3620 Locust Walk
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Danny Kim is an Assistant Professor of Management at the Wharton School. His research is at the intersection of entrepreneurship, strategy, and labor markets. He has conducted studies on startup acquisitions by established firms, the determinants of successful ventures, and the broader role of entrepreneurship in the US economy. Danny also works as an economist at the United States Census Bureau.
Danny received a Ph.D from MIT School of Management and a B.A. from Dartmouth College. Prior to his doctoral studies, he worked at Harvard Business School and Morgan Stanley.
Jisoo Kim, Pierre Azoulay, Benjamin Jones, Javier Miranda (2019), Age and High-Growth Entrepreneurship, American Economic Review: Insights, forthcoming.
Abstract: Do young people make better entrepreneurs? Many observers, and many investors, believe that young people are especially likely to produce the most successful new firms. We use administrative data at the U.S. Census Bureau to study the ages of founders of growth-oriented start-ups in the past decade. Our primary finding is that successful entrepreneurs are middle-aged, not young. The mean founder age for the 1 in 1,000 fastest growing new ventures is 45.0. The findings are broadly similar when considering high-technology sectors, entrepreneurial hubs, and successful firm exits. Prior experience in the specific industry predicts much greater rates of entrepreneurial success. These findings strongly reject common hypotheses that emphasize youth as a key trait of successful entrepreneurs.
Jisoo Kim, Edward B. Roberts, Fiona Murray (2019), Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact, Foundations and Trends in Entrepreneurship, 15 (1), pp. 1-55.
Abstract: This study analyzes the economic impact of MIT alumni-founded companies and highlights the key trends in the MIT entrepreneurial ecosystem between 1950 and 2014. Based on a large-scale survey of all living MIT alumni in 2014, we estimate that MIT alumni have launched more than 30,000 active companies that employ roughly 4.6 million people and generate $1.9 trillion in annual revenues, which is approximately the size of the world's 10th largest GDP. We highlight the role of foreign-born students as entrepreneurs and innovators as well as key trends in the alumni-founded ventures’ industry composition, firm performance, and economic impact through job creation and sales. Lastly, based on the lessons from MIT in the past 60 years, we discuss various implications for university leadership for designing and implementing educational curriculum and programs to address the evolving nature of alumni entrepreneurship and innovation.
Jisoo Kim (Working), Predictable Exodus: Startup Acquisitions and Employee Departures.
Abstract: This paper investigates the effectiveness of startup acquisitions as a hiring strategy. Unlike conventional hires who choose to join a new firm on their own volition, most acquired employees do not have a voice in the decision to be acquired, much less by whom to be acquired. Startup acquisitions therefore provide an empirical setting in which non-founding employees – from these individuals’ perspective – are quasi-randomly assigned a new employer. I argue that the lack of worker choice lowers the average match quality between the acquired employees and the acquiring firm, leading to elevated rates of turnover. Using comprehensive employee-employer matched data from the US Census, I document that acquired workers are significantly more likely to leave compared to regular hires. Moreover, I demonstrate that these departures can be largely predicted ex-ante. Leveraging population data on career histories, I construct a measure of “startup affinity” for each target and acquiring firm based on pre-acquisition employment patterns, and show that this strongly predicts post-acquisition worker retention. Lastly, these departures suggest a deeper strategic cost of competitive spawning: Upon leaving, acquired workers are more likely to found their own companies, many of which appear to later compete against the buyer.
Jisoo Kim, Joonkyu Choi, Nathan Goldschlag, John Haltiwanger (Working), The Post Entry Growth and Survival of Business Startups: The Role of Founding Teams.
Abstract: We explore the role of founding teams in accounting for the enormous variation in post-entry dynamics of startups. We find that successful startups in terms of growth, survival, and productivity have founding teams with higher human capital. However, these correlations are difficult to interpret given the endogenous nature of assortative matching and attrition dynamics. To overcome these issues, we use a difference-in-difference identification approach that exploits exogenous attrition in the founding team due to the premature death of founding team members. We find that the loss of a founding team member due to premature death has a large, negative, and statistically significant impact on the post-entry growth, survival, and productivity of startups. We further investigate the nature and mechanisms at work by investigating a wide range of heterogeneous treatment effect specifications.
Jisoo Kim (2018), Is There a Startup Wage Premium? Evidence from MIT Graduates, Research Policy, 43 (3), pp. 637-649.
Abstract: While startups are the center of extensive policy discussion given their outsized role in job creation, it is not clear whether they create high quality jobs relative to incumbent firms. This paper investigates the wage differential between venture capital-backed startups and established firms, given that the two firm types compete for talent. Using data on MIT graduates, I find that non-founder employees at VC-backed startups earn roughly 10% higher wages than their counterparts at established firms. To account for unobserved heterogeneity across workers, I exploit the fact that many MIT graduates receive multiple job offers. I find that wage differentials are statistically insignificant from zero when individual fixed effects are included. This implies that much of the startup wage premium in the cross-section can be attributed to selection, and that VC-backed startups pay competitive wages for talent. To unpack the selection mechanism, I show that individual preferences for risk as well as challenging work strongly predict entry into VC-backed startups.
Jisoo Kim, Pierre Azoulay, Benjamin Jones, Javier Miranda (2018), The Average Age of a Successful Startup Founder Is 45, Harvard Business Review.