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on Entrepreneurship |
| By: | Saul Estrin; Andrea Herrmann; Moren Levesque; Tomasz Mickiewicz; Mark Sanders |
| Abstract: | We present a Schumpeterian growth model with new venture creation, under uncertainty, which explains the tradeoff between speed-to-breakeven, revenue-at-breakeven and relates this to the level of innovation. We then explore the tradeoffs between these outcomes empirically in a unique sample of 331 information and communication technology (ICT) ventures using a multi-input, multi-output stochastic frontier model. We estimate the contribution of financial capital and labor input to the outcomes and the tradeoffs between them, as well as address heterogeneity across ventures. We find that more innovative (and therefore more uncertain) ventures have lower speed-to-breakeven and/or lower revenue-at-breakeven. Moreover, for all innovativeness levels, new ventures face a tradeoff between speed-to-breakeven and revenue-at-breakeven. Our results suggest that it is the availability of proprietary resources (founder equity and labor) that helps ventures overcome bottlenecks in the innovation process, and we propose a line of research to explain the (large) unexplained variation in venture creation efficiency. Plain English Summary. This study examines how new businesses deal with uncertainty, focusing on the tradeoff between how quickly they become profitable (speed-to-breakeven) and how much revenue they generate when they do. We analyze data from 331 ICT ventures to understand these tradeoffs better, considering factors like financial resources and labor inputs. We find that more innovative ventures, which tend to be more uncertain, often take longer to reach profitability and may earn less when they do. Moreover, regardless of their level of innovation, all new ventures face a tradeoff between speed-to-breakeven and revenue. The study highlights that unique resources, such as founder equity and founder labor, help businesses overcome challenges in the innovation process. It also suggests further research to understand why some ventures are more efficient than others in the early stage of creating new businesses. |
| Keywords: | entrepreneurship, innovation, new venture creation, proprietary resources, stochastic frontier analysis, Schumpeterian growth model |
| Date: | 2024–11–15 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2054 |
| By: | Jordan Moradian; Michael Dubrovsky; Megha Sama; Pavel Korecky; Sidarth Kulkarni; Yaniv Goder; Diedrik Vermeulen |
| Abstract: | In a study of 107 male Y Combinator founders, a surprising correlation between age-normalized testosterone and company stage was uncovered. Testosterone, a hormone associated with confidence, dominance, and drive, increased by 55.7% from pre-seed to seed funding, peaking at the Series B stage, where levels were 99.6% higher than pre-seed. After series B funding, testosterone was observed to drop by 42.2%, coinciding with a spike in cortisol levels. This age-normalized biomarker analysis supports the dual-hormone hypothesis, illustrating that early startup success fosters feelings of dominance and confidence, while later-stage pressures and stresses erode these feelings. An alternative interpretation of the data, which suggests the opportunity for a longitudinal study, is that male founders with higher testosterone are more likely to raise larger rounds of funding. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.03361 |
| By: | Jana S. Hamdan; Tim Kaiser; Lukas Menkhoff; Yuanwei Xu |
| Abstract: | We study the effects of scaling up a financial- and business education program in a randomized saturation experiment in Uganda. We randomly assign the program at the cluster-level, and then randomize the share of treated individuals within treated clusters. 15 months later, we find that treated entrepreneurs are more likely to use mobile money savings accounts and payments, increase their mobile money and bank savings at the intensive and extensive margins, and invest more. We find little evidence of spillovers on untreated peers, but as the share of treated entrepreneurs increases, beneficial effects on the treated decline. |
| Keywords: | scaling, business training, financial literacy, micro-entrepreneurs, mobile money, spillover effects, saturation effects |
| JEL: | C93 D14 G53 O12 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11431 |
| By: | Marcel Boyer; Hicham El Moussaoui; Valentin Petkantchin |
| Abstract: | The aim of our research is to study the persistent challenges of water distribution in a context where supply relies on a network of microentrepreneurs (MEs), often poorly recognized and unprotected at institutional level, but playing an essential role in the well-being, if not the survival, of the target populations. Our analysis focuses on the specific case of microentrepreneurs - working partially or totally in the informal sector - in the precarious districts of Abidjan (Côte d'Ivoire). The central question could be formulated as follows: How can we improve the profitability of MEs by enabling them to move out of the informal sector? L’objet de notre recherche est d’étudier les défis persistants de la distribution d’eau dans un contexte où l’approvisionnement repose sur un réseau de microentrepreneurs (ME), souvent mal reconnus et non-protégés au niveau institutionnel, mais jouant un rôle essentiel au bien-être, voire à la survie des populations visées. Notre analyse porte sur le cas particulier des microentrepreneurs – travaillant partiellement ou totalement dans l’informel – dans les quartiers précaires d’Abidjan (Côte d’Ivoire). La question centrale pourrait être formulée ainsi : Comment améliorer la rentabilité des ME en leur permettant de sortir de l’informel? |
| Keywords: | Microentrepreneurs, institutions, transaction costs, informal economy, water supply, profitability, formalization, Microentrepreneurs, institutions, coûts de transactions, économie informelle, approvisionnement en eau, rentabilité, formalisation |
| JEL: | D02 D04 D23 E14 E26 H44 O17 P37 |
| Date: | 2024–11–05 |
| URL: | https://d.repec.org/n?u=RePEc:cir:cirwor:2024s-05 |