Spotlight: Showcasing new research on entrepreneurship, innovation and science

By Eszter Czibor & Rob Fuller on Wednesday, 9 December 2020.

It is always a joy to read exciting new research in our field and get to know researchers working in our areas of interest – so it was with special delight that our team has reviewed the submissions to our call to feature the work of job market candidates. And in the spirit of “a joy that's shared is a joy made double”, we would like to share with a wider audience our summaries of the nine papers that we felt fit closest with our topics of entrepreneurship, business support, science, technology and innovation. Read on to find out more about innovative ways to support entrepreneurs, novel considerations around incentives in scientific publication and in innovation, barriers and opportunities for women’s participation in STEM, and investor decision making – and if you are as impressed as we are, well, this might just be your chance to hire the authors as your colleagues or to support their research as a funder!

Supporting entrepreneurs

Managing the Second Shift: The Impact of Noncognitive Skills on Female Entrepreneurs’ Time Allocation and Mental Health by Paula Lopez-Pena

Can training in noncognitive skills help entrepreneurs manage competing demands more effectively and thereby improve their mental health and firm profits? This paper tests how a course of Cognitive Behavioral Therapy affects the division of time between household and business activities among women entrepreneurs in urban Bangladesh. The course led to substantial improvements in mental health and reductions in working time lost to household-related problems (at least in the short term), compared to a control group who received non-directive counselling. No significant effect was found on business-related outcomes, but this at least suggests that teaching women skills to help balance their home and work lives can improve wellbeing without reducing business activity or profits.

Lifting Growth Barriers for New Firms: Evidence from an Entrepreneurship Training Experiment by Zhengyun Sun (with Yizhou Jin)

Can training be effective in enabling small and medium-sized enterprises to overcome barriers to growth in e-commerce markets? The authors developed a business training programme available to new entrants on a large e-commerce platform and randomised which sellers would have access. The training was found to enable new sellers to attract more visitors to their sites, which leads to them earning higher revenues. Consumers benefited from this, since the training made it easier for them to find promising new sellers on the platform. The growth in sales also benefits the platform itself, providing a clear case for forming partnerships to promote training for new entrants in the future.

Video summary available here.

The Impact of Early Stage Resource Acquisition in Low-Resource Environments on Pivoting Activity: A Randomized Field Experiment in Morocco by Ouafaa Hmaddi

How does resource acquisition affect the ability of entrepreneurs in low-resource environments to make strategic pivots? Qualitative research suggests that human capital and social capital are important, but that these only enable relatively small, low-risk pivots to approaches closely related to the entrepreneur's existing expertise. Access to finance, on the other hand, can enable higher-risk pivots with the potential to produce greater gains. The author plans to test these hypotheses by implementing an RCT providing a group of entrepreneurs with access to human and social capital and (among a second treatment group) additional access to financial capital.

The author is not on the job market this year, but would welcome hearing from funders who may be interested in supporting this research.

Incentives in science & innovation

Race to the Bottom: Competition and Quality in Science by Carolyn Stein (with Ryan Hill)

How does the competition to publish first and thereby establish priority impact the quality of scientific research? This paper models how competition spurred by priority races impacts the quality of scientific research, and tests the model’s predictions in the field of structural biology, using data from the Protein Data Bank (PDB). Projects that appear to be the most important also generate the most competition, are completed faster, and are lower quality. These relationships are weaker among the work of scientists who are less focused on publication and priority, suggesting that competition is the causal channel. The fact that the most scientifically important structures are also the lowest quality intuitively seems suboptimal from a social welfare perspective – the paper therefore also considers what the optimal policy response may be. 

A Test of the Monopoly Pricing Hypothesis of Patents by Ling Zhou (with Gaétan de Rassenfosse)

Are intellectual property rights effective in stimulating innovation? This paper examines whether patents allow firms to charge monopolistic prices and thus reap the benefits of their R&D investment. Using an original dataset that links consumer products to corresponding patents as well as the Amazon prices, the authors find that a loss of patent protection leads to an estimated 7–8 percent drop in product prices. The price drop, which starts about one year before patent expiry, is larger for more important patents and is more pronounced in more competitive product markets. Overall, the results provide evidence supporting the monopoly pricing hypothesis – patent holders indeed seem to be able to charge supra-competitive prices during patent protection. 

One product, many patents: Imperfect intellectual property rights in the pharmaceutical industry by Charu Gupta 

How important are "imperfect" or non-standard intellectual property rights for competition in the US pharmaceutical industry? While the existing theoretical and empirical literature relies largely on a “one-patent-one-product” model where each product receives a fixed term of monopoly protection, this paper shows that such a model does not hold in the real world. Using data from the pharmaceutical industry, an instrumental variables analysis reveals that the accumulation of patents on a single drug delays generic entry by more than 2 years on average – equal to 17.5 percent of mean monopoly life – demonstrating that the strategic use of patents by innovating firms can substantially increase entry barriers into a market. The paper also offers an important nuance for future work on optimal patent policy and innovation: intellectual property rights are less rigid than we typically assume.

Women in STEM

Careers Versus Children: How Childcare Affects the Academic Tenure-Track Gender Gap by Stephanie D. Cheng 

What is the impact of having children on a biological science PhD’s career trajectory? Using the largest nationally representative survey of U.S. Ph.D. recipients, this paper finds no significant difference in tenure-track rates among men and women prior to the birth of their first child. However, after having children, mothers’ reduction in work hours leads to a 10 percentage points gender gap in academic tenure-track rates. Notably, mothers do not leave research occupations with fewer work hours, such as industry and non-tenure track positions. Taken together, these results suggest that short-term work reductions to focus on childcare combined with a competitive profession requiring long hours leads to long-term reductions in promotions, increasing the gender gap at the top levels of academia.

Statistical Role Models by Lenka Fiala

Can information provision about past successful participants (‘statistical role models’) change women’s beliefs about their own chances of success in traditionally male-dominated fields? And if yes – do the changes in beliefs translate into greater willingness to participate and  improved performance for women in these areas? Using an online experiment, this paper provides evidence that statistical role models indeed communicate that success is achievable for somebody like themselves, changing participants’ beliefs regarding gender success rates in a mathematical task. Changes in beliefs, however, do not lead to improved confidence or higher effort, leaving self-selection decisions and task performance unaffected. These results suggest that effective role model interventions should go beyond simple information provision about past performance, and should consider modeling of values, mentoring, and psychological benefits.

Investor decision making

One News, Many Views: Strategy, Investor Disagreement, and Performance of Ventures Going Public by Sayan Sarkar

How might characteristics of firm strategy determine the extent of investor disagreement in the context of going public – and how does this disagreement affect IPO performance?  If the future is inherently uncertain, not all investors will converge to an identical investment decision. Using tweets posted by investors at an investor-focussed social-media platform, this paper finds empirical support for the  following predictions: investor disagreement will be high when the strategy disclosed by a firm undergoing an IPO has high (a) imbalance between information about strategy and environment factors, (b) novelty vs peers and (c) degree of contingency projected in its plans. As such, the paper adds more nuance to our understanding of financial resource-mobilization as well as investor decision making in response to uncertainty.