Forum Open Is support for small business overhyped as a panacea for our economic troubles? Recent research suggests the advantages of bigness when it comes to employment and economic development. If so, asks Professor Jim Heskett, what does this mean for government policy?
Published in 2011
Despite its recent economic advances, India's gender balance for entrepreneurship remains among the lowest in the world. Improving this balance is an important step for India's achievement of greater economic growth and gender equality. This paper uses detailed micro-data on the unorganized manufacturing and services sectors of India in 2000-2005 to identify and quantify the importance of existing female business networks for promoting subsequent entrepreneurship among women at the district-industry-year level.
Has India's political revolution been accompanied by corresponding changes in the economic sphere? This paper argues that for the most vulnerable, whether in villages or cities, the social structure has not changed. While Scheduled Castes, Scheduled Tribes, and traditionally "middle-level" castes have made significant progress at the level of political representation in independent India, their progress in entrepreneurship has been uneven. By looking at the ownership of enterprises across the country, this paper sheds light on two larger narratives about India's emerging political economy: first, that the rich have benefitted more than the poor, the towns and cities more than the villages, and the upper castes more than the lower castes has acquired salience in several quarters. And second, that "Dalit entrepreneurship," a category conspicuous by its absence in India's business history, has become a significant trend. Findings by Lakshmi Iyer, Tarun Khanna, and Ashutosh Varshney show that while the "middle-level" castes have made progress in entrepreneurship, the Scheduled Castes and Scheduled Tribes are considerably under-represented in the entrepreneurial sphere. That is, for Scheduled Castes and Scheduled Tribes, political gains have not manifested themselves in greater entrepreneurial prowess.
The history of entrepreneurs in green industries is largely unwritten, a fact that Harvard Business School business historian Geoffrey Jones is trying to remedy. In a new paper, Jones explores the edge-of-society pioneers who created the wind turbine industry.
Leading a doomed company can often help a career by providing experience, insight, and contacts that lead to new opportunities, says professor Shikhar Ghosh.
For retailers offering deals through the wildly popular online start-up Groupon, does the one-day publicity compensate for the deep hit to profit margins? A new working paper, "To Groupon or Not to Groupon," sets out to help small businesses decide. Harvard Business School professor Benjamin G. Edelman discusses the paper's findings.
Published in 2010
Does gender affect whether a university scientist will be invited to work with for-profit companies? Indeed it does. A new paper finds that male professors receive more opportunities than their female counterparts to join scientific advisory boards and start new companies. Research, focusing on the biotechnology field, was conducted by Haas School of Business professor Waverly W. Ding, MIT Sloan professor Fiona Murray, and HBS professor Toby E. Stuart.
How can multinationals, entrepreneurs, and investors identify and respond to new challenges and opportunities around the world? In this Q&A, HBS professors and strategy experts Tarun Khanna and Krishna G. Palepu offer a practical framework for succeeding in emerging markets. Plus: Book excerpt with action items.
Entrepreneurial firms rich in knowledge but poor in other resources can use superior architectural knowledge of a technical system to gain strategic advantage over larger and better endowed rivals. This paper presents a model and provides examples showing that architectural knowledge can be applied strategically to change a firm's scope and boundaries, make innovations more or less autonomous, and change the span of problems it must solve.
Published in 2009
Economic growth is highly correlated with an abundance of small, entrepreneurial firms.
This relationship is even stronger looking across industries within cities, and has been taken as evidence for competition spurring technological progress, product cycles where growth is faster at earlier stages, and the importance of entrepreneurship for area success. Any of these interpretations is possible, however, and the only thing that we can be sure of is that entrepreneurial clusters exist in some areas but not in others. This paper first documents systematically some basic facts about average establishment size and new employment growth through entrepreneurship, then analyzes entry and industrial structures at the region and the city levels using the Longitudinal Business Database.
Professor Diego Comin and fellow researchers find a little observed link between private savings and country growth. The work may offer a simple interpretation for the East Asia "miracle" and for failures in Latin America. Q&A.
Like a good case study, this month's question divided respondents nearly down the middle, says professor Jim Heskett. Can managers lead both a large, established organization and encourage intrapreneurial effort inside it? Readers weighed in. (Online forum now closed. Next forum begins June 5.)
An economic crisis is a charter for business leaders to rewrite and rethink how they do business, says Harvard Business School professor Lynda M. Applegate. The key: Don't think retrenchment; think growth.
Want to be a successful entrepreneur? Your best bet might be to partner with entrepreneurs who have a track record of success, suggests new research by Paul A. Gompers, Josh Lerner, David S. Scharfstein, and Anna Kovner.
Published in 2008
Some places, like Silicon Valley, seem almost magically entrepreneurial with a new start-up on every street corner. Other areas, like declining cities of the Rust Belt, appear equally starved of whatever local attributes make entrepreneurship more likely. Many academics, policymakers, and business leaders stress the importance of local conditions for explaining spatial differences in entrepreneurship and economic development. This paper uses data from the U.S. Census Bureau to characterize these entry relationships more precisely within the manufacturing sector.
All else equal, a venture-capital-backed entrepreneur who starts a company that goes public has a 30 percent chance of succeeding in his or her next venture. First-time entrepreneurs, on the other hand, have only an 18 percent chance of succeeding, and entrepreneurs who previously failed have a 20 percent chance of succeeding. But why do these contrasts exist? Such performance persistence, as in the first example, is usually taken as evidence of skill. However, in the context of entrepreneurship, the belief that successful entrepreneurs are more skilled than unsuccessful ones can induce real performance persistence. In this way, success breeds success even if successful entrepreneurs were just lucky. Success breeds even more success if entrepreneurs have some skill.
