WEFI
Title: “How Much Do Small Businesses Rely on Personal Credit?” This paper estimates the degree of substitution between personal and small business credit for U.S. entrepreneurs between 2009 and 2018 using a novel, individual-level dataset. We identify the effect of business credit supply shocks by exploiting geographic variation in the market share of large banks, …
Continue reading “Julia Fonseca (University of Illinois Urbana-Champaign)”
Title: “The Streetlight Effect in Data-Driven Exploration” We consider settings such as innovation-oriented R&D and entrepreneurship where agents must explore across different projects with varying but uncertain payoffs. How does providing partial data on project payoffs affect individual performance and social welfare? While data can typically reduce uncertainty and improve welfare, we present a simple …
Continue reading “Abhishek Nagaraj (University of California, Berkeley)”
Title: “The Anatomy of Financial Innovation” The number of varieties of financial products that firms can use to raise funds from investors has rapidly expanded over the past decades. And yet, many firms issue only a few standard products, such as common stocks and bonds. This paper studies innovation in financial products using a combination …
Continue reading “Ana Babus (Washington University in St. Louis)”
Title: “Why Are Small Business Slow to Adopt Profitable Opportunities” Why do small firms often fail to adopt new profitable opportunities, even in the absence of informational frictions, fixed costs, or misaligned incentives? We explore three potential mechanisms: present bias, memory, and trust in other firms. In partnership with a financial technology (FinTech) company in …
Title: “Knowledge Cycles and Corporate Investment” We examine how firms invest along their knowledge cycles. If investment is only a means to accumulate capital, cycles are irrelevant for the investment-value relation, with the two declining together over cycles. But we argue that investment also creates knowledge—serendipitously—disconnecting it from value. Investment is high early and late …
Continue reading “Laurent Frésard (Università della Svizzera italiana, Lugano)”
Title: “Do Startup Patent Acquisitions Affect Inventor Productivity?” We show that the acquisition of a startup inventor’s first patent has a negative effect on the subsequent productivity of the patent’s inventor, leading to 6.7 fewer patents being granted to the inventor over the following five years. This effect is not due to the inventors of …
Continue reading “Joan Farre-Mensa (University of Illinois Chicago)”
Title: “Does Mentorship Drive Startup Performance?” Mentorship is a staple component of private sector accelerators designed to maximize equity value and also of public sector initiatives created to support economic development. This paper examines whether, how, and when mentorship enhances startup performance. We show that mentorship drives startup performance. To address endogeneity concerns due to …
Title: “Diversity and Performance in Entrepreneurial Teams” We study the role of diversity and performance in the entrepreneurial teams. We exploit a unique dataset of MBA students who participated in a required course to propose and start a real microbusiness that allows us to examine horizontal diversity (i.e., within the team) as well as vertical …
Continue reading “Sophie Calder-Wang (The Wharton School of the University of Pennsylvania)”
Title: “Propagation and Amplification of Local Productivity Spillovers” This paper shows that local productivity spillovers propagate throughout the economy through the plant-level networks of multi-region firms. Using confidential Census plant-level data, we show that large manufacturing plant openings not only raise the productivity of local plants but also of distant plants hundreds of miles away, …
Title: “Opening up Military Innovation” How should governments procure innovation? One choice facing policymakers is whether to tightly specify the innovations they seek (a “Conventional” approach) or to allow firms to suggest ideas (an “Open” approach). We study a natural experiment in the U.S. Air Force Small Business Innovation Research (SBIR) program where Open and …