Prior ties and the limits of peer effects on startup team performance

Abstract

Research Summary We conduct a field experiment at an entrepreneurship bootcamp to investigate whether interaction with proximate peers shapes a nascent startup team's performance. We find that teams whose members lack prior ties to others at the bootcamp experience peer effects that influence the quality of their product prototypes. A 1‐SD increase in the performance of proximate teams is related to a two‐thirds SD improvement for a focal team. In contrast, we find that teams whose members have many prior ties interact less frequently with proximate peers, and thus their performance is unaffected by nearby teams. Our findings highlight how prior social connections, which are often a source of knowledge and influence, can limit new interactions and thus the ability of organizations to leverage peer effects to improve the performance of their members. Managerial Summary Researchers and policymakers believe that accelerators, incubators, and bootcamps help entrepreneurial ecosystems spur innovation and drive startup growth. The effectiveness of these organizations, in large part, depends on the new social interactions fostered among colocated entrepreneurs. Yet, little evidence exists about the extent to which such interactions actually lead to spillovers. We ran a controlled experiment at a startup bootcamp to investigate when entrepreneurs were most affected by their colocated peers. Not everyone benefited. We found that entrepreneurs with many prior ties to others at the bootcamp made fewer new connections, especially to neighboring peers, and thus did not experience significant spillovers. In contrast, those without prior connections experienced the greatest spillovers because they interacted frequently with people on nearby colocated teams. Our findings highlight how organizations like incubators and bootcamps, designed to foster new connections, might sometimes just reinforce old networks.

Metacritiques of Upper Echelons Theory: Verdicts and Recommendations for Future Research

“…While randomized field experiments are the “gold standard” (Antonakis et al, 2010: 1088), we acknowledge that it can be difficult to convince organizations to participate in such experiments. Nevertheless, researchers have had success with this approach by targeting smaller, private firms (for helpful examples, see Chatterji, Delecourt, Hasan, & Koning, 2019; Hasan & Koning, 2019). Recent studies also highlight that even online, survey-based experiments may be appropriate for UET studies that seek to understand the perceptions of stakeholder groups, such as investors or customers (Connelly, Haynes, Tihanyi, Gamache, & Devers, 2016; Cowen & Montgomery, 2020; Krause, Whitler, & Semadeni, 2014).…”

Advice to Entrepreneurs and Small Business

“…Therefore, entrepreneurs access to mentors is distributed unequally; moreover a "Matthew effect" exists where contacts accumulate in a process called preferential attachment (Perry-Smith and Mannucci 2017). Peer networks online have been shown to provide practical advice (Kuhn and Galloway 2015, Sarkar, Osiyevskyy and Hayes 2019, Brown and Butler 1995 but in contrast to preferential attachment, existing peer networks legacy-ties can constrain businesses from reaching new contacts (Hasan and Koning 2019). The sociological literature demonstrates the power of reciprocity in advice networks (Mirc and Parker 2020) and transitivity, where networks increase their density over time leading to 'small world networks'.…”

Engineering serendipity: When does knowledge sharing lead to knowledge production?

“…Another pathway that may lead to joint knowledge creation relies on prior collaborations and tie persistence (Hasan & Koning, 2019; Ingram & Morris, 2007; Zhang & Guler, 2020). We examine a specific type of tie persistence, namely the likelihood that an elemental collaboration persists into a complete knowledge product.…”