Experimentation and Start-up Performance: Evidence from A/B Testing

2022 ◽  
Author(s):  
Rembrand Koning ◽  
Sharique Hasan ◽  
Aaron Chatterji
Keyword(s):  
Organizational Learning ◽  
Technology Use ◽  
Substantial Effect ◽  
Start Up ◽  
Testing Technology ◽  
Quantitative Analyses ◽  
Using Data ◽  
The Cost ◽  
Entrepreneurial Strategy ◽  
Start Ups

Recent scholarship argues that experimentation should be the organizing principle for entrepreneurial strategy. Experimentation leads to organizational learning, which drives improvements in firm performance. We investigate this proposition by exploiting the time-varying adoption of A/B testing technology, which has drastically reduced the cost of testing business ideas. Our results provide the first evidence on how digital experimentation affects a large sample of high-technology start-ups using data that tracks their growth, technology use, and products. We find that, although relatively few firms adopt A/B testing, among those that do, performance improves by 30%–100% after a year of use. We then argue that this substantial effect and relatively low adoption rate arises because start-ups do not only test one-off incremental changes, but also use A/B testing as part of a broader strategy of experimentation. Qualitative insights and additional quantitative analyses show that experimentation improves organizational learning, which helps start-ups develop more new products, identify and scale promising ideas, and fail faster when they receive negative signals. These findings inform the literatures on entrepreneurial strategy, organizational learning, and data-driven decision making. This paper was accepted by Toby Stuart, entrepreneurship and innovation.

Choosing Technology: An Entrepreneurial Strategy Approach

2020 ◽  
Author(s):  
Joshua S. Gans ◽  
Michael Kearney ◽  
Erin L. Scott ◽  
Scott Stern
Keyword(s):  
Technology Choice ◽  
Strategic Choices ◽  
Technological Trajectories ◽  
Start Up ◽  
Technological Trajectory ◽  
Evolution Of Technology ◽  
S Curve ◽  
Entrepreneurial Strategy ◽  
Start Ups ◽  
The Impact

A central premise of research in the strategic management of innovation is that start-ups are able to leverage emerging technological trajectories as a source of competitive advantage. But, if the potential for a technology is given by the fundamental character of a given technological trajectory, then why does entrepreneurial strategy matter? Or, put another way, if the evolution of technology is largely shaped by the strategic choices entrepreneurs make, then why do technological trajectories exhibit systematic patterns such as the technology S-curve? Taking a choice-based perspective, this paper illuminates the choices confronting a start-up choosing their technology by resolving the paradox of the technology S-curve through a reformulation of the foundations of the technology S-curve. Specifically, we reconceptualize the technology S-curve not as a technological given but as an envelope of potential outcomes reflecting differing strategic choices by the entrepreneur in exploration versus exploitation. Taking this lens, we are able to clarify the role of technological uncertainty on start-up strategy, the impact of constraints on technological evolution, and how technology choice is shaped by the possibility of imitation. Our findings suggest that staged exploration may stall innovation as a result of the replacement effect, increasing the strategic importance of commitment.

scholarly journals Do HRM Systems and Practices Influence the Start-Up Organisation? - A Critical Review

2020 ◽  
Vol 6 (02) ◽  
pp. 83-93
Author(s):  
Sneha Bhattacharjee ◽  
Subhadeep Mukherjee
Keyword(s):  
Resource Management ◽  
Organizational Learning ◽  
Human Resource Management ◽  
Performance Management ◽  
Human Resource ◽  
Critical Review ◽  
Individual Responsibility ◽  
Start Up ◽  
Start Ups

Recruitment, compensation, or performance management are the subjects of traditional HR which have an ample number of insight that are likely to be applied in both established and emerging firms. Numerous proofs which recommend the management of people in start-upsmay not be the same as the settled firms. There are features, on managing people, in rising start-ups that need extra concerns and are yet to be. As situations become progressively mind-boggling and dynamic, firms must turn out to be increasingly enterprising to recognize new open doors for continued unrivalled execution. Start-ups include organizational learning, driven by the coordinated effort, imagination and individual responsibility. This paper reviews research connecting human resource management (HRM) with start-ups.

