Entrepreneurship & Innovation

Why do startups from mid-sized markets struggle to scale? This study theorizes that a local market that is big enough for a product to gain early traction but not big enough in which to scale can incentivize startups to delay expanding into new markets necessary for high-growth outcomes. This delay introduces adjustment costs that constrain growth.

We show theoretically that a critical determinant of the attractiveness of VC-backed entrepreneurship for high-earning potential founders is the expected time to develop a startup’s initial product. This is because founder-CEOs’ cash compensation increases substantially after product development, alleviating the non-diversifiable risk that founders face at startup birth.

What tradeoffs do startup founders face in deciding whether to communicate their strategy to employees? While prior research emphasizes the value of clarity and alignment for execution, we find that only about half of employees across 24 entrepreneurial firms can accurately describe their company’s strategy. We tested the effects of strategy communication through two field experiments and follow-up interviews with nearly 600 employees and executives in 24 growth-oriented ventures across 14 countries.

Prior work highlights the importance of cognitive approaches to strategy formation for startup growth. They enable entrepreneurs to strategically reason—logically and convincingly formulate their strategic choices before executing them. However, whether the value of strategic reasoning generalizes across contexts, particularly different financing environments, remains unclear.

How does international exposure shape entrepreneurial pivots? Through a field study of 84 startups across 27 countries, we develop a model that uncovers how international exposure not only spurs ventures to update their understandings of the international market but also generates pivots in the addressed market. Structural differences between markets and entrepreneurs' cognitive openness makes new information about the international market more salient. This new information opens ventures' eyes to novel opportunities.

Scalable and low-cost AI assistance has the potential to improve firm decision-making and economic performance. However, running a business involves a myriad of open-ended problems, making it difficult to know whether recent AI advances can help business owners make better decisions in real-world markets. In a field experiment with Kenyan entrepreneurs, we assessed the impact of AI advice on small business revenues and profits by randomizing access to a GPT-4-powered AI business assistant via WhatsApp.

How does participating in open source software (OSS) communities spur entrepreneurial growth? To address this question, we analyze novel data matching accounts from GitHub—the largest OSS hosting platform—to the universe of global software venture-backed firms identified by PitchBook. We find a robustly positive relationship between OSS contributions and entrepreneurial growth.

Industry groups engage in venue shifting when they seek to overturn or alter restrictive regulations imposed by one political venue through another. A critical step in this process is resolving uncertainties surrounding the preference of the targeted venue and the nature of the relevant policy proposal. While existing studies emphasize a long-term trial-and-error process of policy learning, we focus on nascent industries and argue that ventures seek other information sources to resolve these uncertainties quickly.