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Are serial entrepreneurs really more successful than starters?

LiveMint logoLiveMint 14-04-2017 Ragini Bhuyan

Serial entrepreneurs, who start several companies at the same time or one after the other, are much more likely to be successful than novice or first-time entrepreneurs who are running a single company, shows a National Bureau of Economic Research (NBER) working paper by Kathryn L. Shaw at Stanford University and Anders Sørensen at Copenhagen Business School.

The authors used data from Denmark over 2001-2013 and find that serial entrepreneurs were 39% more productive and had 67% higher sales than novice entrepreneurs. There was also no gender difference in performance of serial entrepreneurs. This suggests that successful serial entrepreneurs like Elon Musk and Steve Jobs are not outliers.

Also Read: The productivity advantage of serial entrepreneurs

Population gains and decline in mortality achieved via better disease treatment can lead to social conflict unless the changes are accompanied by an expansion in economic opportunities, according to a new NBER working paper by MIT economist Daron Acemoglu and others.

The authors studied the period between 1940 and 1980, when advancements in medicine led to a reduction in mortality from diseases, before the onset of the AIDS epidemic of the 1980s. The large population increases over this period led to a rise in social conflicts, especially in low-income countries where medicinal advances saved lives that would have been otherwise lost to infections. The paper argues that the rise in population without a simultaneous rise in technology or natural resources fuelled conflict over scarce resources, and caution that economic opportunities must increase alongside population expansion for peace and stability.

Also Read: Population and Civil War

Even when voters have limited information and time to judge candidates, they are able to predict the election winner in most cases, according to Stanford University political economist Katherine Casey. The paper discusses the results of her study in Sierra Leone, where voters often see the candidates’ photo for the first time in the polling booth. Casey found that snap judgements or quick inferences based on photos favoured candidates with weaker professional qualifications, but stronger intangible persuasion skills. Electable faces reflected persuasive skills, which in itself reflected a combination of advantages in physical looks and speaking abilities.

The study also found that voters were able to predict more productive and less corrupt candidates with 60% accuracy simply on the basis of quick judgements. Similar observations have been made in studies in the US as well where conclusions made by college students based on photos and short video clips accurately predicted the results of congressional and gubernatorial races.

Also Read: Snap Judgments: Voter inferences based on candidate photos predict electoral success and politician quality

Writing in the Economic and Political Weekly, Balwant Singh Mehta from the Institute for Human Development, New Delhi, warns that hyper-competitiveness in the telecom sector is detrimental for both telecom firms and consumers. Mehta observes that the entry of new players in the telecom market in 2008 harmed the efficient use of spectrum, leading to a fall in service quality, low investment, high debt, and fall in revenue and profit. His observations are relevant in the context of Reliance Jio’s aggressive entry into the telecom space.

Mehta argues for regulations to ease market entry and exit. He suggests that the future of mobile lies in providing internet services and in penetrating the rural market, while challenges include applications like Whatsapp, the high cost of imported smart phones and the problem of installing towers in residential areas.

Also Read: Performance of mobile phone sector in India

The voice voting system to pass bills in parliament lacks transparency and must be ended, according to Devendra Damle, Shefali Malhotra and Shubho Roy’s post in Ajay Shah’s blog. The authors point out that the practice slows down the legislative system, grants undue discretion to the speaker and reduces the ability of voters to hold their elected representatives accountable. Speakers of the Lok Sabha and legislative assemblies are generally chosen from the ruling party, and continue to be a member of the ruling party, thus giving them an incentive to favour the ruling party in the voting process.

The system also lacks transparency as it does not allow for the individual votes of legislators to be recorded. This denies voters their right to know how their representative voted on a particular issue. The authors suggest electronic voting as a cheap and efficient method to replace voice voting.

Also Read: Replace voice votes

Economics Digest runs weekly, and features interesting reads from the world of economics.

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