With a Little Help from My (Random) Friends: Success and Failure in Post-Business School Entrepreneurship

Josh Lerner and Ulrike Malmendier

No 16918, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: To what extent do peers affect our occupational choices? This question has been of particular interest in the context of entrepreneurship and policies to create a favorable environment for entry. Such influences, however, are hard to identify empirically. We exploit the assignment of students into business school sections that have varying numbers of classmates with prior entrepreneurial experience. We find that the presence of entrepreneurial peers strongly predicts subsequent entrepreneurship rates of students without an entrepreneurial background, but in a more complex way than the literature has previously suggested: A higher share of entrepreneurial peers leads to lower rather than higher subsequent rates of entrepreneurship. However, the decrease in entrepreneurship is entirely driven by a significant reduction in unsuccessful entrepreneurial ventures. The effect on the rate of successful post-MBA entrepreneurs, instead, is insignificantly positive. In addition, sections with few prior entrepreneurs have a considerably higher variance in their rates of unsuccessful entrepreneurs. The results are consistent with intra-section learning, where the close ties between section-mates lead to insights about the merits of business plans.

JEL-codes: G24 I23 J24 (search for similar items in EconPapers)
Date: 2011-03
New Economics Papers: this item is included in nep-edu and nep-ent
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Citations: View citations in EconPapers (8)

Published as Josh Lerner & Ulrike Malmendier, 2013. "With a Little Help from My (Random) Friends: Success and Failure in Post-Business School Entrepreneurship," Review of Financial Studies, Society for Financial Studies, vol. 26(10), pages 2411-2452.

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