NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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When Does Advice Impact Startup Performance?

Aaron Chatterji, Solène Delecourt, Sharique Hasan, Rembrand M. Koning

NBER Working Paper No. 24789
Issued in July 2018
NBER Program(s):The Productivity, Innovation, and Entrepreneurship Program

Why do some entrepreneurs thrive while others fail? We explore whether the advice entrepreneurs receive about people management influences their firm'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 an active 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 a passive people-management approach 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.

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Document Object Identifier (DOI): 10.3386/w24789

Published: Aaron Chatterji & Solène Delecourt & Sharique Hasan & Rembrand Koning, 2019. "When does advice impact startup performance?," Strategic Management Journal, vol 40(3), pages 331-356.

 
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