Liz Kind

    Andreessen Horowitz (a16z), a venture capital firm launched in 2009, has quickly broken into the VC industry's top ranks, in terms of its ability to invest in Silicon Valley's most promising startups. The case recounts the firm's history; describes its co-founders' motivations and their strategy for disrupting an industry in the midst of dramatic...

    • February 2014
    • Background Note

    Raising Startup Capital

    By: Jeffrey Bussgang

    Entrepreneurs typically focus their full energies on business-building. But raising capital is a core part of building a valuable business. Developing expertise in raising capital is more than a necessary evil, it is a competitive weapon. Master it and you will be in a better position to make your company a massive success. But how do you finance a new venture? In this note, I will try to help answer this question by addressing the following topics: Types of funding. The two major types of startup capital are equity funding and debt funding although there are a few hybrid flavors as well. Sources of funding. These include venture capital firms, angel investors, crowd-funding, and accelerators/incubators. What investors look for. Each source has a different funding process and set of criteria which you need to understand before seeking funding from that source. The mechanics of equity funding. Seeking and securing funding involves setting amounts, agreeing to terms, and defining relationships.

    • February 2014
    • Background Note

    Raising Startup Capital

    By: Jeffrey Bussgang

    Entrepreneurs typically focus their full energies on business-building. But raising capital is a core part of building a valuable business. Developing expertise in raising capital is more than a necessary evil, it is a competitive weapon. Master it and you will be in a better position to make your company a massive success. But how do you finance...

    • January 2014
    • Article

    The Consequences of Entrepreneurial Finance: Evidence from Angel Financings

    By: William R. Kerr, Josh Lerner and Antoinette Schoar

    This paper documents that ventures that are funded by two successful angel groups experience superior outcomes to rejected ventures: they have improved survival, exits, employment, patenting, web traffic, and financing. We use strong discontinuities in angel funding behavior over small changes in their collective interest levels to implement a regression discontinuity approach. We confirm the positive effects for venture operations, with qualitative support for a higher likelihood of successful exits. On the other hand, there is no difference in access to additional financing around the discontinuity. This might suggest that financing is not a central input of angel groups.

    • January 2014
    • Article

    The Consequences of Entrepreneurial Finance: Evidence from Angel Financings

    By: William R. Kerr, Josh Lerner and Antoinette Schoar

    This paper documents that ventures that are funded by two successful angel groups experience superior outcomes to rejected ventures: they have improved survival, exits, employment, patenting, web traffic, and financing. We use strong discontinuities in angel funding behavior over small changes in their collective interest levels to implement a...

    • September 2014 (Revised December 2014)
    • Case

    The Ullens Center for Contemporary Art

    By: Mukti Khaire and Nancy Hua Dai

    Since its opening in Beijing in November 2007 as the first non-profit art center in China, UCCA had been operating with the mission to "promote the continued development of the Chinese art scene, foster international exchange, and showcase the latest in art and culture to hundreds of thousands of visitors each year." For the past six years, UCCA had worked with more than 100 artists and designers to present 87 art exhibitions and 1,826 public programs to over 1.8 million visitors, including many important leaders from all over the world. Given the context of the economic and political environment in the rapidly changing Chinese art market, the founders and senior management of UCCA wondered what they could do to achieve growth and financial viability while continuing to realize their mission.

    • September 2014 (Revised December 2014)
    • Case

    The Ullens Center for Contemporary Art

    By: Mukti Khaire and Nancy Hua Dai

    Since its opening in Beijing in November 2007 as the first non-profit art center in China, UCCA had been operating with the mission to "promote the continued development of the Chinese art scene, foster international exchange, and showcase the latest in art and culture to hundreds of thousands of visitors each year." For the past six years, UCCA...

    • 2014
    • Discussion Paper

    The Promise of Microfinance and Women's Empowerment: What Does the Evidence Say?

    By: Dina D. Pomeranz

    The microfinance revolution has transformed access to financial services for low-income populations worldwide. As a result, it has become one of the most talked-about innovations in global development in recent decades. However, its expansion has not been without controversy. While many hailed it as a way to end world poverty and promote female empowerment, others condemned it as a disaster for the poor. Female empowerment has often been seen as one of the key promises of the industry. In part, this is based on the fact that more than 80% of its poorest clients, i.e., those who live on less than $1.25/day, are women. This paper discusses what we have learned so far about the potential and limits of microfinance and how insights from research and practice can help inform the industry's current products, policies and future developments.

