“It started with a visit to a shopping mall,” began Robert Dur, our afternoon keynote speaker at the IGL Winter Research Meeting in Amsterdam, as he looked back at his first field experiment (also known as randomised controlled trial, or RCT). As an academic interested in incentives and worker motivation, he felt intrigued by the opportunities that RCTs offered to test the predictions of theory in practice, with real organisations and employees. So he and his colleagues from the Erasmus University of Rotterdam went searching for a partner organisation to run a trial with - and found a large retail chain willing to collaborate. Several years and many successful trials later, Robert summarised for us what his work with RCTs has brought him: a much less narrow view on human nature; a more modest view on what interventions can bring about; and a livelier academic life. Throughout the research meeting, these three points came up over and over in relation to the different trials presented.
A less narrow view on human nature
The same way that findings from behavioural economics-inspired experiments helped retire the traditional view of the self-interested homo economicus, researchers today are questioning whether profit is the main driver for individuals to become entrepreneurs. Jean Joohyun Oh (Columbia Business School) presented results from a series of innovative trials conducted in partnership with the MIT Inclusive Innovation Challenge to find out what motivates entrepreneurs to participate in the challenge. They found that men (and people from less altruistic cultures) were indeed more motivated by the promise of money than by a neutral, tech-focussed message - however, women (and people from more altruistic cultures) responded more positively to pro-social cues.
Interestingly, Timm Opitz (Max Planck Institute for Innovation and Competition) found similar results in a trial that offered a free entrepreneurship training programme to highly educated youth in Uganda: a lot more students in their study reported non-financial reasons (creative freedom, being one’s own boss, helping one’s community) as a motivation to become an entrepreneur than the desire to get rich. Preliminary results even suggested that describing entrepreneurship in terms of creativity attracted more cognitively able students to the programme.
Besides individual motivation, researchers are also taking a more nuanced view on how to motivate members of teams. A key insights from Robert’s keynote was that incentives do not operate in a vacuum. An RCT conducted with the above-mentioned retail chain showed that whether a sales competition between stores increases employee performance depends on the social cohesion between the employees: when employees who work together in a store get along well, store-level prizes are good motivators and increase sales, but they have no impact on performance in stores with low social cohesion among the employees.
An oft-ignored ingredient of successful teamwork that is crucial for innovation is team members’ ability to collaborate and share knowledge. In the trial design presented, Coen Rigtering (Utrecht University) proposed to address this research gap by studying the link between individuals’ absorptive capacity (i.e. their ability to acquire and use new knowledge) and team-level performance.
Another important way in which RCTs can change our understanding of human behaviour is through documenting biases and inefficiencies in decision making in high-stakes situations. A great example is the experiment plan that Nataliya Langburd Wright (Harvard Business School) described at the research meeting, with the aim to test whether entrepreneurial gatekeepers prefer new ventures from their own geographical locations, and if so, what underlies this preference.
A more modest view on what interventions can bring about
As a NYT article recently reminded us, we can often learn the most from RCTs that did not work as expected. Such “disappointing” results allow us to question our assumptions, explore the reasons behind the findings, and ultimately revise and improve our theories. In her morning keynote address covering the work of JPAL’s Firms sector, Serene Ho (J-PAL Global) shared with us several such examples from trials conducted across the world. From traditional cash grants to microcredit, promising interventions often failed to produce transformative, long-term effects - but these findings helped researchers improve these programmes or target them towards individuals or businesses who may benefit more from them.
Similarly, Marco Kleine (Max Planck Institute for Innovation and Competition) presented results from a trial in the UK that randomly offered innovation vouchers to firms and found - somewhat discouragingly - no impact on overall business outcomes two years down the line. However, further analysis revealed important differences that the aggregate results masked: depending on what type of suppliers the firms have chosen to work with, the vouchers did have a positive effect on the specific outcomes the firms had intended to improve. The trial also suggested ways to improve the programme design to increase take-up of the vouchers in the future.
A livelier academic life
Conducting RCTs requires academics to leave their ivory towers, to intimately understand the context in which they work, and to convince and then actively work together with implementation partners on the ground. In the research meeting, we heard about RCTs from dozens of different countries, with partner organisations spanning the public, private and non-profit sectors, informed by insights from economics, management, strategy and organisations, psychology and other disciplines. It was a special delight to hear Serene devote so much attention during her keynote to an outcome often ignored in studies on entrepreneurship and business support: worker health and wellbeing.
We are grateful to our brilliant speakers, our sharp, constructive and kind discussants, and to our engaged and active audience for making this event so informative and inspiring. Special thanks go to Eric Bartelsman, General Director of the Tinbergen Institute for offering to host us, the Vrije Universiteit for the hospitality, and Yulia Kukharenko for the great event support.
For more details, browse the full programme of the 2019 Winter Research Meeting. To hear and discuss more great experimental research on entrepreneurship, innovation and business growth, join us for the Research Meeting day of the IGL2020 conference in London. Abstract submission will open early January 2020.