Entrepreneurship →
- 25 Feb 2008
- Sharpening Your Skills
- 04 Feb 2008
- Research & Ideas
Putting Entrepreneurship in the Social Sector
Despite the best of intentions and trillions of dollars worth of assets, nonprofits have been unable to solve many of society's worst ills. A new casebook by 4 Harvard Business School professors argues that the social sector should take an entrepreneurial approach. Q&A with coauthor Jane C. Wei-Skillern. Key concepts include: Societal problems are increasingly large and complex, taxing the ability of nonprofit organizations to solve them. A new model for the social sector based on entrepreneurship would allow organizations to create more value with their limited resources and tap additional resources not directly under their control. MBA students are increasingly interested in courses and careers related to social enterprise. Closed for comment; 0 Comments.
- 31 Jan 2008
- Working Paper Summaries
Peer Effects and Entrepreneurship
How do your coworkers affect your decision to become an entrepreneur? The vast majority of entrepreneurs launch their new ventures following a period of employment in established organizations. To date, factors such as the degree of bureaucracy that individuals have experienced have been shown to shape their likelihood to go into business for themselves. But socialization matters, too. Nanda and Sørensen show that the career experiences of coworkers shape both the information and the resources available to prospective entrepreneurs, as well as the value that individuals attach to entrepreneurial activity as a career choice. Key concepts include: Who your coworkers are, and what they have done in their careers, influence the likelihood that you will become an entrepreneur. Peers matter in 2 ways: by structuring coworkers' access to information and resources that help identify entrepreneurial opportunities, and by influencing coworkers' perceptions about entrepreneurship as a career choice. Company policies and practices related to hiring and retention may have indirect consequences for entrepreneurial activity. These findings have policy implications. For instance, policies that encourage long worker tenures will tend to lower rates of movement between firms, thereby indirectly reducing the supply of prospective entrepreneurs. Closed for comment; 0 Comments.
- 30 Jan 2008
- Working Paper Summaries
Cost of External Finance and Selection into Entrepreneurship
Entrepreneurs are, on average, significantly wealthier than people who work in paid employment. Research shows that entrepreneurs comprise fewer than 9 percent of households in the United States but they hold 38 percent of household assets and 39 percent of the total net worth. This relationship between personal wealth and entrepreneurship has long been seen as evidence of market failure, meaning that talented but less wealthy individuals are precluded from entrepreneurship because they don't have sufficient wealth to finance their new ventures. Nanda studied how changes in the cost of external finance affected the characteristics and likelihood of individuals becoming entrepreneurs. He finds that market failure accounts for only a small fraction of the relationship between personal wealth and entrepreneurship in advanced economies such as the U.S. Key concepts include: Entrepreneurs are, on average, significantly wealthier than people who work in paid employment. The wealthy are also more likely to become entrepreneurs. Talent matters in entrepreneurship, more so for the less wealthy. The relationship between individual wealth and entrepreneurship in advanced economies is driven at least in part by the fact that wealthy individuals can start lower growth-potential businesses because they do not face the discipline of external finance. It may be misguided to provide a simple scheme of cheap credit for new ventures, as not all who take up the scheme will be those who really need it. Closed for comment; 0 Comments.
- 28 Jan 2008
- Research & Ideas
Billions of Entrepreneurs in China and India
Entrepreneurship in both China and India is rising dramatically and thriving under quite different conditions. HBS professor Tarun Khanna explains what it all means in this Q&A about his new book, Billions of Entrepreneurs: How China and India Are Reshaping Their Futures and Yours. Plus: book excerpt. Key concepts include: In China and India, much of entrepreneurship is in response to constraints—societal, political, or other. The business landscapes of China and India differ in two main respects: their degree of openness to outside influence, and the extent and type of government involvement. Foreign direct investment pours into China. India has embraced foreign direct investment much less, for good and bad reasons. Traditionally, India has been more open to ideas than has China. In India, caste is both less important and more important than it used to be. Closed for comment; 0 Comments.
- 25 Jan 2008
- Working Paper Summaries
What Do Non-Governmental Organizations Do?
Non-governmental organizations play an increasingly important role in international development. They serve as a funnel for development funds both from individual donors in wealthy countries and from bilateral aid agencies. At the same time, NGOs are frequently idealized as organizations committed to "doing good" while setting aside profit or politics—a romantic view that is too starry-eyed. Development-oriented NGOs, which have existed for centuries, have played a growing role in development since the end of World War II; there are currently 20,000 international NGOs. This paper argues that the strengths of NGOs and their weaknesses easily fit into economists' conceptualization of not-for-profit contractors. Key concepts include: Strengths of the NGO model produce corresponding weaknesses in agenda-setting, decision-making, and resource allocation. The increased presence of NGOs can be explained by 3 factors: a trend to outsource government services; new ventures by would-be not-for-profit "entrepreneurs"; and the increasing professionalization of existing NGOs. As NGOs increasingly produce their own funding and develop their own professionalized class, it is appropriate to expose them to greater market forces beyond donor preferences. The use of aid vouchers allowing beneficiaries to purchase private goods and services is one tool for introducing more market forces. Closed for comment; 0 Comments.
