When Does Advice Impact Startup Performance?

39 Pages Posted: 16 Jul 2018 Last revised: 27 Mar 2021

See all articles by Aaron Chatterji

Aaron Chatterji

Duke University - Fuqua School of Business

Sharique Hasan

Duke University - Fuqua School of Business

Solene Delecourt

Stanford Graduate School of Business

Rembrand Koning

Harvard University - Business School (HBS)

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Date Written: July 2018

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.

Suggested Citation

Chatterji, Aaron and Hasan, Sharique and Delecourt, Solene and Koning, Rembrand, When Does Advice Impact Startup Performance? (July 2018). NBER Working Paper No. w24789, Available at SSRN: https://ssrn.com/abstract=3214291

Aaron Chatterji (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Sharique Hasan

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

Rembrand Koning

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Boston, MA 02163
United States

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