1135390

Toke Reichstein (TR), Professor, Department of Strategy and Innovation (SI), Copenhagen Business School

Nicolai J. Foss (NJF), Professor, Department of Strategy and Innovation (SI), Copenhagen Business School

Ali Mohammadi (AM), Assistant Professor, Department of Strategy and Innovation (SI), Copenhagen Business School

Mirjam van Praag (MvP), Professor, Department of Strategy and Innovation (SI), Copenhagen Business School

Vera Rocha (VR), Assistant Professor, Department of Strategy and Innovation (SI), Copenhagen Business School

Participants should have basic knowledge of entrepreneurship and innovation theory, of economics and quantitative research methods such as econometrics and experiments. Basic understanding of core theories of organizations and strategic management and the economic theory of the firm will be helpful. The course is compulsory for the SI cohort and open to all PhD students.

The main goal of the course is to increase familiarity with and develop an in-depth understanding of the key themes and empirical research methods of entrepreneurship. Emphasis will be put on empirical applications to test theories. Most of the course will be devoted to teaching how to do empirical research in the domain of entrepreneurship, broadly defined. Focus will be on the contributions making use of quantitative methods and data including experiments. Theories, frameworks, concepts, and controversies that collectively form the foundation for entrepreneurship research are discussed.

The course will aim to build capabilities in critically discussing and developing research questions/projects in entrepreneurship. Students will get acquainted with various methodological approaches employed in the field and learn to analytically review and evaluate academic articles from a diverse body of literature relevant to entrepreneurship research.

Entrepreneurship is a multidisciplinary research area with contributions from economics, psychology, sociology, geography, and management to mention a few. No other subject has attracted more scholarly, managerial and policy attention than the phenomenon of entrepreneurship in recent years. From macro- and microeconomics to demography and organizational sociology, from finance and business studies to cognitive psychology, the quest for understanding its antecedents, sources, processes and consequences has produced a large, vibrant, eclectic field. And with the growing advent of cross-disciplinary, multi-level work employing specialized panel data sets and more rigorous econometric techniques, initial concerns that the field lacked “a professional identity defined by a unifying theory” (Thorntorn, 1999; Shane & Venkatmaran, 2000) have abated.

The magnitude of academic interest in entrepreneurship is not surprising given the vitality of it for several key outcomes. Entrepreneurship has long been considered as an engine of economic growth and regional development (Schumpeter, 1934; Van Praag and Versloot, 2010). Entrepreneurs have been shown to destroy established organizational competencies (Tushman & Anderson, 1986), shape evolutionary trajectories of technologies (Nelson & Winter, 1982), cause substantial regulatory changes (Dobbin & Dowd, 1997) and create, enact and obliterate social topologies, organizational forms, markets and industries (Nelson & Winter, 1982; Burt, 1992; Carroll & Hannan, 2000). They have been placed at the heart of the theories of income inequality, social mobility and social welfare (Sorensen, 1996) and ethnic absorption (Waldinger, Aldrich & Ward, 1990) and have been acknowledged to be a critical driver of the flow and distribution of resources across physical space (Audretsch & Feldman, 1996; Sorenson & Stuart, 2001). Research has also associated entrepreneurial acts with firm growth and performance (Evans, 1988), organizational revival (Burgelman, 1983; March, 1991; Zajac, Golden & Shortell, 1991) and global corporate expansion (Birkinshaw, 1997).

Research Foundations in the Economics of Entrepreneurship is designed to offer an integrative view of how to do research to better understand why only some individuals but not others choose to become entrepreneurs, why only some persons but not others discover opportunities and exploit them and why and how eventually only some ventures succeed.

Lectures, student presentations, paper discussions, literature critiques

This course is organized in ten interactive lectures on specific topics. Students are requested to prepare presentations and to actively participate in class discussion. Assignments also include the development and discussion of a research proposal. Professors will primarily discuss their own research to emphasize research strategies and challenges. Altogether, we make sure that a set of important topics is discussed and that classic contributions to the literature around these focal themes are included in the course as well.