    • 2014
    • Discussion Paper

    The Promise of Microfinance and Women's Empowerment: What Does the Evidence Say?

    By: Dina D. Pomeranz

    The microfinance revolution has transformed access to financial services for low-income populations worldwide. As a result, it has become one of the most talked-about innovations in global development in recent decades. However, its expansion has not been without controversy. While many hailed it as a way to end world poverty and promote female...

Initiatives & Projects

The Arthur Rock Center for Entrepreneurship and the Social Enterprise Initiative encourage innovation to address the large-scale issues that beset society.
Entrepreneurship
Social Enterprise

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.

Initiatives & Projects

The Arthur Rock Center for Entrepreneurship and the Social Enterprise Initiative encourage innovation to address the large-scale issues that beset society.

Entrepreneurship
Social Enterprise

Recent Publications

Open Source Software and Global Entrepreneurship

By: Nataliya Langburd Wright, Frank Nagle and Shane Greenstein
  • November 2023 |
  • Article |
  • Research Policy
This is the first study to consider the relationship between open source software (OSS) and entrepreneurship around the globe. This study measures whether country-level participation on the GitHub OSS platform affects the founding of innovative ventures, and where it does so, for what types of ventures. We estimate these effects using cross-country variation in new venture founding and OSS participation. We propose an approach using instrumental variables, and cannot reject a causal interpretation. The study finds that an increase in GitHub participation in a given country generates an increase in the number of new technology ventures within that country in the subsequent year. The evidence suggests this relationship is complementary to a country’s endowments, and does not substitute for them. In addition to this positive change in the rate of entrepreneurship, we also find a change in direction—OSS contributions lead to new ventures that are more mission- and global-oriented and are of a higher quality. Together, the results suggest that OSS can boost entrepreneurial activity, albeit with a human capital prerequisite. Finally, we consider the implications for policies that encourage OSS as a lever for stimulating entrepreneurial growth.
Keywords: Entrepreneurship; Applications and Software; Business Ventures; Development Economics; Innovation and Invention; Global Range
Citation
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Wright, Nataliya Langburd, Frank Nagle, and Shane Greenstein. "Open Source Software and Global Entrepreneurship." Art. 104846. Research Policy 52, no. 9 (November 2023).

Judging Foreign Startups

By: Nataliya Langburd Wright, Rembrand Koning and Tarun Khanna
  • September 2023 |
  • Article |
  • Strategic Management Journal
Can accelerators pick the most promising startup ideas no matter their provenance? Using unique data from a global accelerator where judges are randomly assigned to evaluate startups headquartered across the globe, we show that judges are less likely to recommend startups headquartered outside their home region by 4 percentage points. Back-of-the-envelope calculations suggest this discount leads judges to pass over 1 in 20 promising startups. Despite this systematic discount, we find that—in contrast to many past studies—judges can discern startup quality and are no better at evaluating local firms. These differences emerge because the pool of startups accelerator judges evaluate is both broader and less “local,” suggesting that judging ability depends on the composition of the companies they are tasked with evaluating.
Keywords: Entrepreneurship And Strategy; Global Strategy; Entrepreneurial Financing; Innovation; International; Entrepreneurship; Judgments; Business Startups; Geographic Location; Growth and Development Strategy
Citation
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Wright, Nataliya Langburd, Rembrand Koning, and Tarun Khanna. "Judging Foreign Startups." Strategic Management Journal 44, no. 9 (September 2023): 2195–2225.

Tenkara Outfitters

By: Christina Wallace, Jo Tango and Johnson Elugbadebo
  • August 2023 |
  • Case |
  • Faculty Research
After taking over from their parents, Sebastian Maxwell and Alexandra Ito, CEO and COO of Minnesota-based outdoor adventure brand Tenkara, must decide how they want to resource and grow this formerly family-run business. After outdoor activities exploded during the COVID pandemic, Tenkara boasted a growth curve that could put them on a VC-backed path. But is that the right choice for these founders and this business? And if so, which of two Series A term sheets should they accept?
Keywords: General Management; Innovation; Entrepreneurship; Innovation and Management
Citation
Educators
Related
Wallace, Christina, Jo Tango, and Johnson Elugbadebo. "Tenkara Outfitters." Harvard Business School Case 824-003, August 2023.