- 07 Jan 2008
- Research & Ideas
Pursuing a Deadly Opportunity
Cadavers are a necessity for medical students and researchers, but the business of supplying this market is a touchy moral and ethical issue. Harvard Business School professor Michel Anteby and research associate Mikell Hyman explore strategies used by both academic and entrepreneurial organizations that deal in the dead. Key concepts include: The study raises general questions around what constitutes organizational legitimacy and the kind of moral order we want to create as a society. The same issues could help us come to grips with the murky legal and ethical areas surrounding the digital age. Understanding how and why these market dynamics develop will shed light on how the supply of cadavers could be increased and improved. Closed for comment; 0 Comments.
- 05 Nov 2007
- Research & Ideas
The Changing Face of American Innovation
Chinese and Indian scientists and engineers have made an unexpectedly large contribution to U.S. technology formation over the last 30 years, according to new research by HBS professor William R. Kerr. But that trend may be ebbing, with potentially harmful effects on future growth in American innovation. Key concepts include: Chinese contributions to U.S. innovation as recorded in patent and trademark data increased from under 2 percent of U.S. domestic inventors in 1975 to over 8 percent today. In the same period, Indian inventors also rose, to almost 5 percent of the total in 2000. Since 2000, Chinese scientists' contributions have leveled off, and Indian contributions have declined slightly. Will American innovation suffer? Closed for comment; 0 Comments.
- 04 Sep 2007
- Research & Ideas
Jumpstarting Innovation: Using Disruption to Your Advantage
Fostering innovation in a mature company can often seem like a swim upstream—the needs of the existing business often overwhelm attempts to create something new. Harvard Business School professor Lynda M. Applegate shows how one of the forces that threatens established companies can also be a source of salvation: disruptive change. Plus: Innovation worksheets. Key concepts include: Jumpstarting innovation is a critical business imperative. Executives realize that radical change is needed but do not feel equipped to make such change. Disruptions in the business environment allow new entrants or forward-thinking established players to introduce innovations that transform the way companies do business and consumers behave. Disruptive changes that might serve as the source of innovation include technology shifts, new business models, industry dynamics, global opportunities, and regulatory changes. Closed for comment; 0 Comments.
- 13 Aug 2007
- Working Paper Summaries
Diasporas and Domestic Entrepreneurs: Evidence from the Indian Software Industry
Several recent studies have highlighted the important role that cross-border ethnic networks might play in facilitating entrepreneurship in developing countries. Little is known, however, about the extent to which domestic entrepreneurs rely on the diaspora and whether this varies systematically by the characteristics of the entrepreneurs or their local business environment. The Indian diaspora is estimated at over 18 million people spanning 130 countries. Given that formal institutions in India remain weak and hence the informal barriers to trade are higher, do diaspora networks serve as substitutes to the functioning of the local business environment? Do they help entrepreneurs to circumvent the barriers to trade arising from imperfect institutions? This study examines the extent to which software entrepreneurs within India vary in their reliance on expatriate networks. Key concepts include: Entrepreneurs located outside software hubs—in cities where monitoring and information flow on prospective clients is harder—rely significantly more on diaspora networks for business leads and financing. Those who rely more on diaspora networks also have better performing firms. This benefit from the diaspora is stronger for entrepreneurs who are based outside hubs. Benefits from the diaspora accrue most to entrepreneurs who have previously lived abroad and returned to India, compared with those who have not lived abroad. Professional rather than ethnic ties may well form the basis for these networks. Policymakers in developing countries could leverage their diasporas to help with domestic entrepreneurship by developing links between the diaspora and smaller cities rather than with hubs. Closed for comment; 0 Comments.
- 22 May 2007
- Working Paper Summaries
The Speed of New Ideas: Trust, Institutions and the Diffusion of New Products
Does trust confer competitive advantage in terms of time, money, and productivity? Previous research indicates that it does. This study shifts perspective slightly and asks whether trust can also act as a barrier to entry. In other words, are trusted suppliers protected from competition if buyers are reluctant to try new products and services offered by other suppliers? Oberholzer-Gee and Calanog explored the link between levels of trust and the decision to adopt a new product using a field experiment on the diffusion of an innovative floor drain for the plumbing market. Key concepts include: Entrepreneurs from less-trusted groups—in this study, African-Americans—found it more difficult to overcome trust barriers. Trust can act as a barrier to entry for new firms and products because trust makes existing relationships more productive. Trust in current suppliers is a particularly strong deterrent to entry if the product is associated with a less-trusted group. Information from an intermediary organization, in this case a national industry association, can neutralize the negative impact of trust. Trust in institutions is therefore a valuable substitute for interpersonal trust. Closed for comment; 0 Comments.
- 06 Apr 2007
- What Do You Think?
Will Market Forces Stop Global Warming?
HBS professor Jim Heskett sums up many creative responses from readers on the role of business in combatting global climate change. Online forum now closed. Closed for comment; 0 Comments.
