Learning from Feedback: Evidence from New Ventures

50 Pages Posted: 5 Oct 2017 Last revised: 12 Jul 2019

See all articles by Sabrina Howell

Sabrina Howell

New York University (NYU) - Leonard N. Stern School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: January 1, 2018

Abstract

This paper studies how early stage entrepreneurs learn about the quality of their ventures. I assess the effect of negative feedback on venture abandonment using application and judging data from 87 new venture competitions, some of which privately informed ventures of their relative rank. I use a difference-in-differences design and two matching estimators to compare lower and higher ranked losers, across competitions in which they did and did not observe their standing. Receiving negative feedback increased venture abandonment by about 13 percent. The effect occurs quickly, doubles among women founders, and increases with signal precision. It decreases with venture maturity and riskiness.

Keywords: Entrepreneurship, Learning

JEL Classification: G24, G4, L1, L2, L26, O3

Suggested Citation

Howell, Sabrina, Learning from Feedback: Evidence from New Ventures (January 1, 2018). Available at SSRN: https://ssrn.com/abstract=3047811 or http://dx.doi.org/10.2139/ssrn.3047811

Sabrina Howell (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

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