Participation in class is required. The final grade is NOT determined based upon class participation, but on a written essay aimed to develop a research paper combining different parts of the syllabus and a three-hour written exam on (a) specified topic(s) to be discussed (open ended question).

Over the last 2-3 decades entrepreneurship has emerged as an important and expanding part of management research. In this lecture we survey and discuss various contemporary approaches to entrepreneurship in management research, focusing on issues such as, What is the proper unit of analysis for entrepreneurship research? Is entrepreneurship best thought of as the discovery of opportunities or rather creating new business plans dedicated to meeting customer preferences under uncertainty? Is entrepreneurship a behaviour or an occupation? Is it uniquely related to start-ups or can we think of entrepreneurship in established firms? Etc.    

Readings 

• Shane, S., Venkataraman, S. (2000). The Promise of Entrepreneurship as a Field of Research. Academy of Management Review, 25: 217-226. 
• Foss, N.J. & Klein, P.G. (2020). Entrepreneurial Opportunities: Who Needs Them? Academy of Management Perspectives, 34.  
• Foss, N.J. & Klein, P.G. (2005). Entrepreneurship and the Theory of the Firm: Any Gains From Trade?, in Agarwal, R., Alvarez, S.A., & Sorenson, O. eds., Handbook of Entrepreneurship: Disciplinary Perspectives, Berlin: Springer.  

Further Readings 

• Knight, F.H. (1921). Risk, Uncertainty and Profit. New York: Augustus M Kelley.  
• Kirzner, I.M. (1973). Competition and Entrepreneurship. Chicago: University of Chicago Press.  
• Foss, N.J. & Klein, P.G. (2012).  Entrepreneurial Judgment and the Theory of the Firm. Cambridge: Cambridge University Press. 

Session 2 Entrepreneurship and the Firm (NJF) 

Starting from the notion that entrepreneurship is a behaviour that is not limited to start-ups, we link entrepreneurship to the established firms and its organizational design (Foss  & Lyngsie). We will also consider the role of external knowledge sources in the entrepreneurial process, forging a link to the open innovation literature (Foss, Lyngsie & Zahra).  Finally, we consider the role of top management in the entrepreneurial process, linking to the literature on intrapreneuship, corporate venturing, etc. (Barney, Foss, & Lyngsie) 

Readings 

• Foss, N.J. & Lyngsie, J. (2014) The Strategic Organization of the Entrepreneurial Established Firm.” Strategic Organization, 12: 208-215.  
• Foss, N.J., Lyngsie, J. & Zahra, S. (2013). The Role of External Knowledge Sources and Organizational Design in the Process of Opportunity Exploitation. Strategic Management Journal, 34: 1453–1471. 
• Barney, J.B, Foss, N.J. & Lyngsie, J. (2018). The Role of Senior Management in Opportunity Formation: Direct Involvement or Reactive Selection? Strategic Management Journal, 39(5): 1325-49 (2018). 

                      Further Readings 

• Baumol, W. (2010). The Microtheory of Innovative Entrepreneurship. Princeton: Princeton University Press.  

Session 3 Entrepreneurship and Personnel I: Founders versus Joiners (VR)

Founders and startups get most of the press coverage and the attention in academic, public, and policy debates. However, for every founder there is often one or several early employees taking nearly equal risks by joining an early-stage company. In this lecture we will discuss a) what distinguishes founders from joiners in a startup context, b) how employees in startups versus established firms differ from each other, and c) which career implications joiners might face when (and after) working in a startup.

Readings

• Roach, M., Sauermann, H. (2015), “Founder or Joiner? The role of preferences and context in shaping different entrepreneurial interests”, Management Science, 61(9): 2160-2184.
• Rocha, V., van Praag, M. (2019), “Mind the gap: The role of gender in entrepreneurial career choice and social influence by founders”, Working Paper.
• Sauermann, H. (2018) “Fire in the belly? Employee motives and innovative performance in start-ups versus established firms.” Strategic Entrepreneurship Journal, 12(4): 423-454.