Quotient

By: Thomas R. Eisenmann and Matt Higgins
  • August 2023 |
  • Case |
  • Faculty Research
The founders of Quotient, a web-based service for onboarding new engineers, face decisions about how to bring their nascent product to market amidst a tech sector contraction.
Keywords: Startup; Engineers; Entrepreneurial Management; Strategy; Growth; Go-to-market; Product Management; Entrepreneurship; New York (city, NY); San Francisco
Citation
Educators
Related
Eisenmann, Thomas R., and Matt Higgins. "Quotient." Harvard Business School Case 824-048, August 2023.

Beamery: Using Skills and AI to Modernize HR

By: Boris Groysberg, Alexis Lefort, Susan Pinckney and Carolina Bartunek
  • August 2023 |
  • Case |
  • Faculty Research
Unicorn human relationships startup Beamery evaluates it growth versus depth strategy as its strategic partners and customers could become future competitors in a quickly changing AI based human resources and talent management industry
Keywords: Acquisition; Business Growth and Maturation; Business Startups; Competency and Skills; Experience and Expertise; Talent and Talent Management; Customers; Nationality; Learning; Entrepreneurship; Corporate Entrepreneurship; Social Entrepreneurship; Human Resources; Employee Relationship Management; Recruitment; Retention; Selection and Staffing; Values and Beliefs; Cross-Cultural and Cross-Border Issues; Analytics and Data Science; Applications and Software; Disruptive Innovation; Technological Innovation; Job Offer; Job Search; Job Design and Levels; Employment; Human Capital; Europe; United Kingdom; United States
Citation
Educators
Related
Groysberg, Boris, Alexis Lefort, Susan Pinckney, and Carolina Bartunek. "Beamery: Using Skills and AI to Modernize HR." Harvard Business School Case 424-004, August 2023.

Kariyer.net: Recruiting AI

By: Shunyuan Zhang, Fares Khrais and Namrata Arora
  • August 2023 |
  • Case |
  • Faculty Research
In 2017, Fatih Uysal (AMP 2021) became CEO of Kariyer.net. By then, the business was already the industry leading online job board in Turkey. However, faced with stalling growth, a turbulent macroenvironment, and growing competition from international players, Uysal kicked off a transformation of the business from an online job board to a horizontally diversified recruitment company, powered by Artificial Intelligence (AI). The case chronicles the transformation, highlighting new AI-driven tools built both for internal use and as products to be sold. The case also describes two new business lines (employer branding services/ virtual job fairs, and an online tech-talent job board coupled with training services) that showed potential to become new core products. By 2023, Uysal and his team were targeting doubling revenue and growing the contribution of non-job ad revenues from 30% to 50% of the total over the next three years. Uysal and his team were constantly balancing exploring promising new products and verticals against doubling down on those generating revenue today. In order to reach their financial targets, Uysal and his team were debating not only which product(s) to pursue but how to do so efficiently.
Keywords: Online Technology; Marketing; Websites; Artificial Intelligence; Innovation; Two-sided Platforms; Internet and the Web; Product Launch; Product Positioning; Job Search; Employment; Transformation; Volatility; Innovation and Invention; Disruptive Innovation; Management Practices and Processes; Business Growth and Maturation; Competitive Strategy; Business Startups; Talent and Talent Management; Cost vs Benefits; Macroeconomics; Corporate Entrepreneurship; Emerging Markets; Digital Platforms; Employment Industry; Information Technology Industry; Technology Industry; Middle East; Turkey
Citation
Educators
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Zhang, Shunyuan, Fares Khrais, and Namrata Arora. "Kariyer.net: Recruiting AI." Harvard Business School Case 524-014, August 2023.

Honeycomb

By: Jeffrey J. Bussgang and Kumba Sennaar
  • July 2023 |
  • Case |
  • Faculty Research
Case on Social app focused on seniors that draws interest from a younger demographic. Shifting the company focus risks losing existing users, investors and staff.
Keywords: Entrepreneurship; Venture Capital; Operations; Business Startups; Technology Industry; United States
Citation
Educators
Related
Bussgang, Jeffrey J., and Kumba Sennaar. "Honeycomb." Harvard Business School Case 824-012, July 2023.