- 03 Jan 2007
- Working Paper Summaries
Banking Deregulation, Financing Constraints and Entrepreneurship
What effect does an increase in banking competition have on the entry of start-ups? In particular, does an increase in banking competition have a differential effect on the entry of start-ups relative to the opening of new establishments by existing firms? The U.S. branch banking deregulations provide a useful laboratory for studying how banking competition affects small businesses. Prior to 1970, all but twelve states had stringent restrictions on the ability of banks to open new branches or to acquire the branches of other banks within the state; beginning in the 1970s and until 1994, all but two states removed these restrictions. In this research, Kerr and Nanda studied the entry of newly incorporated businesses between 1976 and 1999 using detailed data collected by the U.S. Census Bureau. Their findings matter for understanding how reforms that affect the financing environment may improve the real economy through the reallocation of resources in the non-financial sectors. Key concepts include: Interstate branch banking deregulations had a positive effect on both the entry rates and entry sizes of start-ups relative to the facility expansions of existing firms. These beneficial effects were evident in multiple sectors of the economy and stronger in more financially dependent industries. While greater banking competition may hurt entrepreneurs through a decline in relationship banking or loan subsidization, the positive net effects point to substantial increases in credit provision to start-ups. The impact of financial market reforms on product market entry is an important micro-foundation for understanding and fostering economic growth. Closed for comment; 0 Comments.
- 29 Nov 2006
- Research & Ideas
Rich or Royal: What Do Founders Want?
It's a fundamental tension many entrepreneurs face, the conflict between wanting to become rich and wanting to keep control of their new company. Few can have both. Professor Noam Wasserman discusses his research into the motivations of entrepreneurs and the people who invest in them. Key concepts include: Entrepreneurs are often motivated by the potential of money and control, but very few ever achieve both. A fundamental tension between "rich and regal" starts to develop as entrepreneurs look to attract resources to grow their ventures. Investors need to understand the motivations of the entrepreneurs they back to make sure goals are aligned. Closed for comment; 0 Comments.
- 09 Nov 2006
- Research & Ideas
Andy Grove: A Biographer’s Tale
Podcast: For Harvard Business School professor Richard S. Tedlow, Intel co-founder Andy Grove is one of the most important and intriguing CEOs in American business history. In this interview, Tedlow discusses his new biography, Andy Grove: The Life and Times of an American with Jim Aisner. Closed for comment; 0 Comments.
- 16 Oct 2006
- Research & Ideas
Report from China: The New Entrepreneurs
When a delegation of Harvard Business School faculty visited Chinese entrepreneurs, they came away with something unexpected: the start of what could be a fundamental rethinking of how entrepreneurship works. Key concepts include: At least in selected areas, entrepreneurs in China are thriving and opportunities are abundant in times of change, chaos, and uncertainty. National, regional, and local governments continue to play a role in business formation, and can be helpful securing resources for entrepreneurs. Studying China provides fertile ground for rethinking what conditions are necessary to foster a healthy entrepreneurial environment. Closed for comment; 0 Comments.
- 04 Oct 2006
- Lessons from the Classroom
Surviving Success: When Founders Must Go
At some point, a start-up's founder usually cedes CEO responsibilities to a seasoned manager. But what roles does the founder assume next? Professor Noam Wasserman discusses a recent case study and what students learn from it in the classroom. From HBS Alumni Bulletin. Key concepts include: Start-ups replacing their founder/CEO must consider what duties, if any, the founder assumes after succession. The replacement CEO may have very strong feelings on the future role of the founder. Closed for comment; 0 Comments.
- 24 Jul 2006
- Research & Ideas
How Kayak Users Built a New Industry
Customers have produced some of the most important innovations in industries ranging from oil refining to scientific instruments. But how do user innovations take place? How do they get to market? Professor Carliss Baldwin discusses research into the rodeo kayak industry to understand the world of user innovation. Key concepts include: Many product innovations originate with users, and as user communities quickly add more improvements, a "design space" is initiated. User innovators seem to spring up around industries such as recreation, where participants are passionate and design costs are low. Commercial opportunities to build upon existing products may be available for both users and existing companies—but the timing is different for each. Closed for comment; 0 Comments.
- 15 May 2006
- Lessons from the Classroom
Women Find New Path to Work
Professor Myra Hart's New Path program helps Harvard Business School alumnae re-enter the work world. Here is a look at what participants learned about life, work, and the quickly changing world of business. Closed for comment; 0 Comments.
Encouraging Entrepreneurs: Lessons for Government Policy
Who you know and how much money is in your pocket have always been significant contributors to entrepreneurial success. New research by Harvard Business School professor Ramana Nanda explores new wrinkles in this age-old formula—and how government policy may impact entrepreneurship. Key concepts include: Policymakers can benefit from understanding how peer networks and the financing environment impact the kinds of people who become entrepreneurs. People with a higher fraction of co-workers who have been entrepreneurs are more likely to try it themselves. Moreover, peer effects substitute for an individual's own background—those whose parents have been entrepreneurs benefit less from exposure to entrepreneurial peers. Not everyone who wants money to start a new business necessarily deserves it. Wealthy people are often able to start inadvisable businesses because they don't need to undergo the reality check of an investor's approval for funding. Closed for comment; 0 Comments.