Charles E. Eesley

Entrepreneurial Impact: The Role of MIT

The ultimate value of this study is to help us understand the economic impact of the entrepreneurial ventures of university graduates. We know that some universities play an important role in many economies through their core education, research and development, and other spillovers. However, in order to support economic growth through entrepreneurship, universities must create a culture and programs that make entrepreneurship widely accessible to students. While MITs leadership in developing successful entrepreneurs has been evident anecdotally, this study – one of the largest surveys of entrepreneur alumni ever conducted – quantifies the significant impact of MITs entrepreneurial ecosystem that supports firm start-ups. Furthermore, while MIT is more unique and unusual in the programs it offers and in its historical culture of entrepreneurship, MIT provides a benchmark by which other institutions can gauge the economic impact of their alumni entrepreneurs. The report also provides numerous examples of programs and practices that might be adopted, intact or modified as needed, by other universities that seek enhanced entrepreneurial development. The Appendix identifies several universities that have carried out surveys of alumni entrepreneurs.

Impact: Stanford University's Economic Impact via Innovation and Entrepreneurship

This report focuses on data gathered from a large-scale, systematic survey of Stanford alumni, faculty and selected staff in 2011 to assess the university’s economic impact based on its involvement in entrepreneurship. The report describes Stanford’s role in fostering entrepreneurship, discusses how the Stanford environment encourages creativity and entrepreneurship and details best practices for creating an entrepreneurial ecosystem. The report on the 2011 survey, estimates that 39,900 active companies can trace their roots to Stanford. If these companies collectively formed an independent nation, its estimated economy would be the world’s 10th largest. Extrapolating from survey results, those companies have created an estimated 5.4 million jobs and generate annual world revenues of

How Entrepreneurs Leverage Institutional Intermediaries in Emerging Economies to Acquire Public Resources

2.7 trillion.

Secondary Stakeholder Actions and the Selection of Firm Targets

Research Summary: Governments in emerging economies often use institutional intermediaries to promote entrepreneurship, and bridge the void between ventures and public funding. While prior literature describes what institutional intermediaries do, it leaves open how intermediaries support different types of entrepreneurs. By comparing science park and non-science park firms in Beijing and across China, we distinguish which entrepreneurs benefit from certification v. capability-building through the introduction of two new constructs: skill adequacy and context relevance. Broadly, our study adds insights at the nexus of emerging economies and entrepreneurship research, and to the tie formation and institutional intermediaries literatures.Managerial Summary: A key dilemma facing entrepreneurs is how to finance their ventures. While entrepreneurs in developed economies can seek VC or angel investment, entrepreneurs in emerging economies often need to pursue potential government funding opportunities. Our study highlights three strategies for acquiring government funding. Well-connected entrepreneurs can leverage their political ties to acquire such funding. Less-connected entrepreneurs can leverage science parks that in emerging markets are designed to help governments to identify promising ventures. For returnees whose ample experience abroad may not fit with local ways of doing business, gaining science park admission can certify quality and so ease the path to government funding. For technically skilled local entrepreneurs who lack business skills, science parks can help build such skills which then ease the path to government funding.

Institutional Barriers to Growth: Entrepreneurship, Human Capital and Institutional Change

In this paper, we advance the stakeholder theory literature by developing and testing a set of hypotheses concerning which firms are likely to be targeted by secondary stakeholder groups. To test these hypotheses, we draw upon a unique dataset of stakeholder actions within the United States concerning environmental issues over the period 1988 to 2003. We find evidence for two clusters of stakeholder groups, each using different tactics and targeting different populations of firms. In general, we find firms that are more consumer-oriented, financially sound, and heavier polluters are more likely to be targets of environmentally-oriented stakeholder actions.

Failure Is an Option: Institutional Change, Entrepreneurial Risk, and New Firm Growth

Prior research often focuses on how many entrepreneurial firms are created, rather than on institutions that encourage specific types of firms or entrepreneurs. This paper identifies institutional changes that reduce barriers to growth as an important factor influencing the propensity of individuals to start a business. The findings suggest that the impact of lower barriers to growth is shaped by the extent of the reduction in barriers to growth and the level of human capital of the individual. Only a large reduction in barriers to growth has a stronger impact in increasing the likelihood of founding at higher levels of human capital. I capitalize on two reforms lowering barriers to growth as natural experiments. One reform in 1988 only slightly lowered barriers to growth. The second reform in 1999 more strongly lowered barriers to growth with an amendment to the Chinese constitution reversed regulations that favored firms with foreign investors. This made it easier for domestic entrepreneurs to compete. I collected unique data through a survey of 2,966 alumni who graduated from a top Chinese university. Results show that reducing the institutional barriers to growth differently affects college-educated individuals with different levels of human capital.