Further Readings

• Burton, M. D., Dahl, M. S., Sorenson, O. (2018), “Do start-ups pay less?”, Industrial and Labor Relations Review, 71(5): 1179-1200.
• Lazar, M., Miron-Spektor, E., Agarwal, R., Erez, M., Goldfarb, B., Chen, G. (2019) “Entrepreneurial team formation”. Academy of Management Annals. In press. DOI: 10.5465/annals.2017.0131.

 
Session 4 Entrepreneurship and Personnel II: Hiring for Startups (VR)

This lecture will continue the discussions initiated in Session 6 and focus on the founder’s role as a team catalyst who mobilizes personnel into the startup. Research on how young ventures find early employees and how these might affect startup performance is still at an emerging stage. In this session we will discuss potential research avenues in this area, as well as the empirical challenges often faced when studying these questions, while having an overview of different methods that can tackle some of those issues.

Readings

• Honoré, F., Ganco, M. (2019). Entrepreneurial teams’ acquisition of talent: Evidence from technology manufacturing industries using a two-sided approach. Forthcoming in Strategic Management Journal.
• Rocha, V., Brymer, R. A. (2019), “Founder pipeline hiring in young firms”, Working Paper.
• Rocha, V., Carneiro, A., Varum, C. (2018), “Leaving employment to entrepreneurship: The value of coworker mobility in pushed and pulled-driven startups”, Journal of Management Studies, 55(1): 60-85.

Further Readings

• Agarwal, R., Campbell, B. A., Franco, A. M., Ganco, M. (2016), “What do I take with me? The mediating effect of spin-out team size and tenure on the founder-firm performance relationship”, Academy of Management Journal, 59(3), 1060-1087.
• Rocha, V., van Praag, M., Folta, T. B., Carneiro, A. (2019), “Endogeneity in strategy-performance analysis: An application to initial human capital strategy and new venture performance”, Organizational Research Methods, 22(3): 740-764.

Session 5 Organizational Heritage and Entrepreneurs (TR)

Much of the literature assumes that newly established firms are fonts of their parent firms suggesting that the entrepreneurs heavily draws on his/her experience when deciding on the organizational practices installed in the new setting. This indeed has implication for the operations and performances of these firms. This session will seek to discuss this premise and establish the mechanisms that may cause us to accept or reject the heritage hypothesis.

Readings

• Feldman, M. P., Ozcan, S., & Reichstein, T. (2019). Falling Not Far from the Tree: Entrepreneurs and Organizational Heritage. Organization Science, 30(2), 337-360.
• Sørensen, J. B., & Fassiotto, M. A. (2011). Organizations as fonts of entrepreneurship. Organization Science, 22(5), 1322-1331.
• Dencker JC, Gruber M, Shah S (2009) Pre-entry knowledge, learning, and the survival of new firms. Organ. Sci. 20(3):516–537.

Further Readings

• Agarwal R, Campbell BA, Franco AM, Ganco M (2016) What do I take with me? The mediating effect of spin-out team size and tenure on the founder–firm performance relationship. Acad. Management J. 59(3):1060–1087.
• Chatterji AK (2009) Spawned with a silver spoon. Strategic Management J. 30(2):185–206.
• Ruef M. (2005) Origins of organizations: The entrepreneurial process. Res. Sociol. Work 15:63–100.

Session 6 Value of Entrepreneurs in the Labour Market (TR)

Entrepreneurship is a risky career profile. Most entrepreneurs will go back into the labour market seeking to secure a more traditional occupation making a living from a regular pay. But what is the value of the entrepreneurial experience in the labour market? Are the entrepreneurs penalized in the labour market upon returning or will they outshine their counterparts when re-joining the regular work force? And do entrepreneurs in fact earn as much or even more than other comparable counterparts if they stay entrepreneurs? This session will seek to discuss the mechanisms that may play a role in determining the value of entrepreneurs when re-entering into the labour market. 

