Learning to Manage: A Field Experiment in the Indian Startup Ecosystem
This study of 100 high-growth startups in India finds that founder-executives can learn how to improve their management style from their peers at other firms. These interfirm network connections between founders may help explain why some companies are well managed and others less so. Despite the apparent value of this peer learning, founders don’t appear to naturally connect with peers who could help them improve their management style.
Management styles and practices are important determinants of firm performance. Yet, substantial variation exists across organizations with regard to management, suggesting frictions in the broader diffusion of management knowledge. We argue that peer networks may allow for the diffusion of productive management across firms. Using a randomized field experiment with 100 high-growth technology firms, we show that founders who received advice from other founders with more “hands-on” management styles were more likely to reorient their own management activity and, subsequently, experience lower employee attrition and higher rates of firm survival eight months after the intervention. For founders who already had a more hands-on management style themselves, these interactions also increase top-line employee growth via an increase in hiring rates. Our study demonstrates management can indeed diffuse across young firms via networks, though the process might be uneven and slow in practice.
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