Does Institutional Change in Universities Influence High-Tech Entrepreneurship? Evidence from China’s Project 985

Does an institutional change that eases exit via bankruptcy reform enhance venture growth? We take advantage of a quasi-natural experiment in Japan to examine this question. Using longitudinal data over a 10-year period, we find that bankruptcy reform not only increases the rates of bankruptcy and founding, but more importantly improves the likelihood of high growth ventures. This institutional change disproportionately encourages elite individuals (i.e., those with superior human and social capital) to start firms. In turn, these individuals are more likely to launch high growth ventures. Broadly, we contribute at the nexus of institutional theory and entrepreneurship by placing elite entrepreneurs and venture growth in the spotlight, and by highlighting how an institutional change that eases exit fosters a regenerative cycle of exit, founding and growth by attracting more capable entrepreneurs. Overall, we conclude that lowering barriers to exit via lenient bankruptcy laws encourages superior – and not just more – entrepreneurs to start firms.

Through the Mud or in the Boardroom: Examining Activist Types and their Strategies in Targeting Firms for Social Change

This paper contributes to institutional theory on cognitive and normative institutional change targeted at altering beliefs, behaviors, and ultimately firm performance. Prior work emphasizes institutional changes where the ideas and beliefs originate from those within the institutional context. Under examined are cases of institutional changes in beliefs and behaviors imposed from outside of the context, which may result in inconsistencies among cognitive, normative, and regulatory institutional pillars. Project 985 was a program implemented by the Chinese government that provided funding for a set of universities to build new research centers. We found that graduates of these universities subsequently expressed greater beliefs in innovation and founded more high-tech ventures, but that entrepreneurs influenced by the reform were not as financially successful as entrepreneurs who founded firms before the reform or from non-985 universities. We explain this surprising finding as caused by the fact that Project 985 was institutionally inconsistent with China’s broader institutional environment. An important implication is that institutional changes may alter beliefs and behavior, but they must be consistent with the broader institutional environment to improve firm performance.

Who has ‘the right stuff’? human capital, entrepreneurship and institutional change in China

We examine the variety of activist groups and their tactics in demanding firms’ social change. While extant work does not usually distinguish among activist types or their variety of tactics, we show that different activists (e.g., social movement organizations versus religious groups and activist investors) rely on dissimilar tactics (e.g., boycotts and protests versus lawsuits and proxy votes). Further, we show how protests and boycotts drag companies “through the mud” with media attention, whereas lawsuits and proxy votes receive relatively little media attention yet may foster investor risk perceptions. This research presents a multifaceted view of activists and their tactics and suggests that this approach in examining activists and their tactics can extend what we know about how and why firms are targeted.Managerial summary: The purpose of this study was to examine how different types of activist groups behave differently when targeting firms for social change. We find that traditional activist groups rely on boycotts and protests, whereas religious groups and activist investors rely more on lawsuits and proxy votes. Additionally, we find that protests and boycotts are associated with greater media attention, whereas lawsuits and proxy votes are associated with investor perceptions of risk.

Changing entrepreneurial strategies to developing capitalist institutions: A look at Chinese technology entrepreneurs

This paper argues that, contrary to conventional thought, the market development of the institutional environment not only lowers constraints to entrepreneurship, but in addition, encourages those of higher ability to choose entrepreneurship through an increase in expected returns. The data exploits a natural experiment to explore the transition to entrepreneurship using a differences-in-differences approach (over time and across regions). The results provide evidence that the greatest increase in entrepreneurship after the 1999 constitutional amendment (which made illegal prior discriminatory policies preventing the growth of entrepreneurial firms) was among the top quartiles of the ability distribution. The findings suggest that the selection of high quality individuals into entrepreneurship is shaped less by the relaxation of constraints such as the costs of entry and more by the risk/return profile of founding a firm. In addition, both developing and developed countries may want to consider institutions that encourage high human capital individuals to enter entrepreneurship since their firms are found to have higher productivity and to be more innovative. This paper analyzes unique data from a recently conducted survey of alumni graduating from 1947–2007 from a technical university in China.