Judging Foreign Startups

45 Pages Posted: 19 Apr 2021

See all articles by Nataliya Wright

Nataliya Wright

Harvard University - Business School (HBS)

Rembrand Koning

Harvard University - Business School (HBS)

Tarun Khanna

Harvard University - Business School (HBS)

Date Written: April 9, 2021

Abstract

Can accelerators and investors pick the most promising startup ideas no matter their provenance? We investigate this question using unique data from a global accelerator in which judges across international regions are randomly assigned to evaluate startups headquartered across the globe. Our analysis of this natural experiment shows that judges are less likely to recommend startups headquartered outside their home region by 4 percentage points. Additional information about a startup does not appear to attenuate this bias. Back-of-the-envelope calculations suggest that this discount leads judges to pass over 1 in 10 high-potential startups. Our results reveal that judges are able to discern high from low quality startups regardless of their origin, but they systematically discount foreign ideas relative to local ones.

Keywords: Entrepreneurship and Strategy, Global Strategy, Entrepreneurial Financing, Innovation, International

JEL Classification: M13, M16

Suggested Citation

Wright, Nataliya and Koning, Rembrand and Khanna, Tarun, Judging Foreign Startups (April 9, 2021). Available at SSRN: https://ssrn.com/abstract=3822854 or http://dx.doi.org/10.2139/ssrn.3822854

Nataliya Wright (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Rembrand Koning

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Boston, MA 02163
United States

Tarun Khanna

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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