Is Any Advice Good Advice? The Impact of Business and Technology Advisors on Venture Emergence

Abstract

Founders of new technology ventures often seek advice and mentoring in both informal and organized settings. However, despite numerous studies on the subject, we have a poor understanding of whether and how advice affects nascent venture emergence. In this study, we aim to increase our understanding of when advice aids new venture emergence and do so by looking at the type of advice, business versus technology, as well as the entrepreneur’s previous experience level. Specifically, we build competing hypotheses to address the question of whether entrepreneurs benefit more from advice when they lack experience and thus are in greater need of advice, versus when they are more experienced and better able to understand and implement advice. Using a sample of 121 entrepreneurs representing 86 nascent technology ventures associated with the National Science Foundation Innovation Corps (“I-Corps”) Program, we find that business advice improves venture emergence, while technology advice does not. New venture emergence is further enhanced by advice that complements, rather than amplifies, the entrepreneur’s experience base. We further determine that more experienced entrepreneurs typically benefit most from advisors. In addition to offering important insights to the literature on organizational learning and advisors, these findings have strong impact on the public policy and institutional mechanisms supporting technology entrepreneurship.