When Does Advice Impact Startup Performance?

67 Pages Posted: 9 May 2017 Last revised: 25 Jun 2018

See all articles by Aaron Chatterji

Aaron Chatterji

Duke University - Fuqua School of Business

Solene Delecourt

Stanford Graduate School of Business

Sharique Hasan

Stanford Graduate School of Business

Rembrand Koning

Harvard Business School

Multiple version iconThere are 2 versions of this paper

Date Written: September 7, 2017

Abstract

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.

Keywords: Entrepreneurship, Field Experiments, Peer Effects, Management

Suggested Citation

Chatterji, Aaron and Delecourt, Solene and Hasan, Sharique and Koning, Rembrand, When Does Advice Impact Startup Performance? (September 7, 2017). Harvard Business School Strategy Unit Working Paper; Stanford University Graduate School of Business Research Paper No. 17-35. Available at SSRN: https://ssrn.com/abstract=2964249 or http://dx.doi.org/10.2139/ssrn.2964249

Aaron Chatterji

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Solene Delecourt

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Sharique Hasan

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Rembrand Koning (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Boston, MA 02163
United States

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