ENTREPRENEURSHIP AND THE INFORMAL ECONOMY: A STUDY OF UKRAINE'S HIDDEN ENTERPRISE CULTURE

2007 ◽  
Vol 12 (01) ◽  
pp. 119-136 ◽  
Author(s):  
COLIN C. WILLIAMS ◽  
JOHN ROUND
Keyword(s):  
Public Policy ◽  
Informal Economy ◽  
Enterprise Culture ◽  
Structured Interviews ◽  
Face To Face ◽  
The Past ◽  
Start Up ◽  
Using Data ◽  
Start Ups

How many entrepreneurs start-up their business ventures conducting some or all of their trade in the informal economy? The aim of this paper is to answer this key question that has been seldom addressed using data from 600 face-to-face structured interviews conducted in Ukraine in late 2005 and early 2006. Analyzing the 331 entrepreneurs identified (i.e., individuals starting-up an enterprise in the past three years), just 10 percent operate on a wholly legitimate basis, while 39 percent have a license to trade and/or have registered their business but conduct a portion of their trade in the informal economy, and 51 percent operate unregistered enterprises and conduct all of their trade on an off-the-books basis. Given that some 90 percent of all business start-ups operate partially or wholly in the informal economy, and that 40 percent of all respondents depend on the informal economy as either their principal or secondary contributor to their livelihoods, the paper concludes by considering the wider implications of these findings both for further research and public policy.

El método Lean Startup. Cómo crear empresas de éxito utilizando la innovación continua de Eric Ries

2019 ◽  
Vol 1 (1) ◽  
pp. 83-88
Author(s):  
Ysmael Jesús Ayala Colqui
Keyword(s):  
A Priori ◽  
El Paso ◽  
Start Up ◽  
Start Ups ◽  
Lean Startup

Una start-up es definida como una empresa destinada solucionar problemas de maneras no obvias, donde el éxito no está garantizado de antemano y, solo en los casos de éxito efectivo, se adquiere un crecimiento rápido y significativo (Robehmed, 2013). Ejemplos clásicos de start-ups serían Facebook, Uber o AirBnB que, con comienzos modestos, pero con ideas innovadoras, se convirtieron con el paso del tiempo en empresas de ingresos millonarios. Una de las tantas preguntas al respecto sería la siguiente: ¿cómo lograr una start-up de éxito a sabiendas que el éxito no está garantizado a priori y, aún más, que la gran mayoría de estas fracasan?

Wer gewinnt den ‚War for Talent’: Konzerne oder Start-ups?

2015 ◽  
Vol 12 (4) ◽  
pp. 24-31 ◽  
Author(s):  
Rabea Laugemann ◽  
Christopher Buschow ◽  
Beate Schneider
Keyword(s):  
Start Up ◽  
Soziale Beziehungen ◽  
Start Ups ◽  
War For Talent

Im ‚War for Talent‘ konkurrieren heutzutage große Konzerne mit innovativen Start-ups um vielversprechenden Nachwuchs. Was bestimmt die Attraktivität von Arbeitgebern bei Medien- und Kommunikationsstudierenden? Diese Frage wird im Rahmen einer quantitativen Online-Befragung untersucht, vor allem im Hinblick darauf, ob Start-ups oder Konzerne als erste Arbeitgeber präferiert werden. Befragte, denen Prestige wichtig ist, bevorzugen eher Konzerne als Arbeitgeber. Wer Wert auf ein innovatives Arbeitsumfeld und soziale Beziehungen legt, entscheidet sich vermehrt für ein Start-up. Im Wettbewerb um die besten Köpfe sind damit junge Unternehmensgründungen inzwischen eine ernst zu nehmende Konkurrenz für Konzerne.

scholarly journals Innovation Capabilities and the Performance of Start-Ups in Korea: The Role of Government Support Policies

2021 ◽  
Vol 13 (11) ◽  
pp. 6009
Author(s):  
Se-Kyoung Choi ◽  
Sangyun Han ◽  
Kyu-Tae Kwak
Keyword(s):  
Firm Performance ◽  
Financial Support ◽  
Political Support ◽  
Sustainable Growth ◽  
Government Support ◽  
Role Of Government ◽  
Positive Effects ◽  
Start Up ◽  
Start Ups

What kind of capacity is needed to improve the performance of start-ups? How effective are government support policies in improving start-up performance? Start-ups are critical firm group for ensuring the prospective and sustainable growth of an economy, and thus many countries’ governments have established support policies and they are likely to engage more widely in forward-looking political support activities to ensure further growth and expansion. In this paper, the effect of innovation capabilities and government support policies on start-up performance is examined. We used an unbalanced panel data analysis with a random effect generalized least squares. We investigated the effect of government support policies on 4368 Korean start-ups. The findings indicated that technology and knowledge capabilities had positive effects on the sales performance of start-ups, and government financial support positively affected the relationship between knowledge capability and firm performance. However, when government financial support increased, marketing capability was negatively associated with firm performance. These results demonstrate the significant role of government financial support, including its crowding in but also its crowding out effect. Practical implications: To be more effective, governments should employ innovation-driven entrepreneurship policy approaches to support start-ups. To improve their performance, start-ups need to increase their technology and knowledge capabilities. This study extends recent efforts to understand more fully the effect of government support policies on start-ups differing in their technology, knowledge, and marketing capabilities.

