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Field
Randomization Method
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Before
We will use block randomization on variables chosen based on the characteristics of subjects registered in the class. Potential candidates in this randomization are gender, marital status, and age, but we would like to see the distribution of this variables in the data first before randomizing. We will amend our trial registration when we have the class subjects registered so we can better state our randomization approach.
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After
We performed block randomization according to the background characteristics of subjects collected at registration. We partitioned the covariate space using the following variables: startup financing stage, startup value, startup location, satisfaction with local resources, satisfaction with local quality of life, number of founders, number of employees, having children, marital status, having a second job, age, and gender. We then grouped similar subjects together, in backwards order of the listed variables, until each block had at least 4 subjects, as recommended by Athey and Imbens (2016), resulting in 18 total blocks. Finally, we performed a balance test (attached) to ensure that treatment and control group means were not significantly different among every covariate.
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Field
Intervention (Hidden)
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Before
Research in psychology and economics posits that individuals have multiple identities centered around the different social roles they occupy, and that their behavior at a given time may depend on which identity is dominant (Akerlof and Kranton, 2000). Priming interventions can cause a particular identity to become more salient, altering an individual's values and desires and, thus, his or her economic decisions (Benjamin et al, 2010). This study examines how the profit-maximizing strategic decisions of startups are constrained by the personal motivations of their utility-maximizing founders.
We develop a novel experimental approach that applies priming techniques to study entrepreneurial decision-making and, in turn, how identity limits startup strategy. Our experiment primes entrepreneurs' "entrepreneurial identity" through a survey mechanism, where entrepreneurs are randomly distributed one of two versions of a survey, priming or control. The priming version asks subjects four questions about their startup strategy (e.g., "What is your exit strategy?"), while the control version asks four questions about their work-life balance (e.g., "Whom do you typically spend leisure time with?"). In both surveys, the priming or control questions are followed by questions about how the subject would behave in the following hypothetical scenarios. We designed these questions to specify a trade-off between startup growth and personal utility:
A. A major Silicon Valley venture capital firm has contacted you to express interest in investing in your startup. The firm has a history of partnerships with numerous highly-successful companies, and Series A investments in its partners are typically around $5 million. However, the firm only invests in startups that are located in Silicon Valley. How likely would you be to decide to move to Silicon Valley?
B. For the last month, you have been employing a close relative to do part-time work for your startup. However, the quality of their work is below expectations, often requiring you to spend extra time correcting their errors. You have spoken to the relative regarding your concerns, but the errors still continue. How likely would you be to fire your relative?
C. You have planned a long vacation to spend some quality time with your family and/or your closest friends, but you have just been invited to a special event where you will have the opportunity to network with numerous potential investors. This event is going to be held during the time you had planned to be on vacation. How likely would you be to cancel your vacation?
D. Your startup has the opportunity to make an investment that may greatly increase growth in the future. In order to finance the investment, you would have to nearly drain your own retirement savings. How likely would you be to make the investment?
The questionnaire also includes a word-choice test to measure the dominance of subjects' entrepreneurial identities. Subjects are asked to choose the word that best describes them from a series of ten word pairs. In each pair, one word is entrepreneurial (i.e., "innovative") and one is not (i.e., "generous"). We study variation in the number of entrepreneurial words chosen across treatment conditions as a manipulation check. Finally, the questionnaire asks respondents the minimum value of their startup to measure whether priming affects startup valuation as well as personal preferences.
Our main sample is drawn from a population of entrepreneurs who have registered for a free online class that will be taught by one of us (Guzman). Entrepreneurs register by completing a 10-minute registration form with questions about their personal and startup backgrounds. Several weeks after registering for the class, subjects are asked to fill out a pre-class survey, which constitutes the experiment. We screen our registrants to select young growth-driven startups, selecting only those who answer "Yes" to the question "Are you a startup founder?".
We have already conducted a two-phase pilot through Qualtrics Online Samples, and we are now updating our trial registration to include improvements made after this pilot. Our first pilot phase was a soft launch of our surveys on a sample of 12 self-identified entrepreneurs, and our second phase was a full launch on a sample of 100. In our initial trial registration, we had hoped to present the second phase as an experiment in its own right. As of this update after pilot completion, we have found strong evidence for the effect of priming on entrepreneurial identity and strategic decision-making, and have attached our data and R code for analysis. However, we are concerned about the quality of our data: our survey respondents recruited by Qualtrics included, for instance, a contract driver and a teenager who mows lawns. In addition, although survey distribution was randomized, we also found evidence that entrepreneurs with less valuable companies were less likely to complete our priming survey. We also did not collect statistics on attrition and survey drop-out. Therefore, we believe this first experiment does not meet scientific standards, and we intend to present these results not in our main paper but in an appendix. Nevertheless, the results of the pilot provide strong motivation for launching our experiment on our main sample, and were also useful for power calculations.
