When does advice impact startup performance? |
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Authors: | Aaron Chatterji Solène Delecourt Sharique Hasan Rembrand Koning |
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Institution: | 1. Fuqua School of Business, Duke University, Durham, North Carolina;2. Stanford Graduate School of Business, Stanford, California;3. Harvard Business School, Boston, Massachusetts |
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Abstract: | Why do some entrepreneurs thrive while others fail? We explore whether the advice entrepreneurs receive about managing their employees influences their startup'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 a formal 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 an informal approach to managing people, 2 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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Keywords: | advice business training entrepreneurship field experiment management |
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