Readings

• Hamilton, B. H. (2000). Does entrepreneurship pay? An empirical analysis of the returns to self‐employment. Journal of Political Economy, 108(3), 604–631.
• Mahieu, J., Melillo, F., Reichstein, T., & Thompson, P. (2019). Shooting stars? Uncertainty in hiring entrepreneurs. Strategic Entrepreneurship Journal.
• Manso, G. (2016). Experimentation and the returns to entrepreneurship. Review of Financial Studies, 29(9), 2319–2340.

Further Readings

• Failla, V., Melillo, F., & Reichstein, T. (2017). Entrepreneurship and employment stability—Job matching, labour market value, and personal commitment. Journal of business venturing, 32(2), 162-177.
• Dillon, E.& Stanton, C. (2017). Self‐employment dynamics and the returns to entrepreneurship (National Bureau of Economic Research Working Paper Series, No. 23168).
• Hyytinen, A., & Rouvinen, P. (2008). The labour market consequences of self‐employment spells: European evidence. Labour Economics, 15(2), 246–271.

Session 7 Diversity, Gender and Entrepreneurship (MvP)

Teams have become increasingly important as decision-making bodies. This is the case in many sorts of organizations, varying from judges in collegial courts or academic researchers to business start-ups. Consequently, the effective composition or diversity of teams has become an interesting topic of research. This is for sure the case in the field of Entrepreneurship. We discuss studies into the effects of gender and/or team diversity. 

Readings

• Huber, L. Rosendahl, S. Parker, R. Sloof and M. Van Praag (2020) Diverse Cognitive Skills and Team Performance: A Field Experiment Based on an Entrepreneurship Education Program, Journal of Economic Behavior & Organization, forthcoming
• Hoogendoorn, S.M., Oosterbeek, H. & van Praag, C.M. (2013), The Impact of Gender Diversity on the performance of business teams: Evidence from a field experiment  Management Science, Volume 59 Issue 7, July 2013, pp. 1514-1528
• Czibor, E., J. Claussen and M. van Praag (2019) Women in a men’s world: Risk taking in an online card game community”, Journal of Economic Behavior and Organization 158, 62-89.

Further Readings

• Hoogendoorn, S., Parker, S.C. & van Praag, M. (2017) Smart or diverse start-up teams? Evidence from a field experiment, Organization Science, Vol. 28, No. 6, pp. 1010-1028
• Lazear, E.P. (2005) Entrepreneurship, Journal of Labor Economics 23(4), 649-680.
• Hoogendoorn, S.M., K. Laursen and C.M. van Praag (2020) Majority Matters: The Impact of Cultural Diversity on the Performance of Startup Teams, Working Paper.

 
Session 8 Field Experiments in Entrepreneurship (MvP)

In this Session we discuss various field experiments in entrepreneurship. Huber et al, (2020), Lindquist et al. (2015) and Karlan et al. (2015) are related to the question: Can entrepreneurship be taught? This question has been subject to heated debate for many years. The sharp increase in the number of entrepreneurship education programs offered suggests though that the general consensus has become that entrepreneurship can indeed be taught. From a policy perspective, this is an appealing thought. The possibility that entrepreneurship can be taught creates a window of opportunity for (educational) policies aimed at enhancing entrepreneurship. Two more field experiments in entrepreneurship are discussed in this session: one about risk and loss attitudes of entrepreneurs (Koudstaal et al., 2016) and one about the valuation of earlier entrepreneurial failure by investors (Zunino et al., 2020).

Readings

• Rosendahl Huber, L., Sloof, R. & van Praag, C.M. (2014), The Effect of Early Entrepreneurship Education: Evidence from a Field Experiment  The European Economic Review, Vol. 72, 11.2014, pp. 76-97
• Lindquist, M., Sol, J. & van Praag, C.M. (2015), Why do Entrepreneurial Parents have Entrepreneurial Children?  Journal of Labor Economics,  Vol. 33, No. 2, 4.2015, pp. 269-296
• Fairlie, R., D. Karlan and J. Zinman, Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training, American Economic Journal: Economic Policy 7(2), 125-161
• Koudstaal, M., Sloof, R. & van Praag, M. (2016), Risk, Uncertainty and Entrepreneurship: Evidence from a Lab-in-the-Field Experiment  Management Science,  Vol. 62, No. 10, pp. 2897-2915
• Zunino, D., G. Duschnitsky & M. van Praag (2020) How do investors evaluate past entrepreneurial failure? Unpacking failure due to lack of skill versus bad luck in the context of equity crowdfunding, Working Paper.
  
