Working Paper: NBER ID: w24789
Authors: Aaron Chatterji; Solne Delecourt; Sharique Hasan; Rembrand M. Koning
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.
Keywords: Entrepreneurship; Management Advice; Startup Performance; Field Experiment
JEL Codes: M1; M12; M13; O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| active management style (M54) | firm growth (L26) |
| active management style (M54) | likelihood of failure (G33) |
| peer advice (C92) | proactive management changes (M54) |
| passive management style (M54) | slower growth (O49) |
| passive management style (M54) | higher failure rates (L15) |
| management advice (M54) | firm activity status (M13) |
| type of management advice (M54) | firm growth (L26) |
| type of management advice (M54) | likelihood of failure (G33) |