scholarly journals A FUZZY FRONT-END PRODUCT DEVELOPMENT FRAMEWORK FOR START-UPS

2021 ◽  
Vol 1 ◽  
pp. 111-120
Author(s):  
Nuno Miguel Martins Pacheco ◽  
Anand Vazhapilli Sureshbabu ◽  
Masaru Charles Nürnberger ◽  
Laura Isabel Durán Noy ◽  
Markus Zimmermann
Keyword(s):  
Two Dimensions ◽  
Fuzzy Front End ◽  
Development Framework ◽  
Front End ◽  
Start Up ◽  
Extended Approach ◽  
Role Based ◽  
Definition Of ◽  
Clear Idea ◽  
Start Ups

AbstractStart-ups tend to form with a central idea that differentiates them from their competitors in the market. It is crucial for them to efficiently transform the idea into a marketable product. Prototyping helps to iteratively achieve a minimum viable product and plays a crucial role by enabling teams to test their ideas with limited resources early on. However, the prototyping process may have wrong focus leading to a suboptimal allocation of resources. Previously, we proposed role-based prototyping for fuzzy front-end development in small teams. It supports (1) resource allocation, (2) the definition of responsibilities, and (3) structuring the development process with milestones. In recent research this was a promising yet incomplete approach. We extend the previous work by refining the prototyping process by adding a prototyping matrix with two dimensions (purpose and lens), a prototyping cycle (plan, execute, test, reflect, assimilate), and a modified Kanban board (Protoban) for planning, managing, and reflecting cycles. This process, named PETRA was tested with a start-up developing an autonomous trash picking robot. The extended approach supported the team significantly in providing a clear idea of what to do at what time.

scholarly journals Punishment Strategies across Societies: Conventional Wisdoms Reconsidered

Games ◽  
2021 ◽  
Vol 12 (3) ◽  
pp. 63
Author(s):  
Ramzi Suleiman ◽  
Yuval Samid
Keyword(s):  
Public Goods ◽  
Strong Predictor ◽  
Social Environments ◽  
Public Goods Game ◽  
The Public ◽  
Free Riders ◽  
The World ◽  
Emergence Of Cooperation ◽  
Using Data ◽  
The Cost

Experiments using the public goods game have repeatedly shown that in cooperative social environments, punishment makes cooperation flourish, and withholding punishment makes cooperation collapse. In less cooperative social environments, where antisocial punishment has been detected, punishment was detrimental to cooperation. The success of punishment in enhancing cooperation was explained as deterrence of free riders by cooperative strong reciprocators, who were willing to pay the cost of punishing them, whereas in environments in which punishment diminished cooperation, antisocial punishment was explained as revenge by low cooperators against high cooperators suspected of punishing them in previous rounds. The present paper reconsiders the generality of both explanations. Using data from a public goods experiment with punishment, conducted by the authors on Israeli subjects (Study 1), and from a study published in Science using sixteen participant pools from cities around the world (Study 2), we found that: 1. The effect of punishment on the emergence of cooperation was mainly due to contributors increasing their cooperation, rather than from free riders being deterred. 2. Participants adhered to different contribution and punishment strategies. Some cooperated and did not punish (‘cooperators’); others cooperated and punished free riders (‘strong reciprocators’); a third subgroup punished upward and downward relative to their own contribution (‘norm-keepers’); and a small sub-group punished only cooperators (‘antisocial punishers’). 3. Clear societal differences emerged in the mix of the four participant types, with high-contributing pools characterized by higher ratios of ‘strong reciprocators’, and ‘cooperators’, and low-contributing pools characterized by a higher ratio of ‘norm keepers’. 4. The fraction of ‘strong reciprocators’ out of the total punishers emerged as a strong predictor of the groups’ level of cooperation and success in providing the public goods.

scholarly journals Electoral Incentives and the Allocation of Public Funds

2020 ◽  
Author(s):  
Frederico Finan ◽  
Maurizio Mazzocco
Keyword(s):  
Electoral System ◽  
Policy Reforms ◽  
Public Funds ◽  
Term Limit ◽  
The Public ◽  
Public Projects ◽  
Electoral Incentives ◽  
Using Data ◽  
The One ◽  
The Cost

Abstract Politicians allocate public resources in ways that maximize political gains, and potentially at the cost of lower welfare. In this paper, we quantify these welfare costs in the context of Brazil’s federal legislature, which grants its members a budget to fund public projects within their states. Using data from the state of Roraima, we estimate a model of politicians’ allocation decisions and find that 26.8% of the public funds allocated by legislators are distorted relative to a social planner’s allocation. We then use the model to simulate three potential policy reforms to the electoral system: the adoption of approval voting, imposing a one-term limit, and redistricting. We find that a one-term limit and redistricting are both effective at reducing distortions. The one-term limit policy, however, increases corruption, which makes it a welfare-reducing policy.

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