  

Session 9 Entrepreneurial finance – theories and supply (AM)

Start-ups face “financing constraints” and financial decisions may have a profound influence on the future options and choices. In this session, we first focus theoretical differences between entrepreneurial finance and corporate finance in general.  We then dive into different sources of financing (i.e Venture capital and crowdfunding).

Readings

• Amit, Brander, Zott, 1998: “Why do Venture Capital Firms Exist? Theory and Canadian Evidence,” Journal of Business Venturing 13, 441-466.
• Demir, Tolga and Mohammadi, Ali and Shafi, Kourosh, Crowdfunding as Gambling: Evidence from Repeated Natural Experiments (July 31, 2019). Swedish House of Finance Research Paper No. 19-7.
• Song Ma, The Life Cycle of Corporate Venture Capital, The Review of Financial Studies, , hhz042, https://doi.org/10.1093/rfs/hhz042
• Arthur Korteweg, Morten Sorensen, Risk and Return Characteristics of Venture Capital-Backed Entrepreneurial Companies, The Review of Financial Studies, Volume 23, Issue 10, October 2010, Pages 3738–3772, https://doi.org/10.1093/rfs/hhq050

Further Readings

• Cochrane, J. H. 2005. The risk and return of venture capital. Journal of Financial Economics, 75(1): 3-52.
• Kaplan, S. N., & Stromberg, P. 2003. Financial contracting theory meets the real world: An empirical analysis of venture capital contracts. Rev. of Econ. Stud., 70(2): 281-315.
• Mohammadi, Ali and Shafi, Kourosh, How Wise Are Crowds? A Comparative Study of Crowds and Institutions in Peer-to-Business Online Lending Markets (August 15, 2016). Swedish House of Finance Research Paper No. 17-10; Available at SSRN: https://ssrn.com/abstract=2752085
• Zhelyazkov, P. I., & Gulati, R. 2016. After the break-up: the relational and reputational consequences of withdrawals from venture capital syndicates. Academy of Management Journal, 59(1): 277-301.

 
Session 10 Entrepreneurial finance- demand (AM)

The choice of financing and behaviour of investors have an impact on performance and success of start-ups. In this section, we focus on how different investors select their investment portfolios and what are impact of ties with investors on performance of entrepreneurial ventures.

Readings

• Shai Bernstein, Xavier Giroud, Richard R. Townsend, 2016. The Impact of Venture Capital Monitoring,Journal of Finance. 71( 4): 1591-1622.
• Shafi, K, Mohammadi, A. and Johan, S. A. (forthcoming): Investment Ties Gone Awry. Academy of Management Journal, https://doi.org/10.5465/amj.2017.0103.
• Chemmanur TJ, Loutskina E, Tian, X. 2014. Corporate venture capital, value creation, and innovation. Review of Financial Studies 27(8):2434 – 2473.
• Xavier Walthoff-Borm, Armin Schwienbacher, Tom Vanacker, 2018, Equity crowdfunding: First resort or last resort?, J. of Business Venturing,Volume 33, Issue 4,2018.

Further Readings

• Kaplan, S. N., Sensoy, B. A., & Strömberg, P. (2009). Should investors bet on the jockey or the horse? Evidence from the evolution of firms from early business plans to public companies. The Journal of Finance, 64(1), 75-115.
• Sorensen, M. 2007. How smart is smart money? A two-sided matching model of venture capital. The Journal of Finance, 62(6): 2725-2762.
• Gompers, P. A. 1996. Grandstanding in the venture capital industry. Journal of Financial Economics, 42(1): 133-156.

30 hours, 3 hour lectures.

Copenhagen Business School
2000 Frederiksberg

Online course