Experimentation and Startup Performance: Evidence from A/B testing / Rembrand Koning, Sharique Hasan, Aaron Chatterji.

Format:

Book

Author/Creator:

Koning, Rembrand.

Contributor:

National Bureau of Economic Research.

Hasan, Sharique.

Chatterji, Aaron.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26278.

NBER working paper series no. w26278

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Experimentation and Startup Performance

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

Recent work argues that experimentation is the appropriate framework for entrepreneurial strategy. We investigate this proposition by exploiting the time-varying adoption of A/B testing technology, which has drastically reduced the cost of experimentally testing business ideas. This paper provides the first evidence of how digital experimentation affects the performance of a large sample of high-technology startups using data that tracks their growth, technology use, and product launches. We find that, despite its prominence in the business press, relatively few firms have adopted A/B testing. However, among those that do, we find increased performance on several critical dimensions, including page views and new product features. Furthermore, A/B testing is positively related to tail outcomes, with younger ventures failing faster and older firms being more likely to scale. Firms with experienced managers also derive more benefits from A/B testing. Our results inform the emerging literature on entrepreneurial strategy and how digitization and data-driven decision-making are shaping strategy.

Notes:

Print version record

September 2019.