With a Little Help from My (Random) Friends: Success and Failure in Post-Business School Entrepreneurship

By Josh Lerner, Ulrike Malmendier. 2013

318 citations recorded by the source corpus.

To what extent do peers affect our occupational choices? This question has been of particular interest in the context of entrepreneurship and policies to create a favorable environment for entry. Such influences, however, are hard to identify empirically. We exploit the assignment of students into business school sections that have varying numbers of classmates with prior entrepreneurial experience. We find that the presence of entrepreneurial peers strongly predicts subsequent entrepreneurship rates of students without an entrepreneurial background, but in a more complex way than the literature has previously suggested: A higher share of entrepreneurial peers leads to lower rather than higher subsequent rates of entrepreneurship. However, the decrease in entrepreneurship is entirely driven by a significant reduction in unsuccessful entrepreneurial ventures. The effect on the rate of successful post-MBA entrepreneurs, instead, is insignificantly positive. In addition, sections with few prior entrepreneurs have a considerably higher variance in their rates of unsuccessful entrepreneurs. The results are consistent with intra-section learning, where the close ties between section-mates lead to insights about the merits of business plans.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/ecc60f9672608f0b616f2ef2ba8983318f09462d

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Citations in the corpus

Cultural proximity and loan outcomes (2017, unknown): “[49] Lerner, Josh and Ulrike Malmedier, 2011, “With a Little Help from My (Random) Friends: Success and Failure in Post-Business School Entrepreneurship,” Manuscript, Harvard University and U.”
Startups by recent university graduates and their faculty: implications for university entrepreneurship policy (2012, unknown): “Approximately five percent of alumni at Harvard Business School start businesses within one year of graduation and 13% of those are successful (Lerner and Malmendier, 2011).4 Judging by these case studies the rates of entrepreneurship varies significantly across universities but students should not…”
Risk Tolerance and Entrepreneurship (2013, result): “Our research also complements the Lerner & Malmendier (2011) finding that learning about other individuals’entrepreneurial experiences decreases entry rates but improves performance.”
Executive Networks and Firm Policies: Evidence from the Random Assignment of MBA Peers (2013, unknown): “…among the corporate elite, Group members were not above some friendly competition, especially with regard to executive compensation: The members of The Group love to tease one another about their accomplishments, and Baldwin is one of the most adept at it ... [H]e and Burke set out to bait Tom…”
Social influence in career choice: Evidence from a randomized field experiment on entrepreneurial mentorship (2017, background): “On the other hand, a recent study using a quasi-experimental design found that MBA students randomized to class sections with former entrepreneurs as fellow students were less likely to start businesses after graduation (Lerner and Malmendier, 2013).”
Friendship at Work: Can Peer Effects Catalyze Female Entrepreneurship? (WP-15-22) (2016, background): “Turning to business training programs for micro-entrepreneurs in low-income settings, experimental studies point to modest positive program impacts with significant heterogeneity (for a complete review, see McKenzie and Woodruff (2014)).”
The Effects of Business Accelerators on Venture Performance: Evidence from Start-Up Chile (2017, background): “Productivity may increase via the instruction of entrepreneurship know-how from peers and staff (cf. Lerner and Malmendier 2013), access to valuable social networks (Granovetter 1973; Ketchen, Ireland, and Snow 2007; Cai and Szeidl 2016), the structured accountability imposed by regular meetings…”