The ready availability of patent citation data has been a tremendous boon to applied research on knowledge and innovation. The role of examiners in the generation of patent citations has been thought to potentially complicate these analyses, but has been difficult to study. Taking advantage of a change in the way patent citation data has been reported starting in 2001, this paper summarizes basic facts on examiner citations, and provides a descriptive analysis of factors associated with citations in a patent.
Why do established firms find some technological change so challenging? While existing research has identified numerous sources of inertia in established firms exploring new technological domains, identity is a critical piece of the puzzle. As the core essence of an organization, identity directs and constrains action. The routines, procedures, capabilities, knowledge base, and beliefs of an organization all reflect its identity. So when a technology is identity-challenging to an organization—when pursuing it would violate the core beliefs of both insiders and outsides about what the firm represents—organizations face significant obstacles to adopting it. This study by Tripsas highlights the importance of recognizing and evaluating the tradeoffs associated with technological opportunity and organizational identity.
It is crucial for firms that create and maintain platforms to select optimal levels of openness. Decisions to open a platform entail tradeoffs between adoption and appropriability, and opening a platform can spur adoption by harnessing network effects, reducing users' concerns about lock-in, and stimulating production of differentiated goods that meet the needs of user segments. At the same time, opening a platform typically reduces users' switching costs and increases competition among platform providers, making it more difficult for them to appropriate rents from the platform. This paper describes research on factors that motivate managers to open or close mature platforms.
Access to "soft information" and the greater sensitivity of decentralized banks to the local institutional environment can have both positive and negative consequences for small firms. Hence there may be a dark side to decentralized bank lending in certain instances. This paper argues that the same ability of decentralized banks to act on soft information also makes them more responsive to the local environment when setting terms of their loans. While this can be beneficial for small businesses in competitive markets, it also implies that the organizational structure of decentralized banks might allow them to better exploit their market power in concentrated banking markets by restricting credit or charging higher interest rates from small businesses.
Business leaders must manage and support creativity just as they would any other asset. Harvard Business School professors Teresa Amabile, Mary Tripsas, and Mukti Khaire discuss where creativity comes from, how entrepreneurs use it, and why innovation is often a team sport. From the HBS Alumni Bulletin.
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.
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.
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.
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.
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.
Published in 2007
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.
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.
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.
Published in 2006
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.
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.
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.
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.
Company founders have a tough time convincing their boards to increase compensation, says HBS professor Noam Wasserman. He discusses his research into "founder frustration" areas.
Published in 2005
Bill Gates and Larry Ellison are rare birds. In this interview by HBS senior lecturer Mike Roberts for New Business, professor Noam Wasserman explains how and why many founding chief executives find themselves replaced.
Published in 2004
A key to exploiting radical technological change is to clear your vision of historical constraints and see new opportunities with a fresh perspective. Michael J. Roberts interviews HBS professor Mary Tripsas.
Published in 2003
Whether delivering pizza or building gizmos for cell phones, the companies that get launched outside the United States bring unique issues to the table, says HBS professor Walter Kuemmerle.
Managers know they need growth to survive—but innovation isn't easy. In this Harvard Management Update article, HBS professor Clayton Christensen and co-authors detail the six keys to creating new-growth businesses.
Is China post WTO a land of great entrepreneurial opportunity, or a house of
cards threatening to collapse on foreign investors?
Published in 2002
Highlights from a discussion with HBS professors Howard Stevenson, Richard Hamermesh, and Paul Marshall (moderated by Mike Roberts) on teaching entrepreneurship at HBS.
Published in 2001
Part Two: The intricacies of creating a board for the family-run business.
Corporate governance can be difficult enough—but what happens when your board of directors is comprised of your cousins? Or when your CEO is your sister? Harvard Business School's John Davis discusses governance issues unique to the family-run business.
Bridging the digital divide, at least in inner cities, requires a lot more than computer power — although more computers would certainly be nice. According to business and political leaders who focus their efforts on empowering residents of urban areas, access is only one rung on the ladder. Stated one Harlem entrepreneur, "It's more so about attitude." And attitudes, panelists noted, can be shaped by exposure to the wonders of technology.
By filling gaps in the infrastructure of emerging economies, business groups can both foster and deter entrepreneurship in various ways. Peter K. Jacobs explores the research of HBS associate professor Tarun Khanna in this article from Working Knowledge.
A conversation with HBS associate professor Walter Kuemmerle provides insight into the entrepreneurial process in a global setting.
A new breed of advisors, known as mentor capitalists, has seeded Silicon Valley with knowledge and expertise. Dorothy Leonard and Walter Swap explain why this new kind of mentoring has flourished in the Valley.
Published in 2000
Health care and the Internet are well-matched for each other, quipped one panelist at the IS2K conference, "because no one wants to pay for either." Quips aside, the health care field is emerging as one of the busiest laboratories for exciting new business models—and the stakes are high indeed. In a discussion moderated by HBS Professor Lynda Applegate, experts in this burgeoning realm of Internet activity talked about what their businesses are doing to change the rules, all while trying to fulfill their primary goal of earning patients' trust.
Entrepreneurship's rise as a business phenomenon has occurred side-by-side with its emergence as a centerpiece of modern business education. In this conversation with Mike Roberts, Executive Director of Entrepreneurial Studies at HBS, Professor Howard Stevenson reflects on how academic inquiry has affected entrepreneurial practice and how scholars can learn from today's entrepreneurs.
Published in 1999
For women in business today, there's much more to talk about than gender specific issues like dual career families or the glass ceiling. Women Leading Business, an HBS Executive Forum, brings together executive women—entrepreneurs and corporate leaders alike—for a different kind of conversation about strategy, decision-making and paths to success. In this interview, Professor Myra Hart talks about the program, and how it enhances both the personal and professional lives of senior-level businesswomen.
