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Prof. 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. His research has been published in various academic journals and featured in media outlets such as The Wall Street Journal, The New York Times and Financial Times. He also works as an economist at the United States Census Bureau.
Prof. Kim 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.
Abstract: Existing research shows that incumbent firms frequently acquire high-tech startups in order to eliminate nascent competition, raising policy concerns around the anti-competitive effects of startup acquisitions. In this study, I document that high-tech startup acquisitions paradoxically lead to the creation of new competition. Leveraging employee-employer matched data from the US Census, I find that acquisitions significantly increase the target startup’s rate of employee entrepreneurship, leading to the spawning of new competitors. Surprisingly, even in cases of withdrawn acquisitions, the mere announcement of an acquisition leads to an increase in employee entrepreneurship, though it is ultimately cancelled. To reconcile these empirical patterns, I explore a set of theoretical mechanisms by drawing on both the technology M&A and entrepreneurship literature. In particular, I find support for a novel mechanism to explain the link between acquisitions and employee entrepreneurship: workers’ resentment towards their young employers “selling out” to a bigger rival. Taken together, these results demonstrate that acquiring a high-tech startup can generate new competition by spurring the target employees to pursue their own ventures in the same space.
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.
Abstract: This study investigates the effectiveness of high-tech startup acquisitions as a hiring strategy (“acqui-hiring”) versus traditional hiring. Using population-level data from US Census, I find that acquired workers exhibit significantly greater rates of turnover than regular hires, especially among high-earning individuals. I explore a theoretical mechanism based on the premise that, unlike regular hires who voluntarily choose to join a new firm, most acquired employees do not have a voice in the decision to be acquired. I posit that this lack of worker choice instigates organizational mismatch, thereby elevating turnover rates among acquired workers. Moreover, I document that firms learn from prior acquisitions how to effectively retain acquired employees. Together, these results elucidate the conditions under which firms can harness new talent by acquiring startups.
Abstract: We explore the role of founding teams in accounting for the post-entry dynamics of startups. While the entrepreneurship literature has largely focused on business founders, we broaden this view by considering founding teams, which include both the founders and the initial employees in the first year of operations. We investigate the idea that the success of a startup may derive from the organizational capital that is created at firm formation and is inalienable from the founding team itself. To test this hypothesis, we exploit premature deaths to identify the causal impact of losing a founding team member on startup performance. We find that the exogenous separation of a founding team member due to premature death has a persistently large, negative, and statistically significant impact on post-entry size, survival, and productivity of startups. While we find that the loss of a key founding team member (e.g. founders) has an especially large adverse effect, the loss of a non-key founding team member still has a significant adverse effect, lending support to our inclusive definition of founding teams. Furthermore, we find that the effects are particularly strong for small founding teams but are not driven by activity in small business-intensive or High Tech industries.
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 (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.
MGMT 801 is the foundation coures in the Entrepeurial Management program. The purpose of this course is to explore the many dimensions of new venture creation and growth. While most of the examples in class will be drawn from new venture formation, the principles also apply to entrepreneurship in corporate settings and to non-profit entrepreneurship. We will be concerned with content and process questions as well as with formulation and implementation issues that relate to conceptualizing, developing, and managing successful new ventures. The emphasis in this course is on applying and synthesizing concepts and techniques from functional areas of strategic management, finance, accounting, managerial economics, marketing, operations management, and organizational behavior in the context of new venture development. The class serves as both a stand alone class and as a preparatory course to those interested in writing and venture implementation (the subject of the semester-long course, MGMT 806). Format: Lectures and case discussions Requirements: Class participation, interim assignments, final project
This quarter-length course explores key topics at the intersection of entrepreneurship and innovation. While the course primarily draws from established theory and empirics from management and economics, it will also include discussions of emerging phenomena in this rapidly evolving field. We will begin by reviewing the basic properties of ideas that uniquely shape the sources and dynamics of entrepreneurship and innovation. Subsequently, we will explore innovation-related challenges and opportunities for startups. Special focus will be placed on research application in which students design and present their own research proposal broadly in the area of entrepreneurship and innovation. Students are highly encouraged to take this course in sequence with MGMT 937.