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

Author

Listed:
  • Josh Lerner
  • Ulrike Malmendier

Abstract

How do individuals decide to become entrepreneurs and learn to make optimal entrepreneurial decisions? The concentration of entrepreneurs in regions such as Silicon Valley has stimulated research and policy interest into the influence of peers, but the causal effect is hard to identify empirically. We exploit the exogenous assignment of students into business-school sections to identify the causal effect of entrepreneurial peers. We show that, in contrast to prior findings, a higher share of entrepreneurial peers decreases, rather than increases, entrepreneurship. The decrease is driven by a reduction in unsuccessful entrepreneurial ventures; the effect on successful ventures is significantly more positive. The Author 2013. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.

Suggested Citation

  • Josh Lerner & Ulrike Malmendier, 2013. "With a Little Help from My (Random) Friends: Success and Failure in Post-Business School Entrepreneurship," The Review of Financial Studies, Society for Financial Studies, vol. 26(10), pages 2411-2452.
    • Handle: RePEc:oup:rfinst:v:26:y:2013:i:10:p:2411-2452
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    File URL: http://hdl.handle.net/10.1093/rfs/hht024
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    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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