3 Crucial Factors to Manage Your Company’s Growth Without Losing Its Spark

By: Ranjay Gulati
  • July 7, 2023 |
  • Article |
  • Inc.com
Keywords: Growth Management; Entrepreneurship
Citation
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Gulati, Ranjay. "3 Crucial Factors to Manage Your Company’s Growth Without Losing Its Spark." Inc.com (July 7, 2023).

Science-based Entrepreneurship in India: A Policy Glass (as yet) Quarter-Full

By: Tarun Khanna
  • 2022 |
  • Article |
  • India Policy Forum
India is celebrated for a resurgence of de novo entrepreneurship in recent decades. Entrants have engaged in creative risk-taking to provide market-based solutions for private or social needs despite not being scions of wealthy industrial or business families. In this policy piece, I first document and celebrate this rise of entrepreneurship. I then turn to the inconvenient fact that this entrepreneurship is heavily circumscribed in a handful of sectors, even more so than the similarly skewed incidence that one sees in the U.S. ecosystem (as an imperfect benchmark). A gaping lacuna is the lack of what I refer to as science-based entrepreneurship, increasingly understood as perhaps the key source of long-run dynamism of mature economies.
The academic evidence is compelling. Science, through the recombination of past insights, provides the fuel for innovative entrepreneurial economic output. This requires universities that are not ossified into traditional silos, as well as vibrant local ecosystems that allow the translation of science into entrepreneurship.
Then, I turn to relevant policy efforts underway in India within the last decade to address this lacuna. Preliminary data indicate that these experiments are likely on successful trajectories. They are, however, deeply insufficient in the magnitude of investment and policy ambition. The rhetoric and reality must be rethought if India is to capitalize on its deep talent reservoirs and move on from what I see as a glass yet only quarter-full.
Keywords: Entrepreneurship; Innovation and Invention; Science; Policy; Investment
Citation
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Khanna, Tarun. "Science-based Entrepreneurship in India: A Policy Glass (as yet) Quarter-Full." India Policy Forum 19 (2022): 1–53.

Should You Start a Generative AI Company?

By: Julian De Freitas
  • June 19, 2023 |
  • Article |
  • Harvard Business Review (website)
Many entrepreneurs are considering starting companies that leverage the latest generative AI technology, but they must ask themselves whether they have what it takes to compete on increasingly commoditized foundational models, or whether they should instead differentiate on an app that leverages these models.
Keywords: Business Startups; Entrepreneurship; AI and Machine Learning; Applications and Software
Citation
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De Freitas, Julian. "Should You Start a Generative AI Company?" Harvard Business Review (website) (June 19, 2023).
More Publications

Faculty

William R. Kerr
Lynda M. Applegate
William A. Sahlman
Thomas R. Eisenmann
Geoffrey G. Jones
Ramana Nanda
Myra M. Hart
Rosabeth M. Kanter
Joseph B. Lassiter
Howard H. Stevenson
Richard G. Hamermesh
Josh Lerner
→See All

Seminars & Conferences

Oct 11
  • 11 Oct 2023
Entrepreneurial Management Seminar
Oren Danieli, Tel Aviv University School of Economics
Oct 25
  • 25 Oct 2023
Entrepreneurial Management Seminar
Martin Beraja, MIT
→Seminars & Conferences

HBS Working Knowlege

    • 01 Aug 2023

    Can Business Transform Primary Health Care Across Africa?

    Re: Regina E. Herzlinger
    • 05 Jul 2023

    How Unilever Is Preparing for the Future of Work

    Re: William R. Kerr
    • 16 May 2023

    After Silicon Valley Bank's Flameout, What's Next for Entrepreneurs?

    by Avery Forman
→More Articles

Harvard Business Publishing

    • May 2013
    • Article

    How to Negotiate with VCs

    By: Deepak Malhotra
    • August 2023
    • Case

    Kariyer.net: Recruiting AI

    By: Shunyuan Zhang, Fares Khrais and Namrata Arora
    • 2017
    • Book

    HBR Guide to Buying a Small Business: Think Big, Buy Small, Own Your Own Company

    By: Richard S. Ruback and Royce Yudkoff
→More Harvard Business Publishing
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