Management Science | October 2011
failure and cash-out (liquidity event) as conditioned by the same underlying process. High
opportunity cost entrepreneurs prefer a shorter time to success, even if this also implies failing
more quickly, whereas entrepreneurs with fewer outside alternatives will choose less aggressive
strategies, and, consequently, linger on longer. We formalize this intuition with a simple model.
Using a novel dataset of information security startups, we find that entrepreneurs with high
opportunity costs are not only more likely to cash out more quickly but are also more likely to
fail faster. Not only is survival a poor indicator of performance, but its use as one obscures the
relationship between entrepreneurial characteristics, entrepreneurial strategies, and outcomes.
Anand Nandkumar is an Associate Professor of Strategy, Executive Director of SRITNE at the Indian School of Business (ISB), and Associate Dean of the Centre for Learning and Teaching Excellence. He explores industry and firm-level phenomena that influence innovation - the generation of new ideas, and entrepreneurship - distribution and commercialisation of new ideas. His research focuses on high-technology industries such as pharmaceuticals, biotechnology, and software, and it falls in between industrial organisation (IO), economics of technological change, and strategy.
Professor Nandkumar’s current work in the innovation stream examines the effect of stronger intellectual property rights (IPR) on different aspects of innovation, such as the influence of stronger patents on long run incentives for innovation or the influence of stronger patents on the functioning of Markets for Technology (MFT). In the entrepreneurship stream, his current work examines the influence of venture capitalists on entrepreneurial performance.
Professor Nandkumar graduated with a PhD in Public Policy and Management, with a focus in strategy and entrepreneurship from Carnegie Mellon University in 2008. Prior to his PhD, he worked for 3 years with a startup in Silicon Valley, and prior to that, in New York City with one of the world’s largest financial services firms.
True to his expertise, at ISB, Professor Nandkumar teaches Strategic Innovation Management and Strategic Challenges for Innovation-based startups.
