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

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  • Sharique Hasan
  • Rembrand Koning

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.

Suggested Citation

  • Sharique Hasan & Rembrand Koning, 2019. "Prior ties and the limits of peer effects on startup team performance," Strategic Management Journal, Wiley Blackwell, vol. 40(9), pages 1394-1416, September.
  • Handle: RePEc:bla:stratm:v:40:y:2019:i:9:p:1394-1416
    DOI: 10.1002/smj.3032
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    Cited by:

    1. Ben Spigel, 2022. "Examining the cohesiveness and nestedness entrepreneurial ecosystems: evidence from British FinTechs," Small Business Economics, Springer, vol. 59(4), pages 1381-1399, December.
    2. Ben Saad, Faris, 2024. "How to Measure the Success of Technology-Based Start-Ups – A Comprehensive Overview of the Perspectives of Academics & Practitioners," Junior Management Science (JUMS), Junior Management Science e. V., vol. 9(1), pages 1306-1340.
    3. Menzel, Andreas, 2021. "Knowledge exchange and productivity spill-overs in Bangladeshi garment factories," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 721-746.
    4. Soda, Giuseppe & Zaheer, Akbar & Sun, Xiaoming & Cui, Wentian, 2021. "Brokerage evolution in innovation contexts: Formal structure, network neighborhoods and knowledge," Research Policy, Elsevier, vol. 50(10).
    5. Sharique Hasan & Rembrand Koning, 2020. "Designing social networks: joint tasks and the formation and endurance of network ties," Journal of Organization Design, Springer;Organizational Design Community, vol. 9(1), pages 1-19, December.
    6. Sunny Li Sun & Weilei (Stone) Shi & David Ahlstrom & Li (Rachel) Tian, 2020. "Understanding institutions and entrepreneurship: The microfoundations lens and emerging economies," Asia Pacific Journal of Management, Springer, vol. 37(4), pages 957-979, December.
    7. Howell, Travis, 2022. "Coworking spaces: An overview and research agenda," Research Policy, Elsevier, vol. 51(2).
    8. Monika Hudáková & Hana Urbancová & Lucie Vnoučková, 2019. "Key Criteria and Competences Defining the Sustainability of Start-Up Teams and Projects in the Incubation and Acceleration Phase," Sustainability, MDPI, vol. 11(23), pages 1-15, November.
    9. Hope, Ole-Kristian & Su, Xijiang, 2021. "Peer-level analyst transitions," Journal of Corporate Finance, Elsevier, vol. 70(C).
    10. Brian J. Bergman & Jeffery S. McMullen, 2022. "Helping Entrepreneurs Help Themselves: A Review and Relational Research Agenda on Entrepreneurial Support Organizations," Entrepreneurship Theory and Practice, , vol. 46(3), pages 688-728, May.
    11. Becker, Kai & Ebbers, Joris J. & Engel, Yuval, 2023. "Network to passion or passion to network? Disentangling entrepreneurial passion selection and contagion effects among peers and teams in a startup accelerator," Journal of Business Venturing, Elsevier, vol. 38(4).
    12. Sandy Yu, 2020. "How Do Accelerators Impact the Performance of High-Technology Ventures?," Management Science, INFORMS, vol. 66(2), pages 530-552, February.
    13. Rembrand Koning & Sharique Hasan & Aaron Chatterji, 2022. "Experimentation and Start-up Performance: Evidence from A/B Testing," Management Science, INFORMS, vol. 68(9), pages 6434-6453, September.
    14. Yi Cao & Tao Zhou & Jian Gao, 2024. "Heterogeneous peer effects of college roommates on academic performance," Nature Communications, Nature, vol. 15(1), pages 1-11, December.
    15. Ben Spigel & Fizza Khalid & David Wolfe, 2023. "Alacrity: a new model for venture acceleration," International Entrepreneurship and Management Journal, Springer, vol. 19(1), pages 237-259, March.
    16. Henning Piezunka & Thorsten Grohsjean, 2023. "Collaborations that hurt firm performance but help employees’ careers," Strategic Management Journal, Wiley Blackwell, vol. 44(3), pages 778-811, March.
    17. Diwei Lv, David & Zhu, Hang & Chen, Weihong & Lan, Hailin, 2021. "Negative performance feedback and firm cooperation: How multiple upward social comparisons affect firm cooperative R&D," Journal of Business Research, Elsevier, vol. 132(C), pages 872-883.
    18. Jiao, Hao & Wang, Tang & Yang, Jifeng, 2022. "Team structure and invention impact under high knowledge diversity: An empirical examination of computer workstation industry," Technovation, Elsevier, vol. 114(C).
    19. Becker, Kai & Ebbers, Joris J. & Engel, Yuval, 2024. "Going online: Peer entrepreneur networks in a startup accelerator before and during the COVID-19 pandemic," Technovation, Elsevier, vol. 130(C).
    20. Linda Argote & Sunkee Lee & Jisoo Park, 2021. "Organizational Learning Processes and Outcomes: Major Findings and Future Research Directions," Management Science, INFORMS, vol. 67(9), pages 5399-5429, September.
    21. Jacqueline N. Lane & Ina Ganguli & Patrick Gaule & Eva Guinan & Karim R. Lakhani, 2021. "Engineering serendipity: When does knowledge sharing lead to knowledge production?," Strategic Management Journal, Wiley Blackwell, vol. 42(6), pages 1215-1244, June.
    22. van der Wouden, Frank & Youn, Hyejin, 2023. "The impact of geographical distance on learning through collaboration," Research Policy, Elsevier, vol. 52(2).

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