Entrepreneurship as Experimentation

Abstract

acknowledged. Research results and conclusions expressed are the authors and do not necessarily reflect the views of the Census Bureau or the NSF. This paper has been screened to ensure that no confidential data are revealed. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Specializing in Generality: Firm Strategies When Intermediate Markets Work

“…These additional results suggest the intriguing possibility-which could be investigated by future research-that any shock making trading relatively more convenient than entry might induce even some flexible, vertically integrated firms, which can still experiment with their strategies, to specialize in generality. In this regard, our findings suggest that corporate experimentation may involve not only the choice of which downstream market to operate in (e.g., Kerr et al 2014), but also the decision on the most appropriate business model for serving these markets.…”

Productivity Revisited: Shifting Paradigms in Analysis and Policy

“…Treating entrepreneurship as an experimental process requires a greater focus on how individuals process information and perceive, tolerate, and manage risk, as well as on the framework institutions that support this process. Though these issues have been discussed in the context of scientific discovery (Moscarini and Smith 2001) and venture capital (Kerr, Nanda, and Rhodes-Kropf 2014), their application to productivity growth in developing countries is newer. Often a particular product, process, or technology has never been tried in the local context and the firm contemplating doing so is facing great uncertainty.…”

“…Like any investor, an entrepreneur is fundamentally placing a bet, comparing an entrepreneurial project with an expected range of returns and risks against other alternatives, such as "safe" salaried work, which is the opportunity cost of entrepreneurship. As Kerr, Nanda, and Rhodes-Kropf (2014), among others, argue, entrepreneurship is a form of experimentation in which entrepreneurs learn about the viability of a product or process in the local context. This implies both a process of managing risk and a process of learning-about the investment, about running a firm, and about evaluating and managing risk.…”

New Technology Assessment in Entrepreneurial Financing - Can Crowdfunding Predict Venture Capital Investments?

“…Experimentation with various business ideas is necessary to find these very successful investments and to separate the good from the bad opportunities. Recent literature (Kerr, Nanda, and Rhodes-Kropf, 2014;Manso, 2011;Nanda and Rhodes-Kropf, 2013) suggests that important factors (beyond financial capital) that drive entrepreneurial activity are a mindset of experimentation and a willingness to fail. To create radically novel products and services, entrepreneurs -who act in good faith on imagined new venture ideas -must have the chance to experiment with their ideas and not to be punished when they fail (Manso, 2011).…”