Creating Entrepreneurs

Paper Session

Saturday, Jan. 7, 2017 10:15 AM – 12:15 PM

Swissotel Chicago, Zurich A
Hosted By: American Economic Association
  • Chair: Joshua S. Gans, University of Toronto

The Impact of Entrepreneurship Programs on Minorities

Elizabeth Lyons
,
University of California-San Diego
Laurina Zhang
,
Western University

Abstract

We document the impact of an entrepreneurship training program on startup activity of minorities (females and non-Caucasians). We compare entrepreneurial activity between applicants who are accepted into the program with applicants who are program finalists but not accepted. We find that the effect of the program is small for minorities in the short run. However, the effect of the program is more pronounced for minorities’ likelihood of longer run startup activity whereas the effect on non-minorities is small and statistically insignificant. We suggest that such programs are most effective for individuals that may otherwise have limited access to entrepreneurial opportunities.

Gender Gap in High-Growth Ventures: Evidence From a University Venture Mentoring Program

Erin Scott
,
National University of Singapore
Pian Shu
,
Harvard University

Abstract

In this paper, we track high-growth ventures from idea stage to commercialization and investigate the patterns of the gender gap during the lifecycle of a venture. We do so in a rich empirical setting: Massachusetts Institute of Technology’s Venture Mentoring Service (VMS), a free educational service that helps aspiring MIT-affiliated entrepreneurs develop their business ideas. We collect detailed data on the characteristics and subsequent outcomes of 651 ventures that joined VMS between 2005 and 2012. These venture ideas have generated significant economic impact, raising over 750 million dollars from venture financing and government grants. Female entrepreneurs represent around 19% of the founders of these ventures. We find a large and significant gender gap among ventures without documented intellectual assets at entry into VMS, but not among ventures with intellectual assets. We also find that the gender gap occurs in entrepreneurs' tendency to commit to their venture ideas full-time. Conditional on commitment, there are no significant differences in ventures' access to venture financing or rate of commercialization.

Which Entrepreneurs Are Coachable, and Why?

Kevin A Bryan
,
University of Toronto
Andras Tilcsik
,
University of Toronto
Hwanyi Zhu
,
University of Toronto

Abstract

Early-stage entrepreneurs make many decisions which are difficult to reverse if they later prove to be a mistake: how to fund their firm, what product to sell, how to divide equity, what early hires should be made, how time should be allocated, and so on. These entrepreneurs often receive advice from friends, former colleagues, other entrepreneurs, and funders. Entrepreneurs who frequently accept advice from the outside are said to be “coachable”. There is a debate in the popular business press and the management literature about whether and when entrepreneurs defer to advice from more experienced outsiders or rely on their unique local knowledge about their own firm. <br />
<br />
Whether entrepreneurs defer to outside advice depends on both characteristics of the inventor and the type of advice being proffered. We investigate coachability using a novel quantitative and qualitative dataset of roughly 100 very early-stage growth firms that participated in a science-based accelerator program called the Creative Destruction Lab. The dataset is unusual both because most firms are pre-funding, hence at the stage in their lifecycle where radical shifts in strategy are common, and because there are exhaustive qualitative reports describing changes in employment and financing, reactions of outsiders to firm activity, and written records of arguments for why certain suggested goals are or are not pursued. Using these data, we analyze hundreds of pieces of advice, investigating what types of entrepreneurs appear to be coachable, what types of advice are mostly likely to be pursued by a given firm, and the reasons why there is heterogeneity across groups (by gender, experience, sole-founder versus joint-founder, and academic vs. non-academic) in how a particular type of advice is received.

Endogenous Appropriability

Joshua S. Gans
,
University of Toronto
Scott Stern
,
Massachusetts Institute of Technology

Abstract

Innovation appropriability is generally taken as a characteristic of the environment afforded, say, by the strength of formal intellectual property protection. Here we demonstrate that how appropriability is achieved is a choice made by the entrepreneur. They can choose control – protection from future competition via formal intellectual property (such as patents, copyrights or trade secrets) or other pre-emptive entry barriers – or execution – a more rapid approach to market in pursuit of capabilities that can be leveraged for future competitive advantage. An execution approach can be profitable even when the conditions for control are favorable. We show how the appropriability choice interacts with other choices such as customer type or technology.
Discussant(s)
Yael Hochberg
,
Rice University
Aaron Chatterjie
,
Duke University
Josh Lerner
,
Harvard University
Ramana Nanda
,
Harvard University
JEL Classifications
  • M1 - Business Administration
  • O3 - Innovation; Research and Development; Technological Change; Intellectual Property Rights