Learning from Feedback: Evidence from New Ventures

86 Pages Posted: 5 Oct 2017 Last revised: 26 May 2020

See all articles by Sabrina T Howell

Sabrina T Howell

New York University (NYU) - Leonard N. Stern School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: May 5, 2020

Abstract

This paper studies how early stage entrepreneurs respond to negative feedback about the quality of their ventures using data from new venture competitions. In some competitions, founders are privately informed of their relative rank but did not know there would be feedback ex-ante. The empirical strategy compares lower and higher ranked losers across competitions in which they did and did not observe their standing. Receiving negative feedback increases average venture abandonment by 13 percent. Differences in responsiveness – for example, in venture risk, venture maturity, and signal precision – are consistent with particular theories about entrepreneurship, including the importance of experimentation.

Keywords: Entrepreneurship, Learning

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

Suggested Citation

Howell, Sabrina T, Learning from Feedback: Evidence from New Ventures (May 5, 2020). Available at SSRN: https://ssrn.com/abstract=3047811 or http://dx.doi.org/10.2139/ssrn.3047811

Sabrina T Howell (Contact Author)

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