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After
Research in psychology and economics posits that individuals have multiple identities centered around the different social roles they occupy, and that their behavior at a given time may depend on which identity is dominant (Akerlof and Kranton, 2000). Priming interventions can cause a particular identity to become more salient, altering an individual's values and desires and, thus, his or her economic decisions (Benjamin et al, 2010). This study examines how the profit-maximizing strategic decisions of startups are constrained by the personal motivations of their utility-maximizing founders.
We develop a novel experimental approach that applies priming techniques to study entrepreneurial decision-making and, in turn, how identity limits startup strategy. Our experiment primes entrepreneurs' "entrepreneurial identity" through a survey mechanism, where entrepreneurs are randomly distributed one of two versions of a survey, priming or control. The priming version asks subjects four questions about their startup strategy (e.g., "What is your exit strategy?"), while the control version asks four questions about their work-life balance (e.g., "Whom do you typically spend leisure time with?"). In both surveys, the priming or control questions are followed by questions about how the subject would behave in the following hypothetical scenarios. We designed these questions to specify a trade-off between startup growth and personal utility:
A. A major Silicon Valley venture capital firm has contacted you to express interest in investing in your startup. The firm has a history of partnerships with numerous highly-successful companies, and Series A investments in its partners are typically around $5 million. However, the firm only invests in startups that are located in Silicon Valley. How likely would you be to decide to move to Silicon Valley?
B. For the last month, you have been employing a close relative to do part-time work for your startup. However, the quality of their work is below expectations, often requiring you to spend extra time correcting their errors. You have spoken to the relative regarding your concerns, but the errors still continue. How likely would you be to fire your relative?
C. You have planned a long vacation to spend some quality time with your family and/or your closest friends, but you have just been invited to a special event where you will have the opportunity to network with numerous potential investors. This event is going to be held during the time you had planned to be on vacation. How likely would you be to cancel your vacation?
D. Your startup has the opportunity to make an investment that may greatly increase growth in the future. In order to finance the investment, you would have to go into personal debt. How likely would you be to make the investment?
The questionnaire also includes a word-choice test to measure the dominance of subjects' entrepreneurial identities. Subjects are asked to choose the word that best describes them from a series of ten word pairs. In each pair, one word is entrepreneurial (i.e., "innovative") and one is not (i.e., "generous"). We study variation in the number of entrepreneurial words chosen across treatment conditions as a manipulation check. Finally, the questionnaire asks respondents the minimum value of their startup to measure whether priming affects startup valuation as well as personal preferences.
Our main sample is drawn from a population of entrepreneurs who have registered for a free online class that will be taught by one of us (Guzman). Entrepreneurs register by completing a 10-minute registration form with questions about their personal and startup backgrounds. Several weeks after registering for the class, subjects are asked to fill out a pre-class survey, which constitutes the experiment. We screen our registrants to select young growth-driven startups, selecting only those who answer "Yes" to the question "Are you a startup founder?".
We have already conducted a two-phase pilot through Qualtrics Online Samples, and we are now updating our trial registration to include improvements made after this pilot. Our first pilot phase was a soft launch of our surveys on a sample of 12 self-identified entrepreneurs, and our second phase was a full launch on a sample of 100. In our initial trial registration, we had hoped to present the second phase as an experiment in its own right. As of this update after pilot completion, we have found strong evidence for the effect of priming on entrepreneurial identity and strategic decision-making, and have attached our data and R code for analysis. However, we are concerned about the quality of our data: our survey respondents recruited by Qualtrics included, for instance, a contract driver and a teenager who mows lawns. In addition, although survey distribution was randomized, we also found evidence that entrepreneurs with less valuable companies were less likely to complete our priming survey. We also did not collect statistics on attrition and survey drop-out. Therefore, we believe this first experiment does not meet scientific standards, and we intend to present these results not in our main paper but in an appendix. Nevertheless, the results of the pilot provide strong motivation for launching our experiment on our main sample, and were also useful for power calculations.
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