Evidence-based entrepreneurship

By Sim Shuzhen

SMU Office of Research & Tech Transfer – Upon starting a new company, many founders soon find that the road to a successful business is an uphill, unpaved trek. Some entrepreneurs harbour grand visions that are not economically viable; others hit on feasible ideas but lack the business experience and connections needed to take them forward or scale them up. Still others struggle with making strategic decisions, such as when to call off an unsuccessful venture.

To help more businesses find their footing and flourish, Associate Professor Reddi Kotha of the Singapore Management University (SMU) Lee Kong Chian School of Business wants to better understand the constraints entrepreneurs face, and thus design research-backed interventions to equip them with the capabilities needed to scale their companies.

“As a research and educational university, we’re interested in how we can intervene to improve the supply side of the entrepreneur talent pool. The investors and venture capitalists can pick winners; we [at SMU] want to provide entrepreneurs with capabilities, skills, training and opportunities, and serve as an open platform for the actors in the entrepreneurship ecosystem to network, which can then have positive spillover effects to not only their current venture but also to their subsequent ventures,” says Professor Kotha.

Piloting interventions

In a year-long pilot study, Professor Kotha collaborated with SMU Assistant Professor Anne-Valerie Ohlsson-Corboz and INSEAD Associate Professor Balagopal Vissa to survey and provide two days of training to some 200 startup entrepreneurs in Singapore. “It was our first attempt to try and systematically understand the constraints of entrepreneurs in Singapore,” explains Professor Kotha.

As part of the study, entrepreneurs also received expert mentoring from industry leaders and participated in training workshops focused on the use of social capital – referring to networks of interactions with other individuals or businesses – to solve business-related problems.

The researchers are now analysing data from the study to determine the effectiveness of the interventions. One of their aims is to eventually make the data publicly available, so that other researchers or policy makers with an interest in entrepreneurship can analyse it for further meaningful insights, says Professor Kotha.

Having validated the design of their study during the pilot, the researchers are now gearing up for a larger and more in-depth study of entrepreneurs from Singapore-registered startups, for which Professor Kotha was recently awarded a Social Science Research Thematic Grant (SSRTG) from the Singapore Ministry of Education. The study will focus on equipping entrepreneurs to scale their businesses and take them international – a particularly pertinent problem for businesses in Singapore, which often have to internationalise relatively early because of the small domestic market, says Professor Kotha.

Starting at the bottom  

A key researcher joining Professor Kotha and Professor Vissa for the upcoming study is Dr Lim Chon-Phung, who received his PhD in general management from SMU in June 2018. An IT industry veteran with more than three decades of experience in Hewlett-Packard and Oracle, Dr Lim retired from the corporate world in 2015 to pursue his dual passions in research and mentoring. Fieldwork for his PhD dissertation took him to rural farming and fishing communities in the province of Northern Samar in the Philippines, where he studied the impact of training interventions aimed at developing and activating social capital.

“What Chon-Phung was doing in the Philippines immediately resonated with me, because he was training people at the bottom of the pyramid in activating social capital, in order to have a greater impact on their lives and livelihoods,” says Professor Kotha, whom Dr Lim consulted for advice on research methodology.

In the Philippines, Dr Lim found that when rural community leaders received basic training to help them expand their social networks, interactions within and between communities increased, and people were more willing to cooperate to implement common agricultural and fishing tools and technologies. Further, the training had a positive psychological impact on the leaders themselves, who were more confident and hopeful that they would be able to improve the lives of their people.

“It was very rewarding to confirm my hypothesis that we can train people who don’t have any formal education – the poorest of the poorest farmers can be trained if we provide simple programmes to develop additional capital that is really lacking at the bottom,” says Dr Lim. “Being able to take modern management education and structure it in such a way that people at the bottom can benefit is very exciting to me.”

A systematic approach to entrepreneurship

Coming on board the SSRTG-funded study, Dr Lim will be able to draw on both his professional and research experience to design interventions that focus on growth and internationalisation, says Professor Kotha.

Because entrepreneurship is such a dynamic phenomenon, with people moving in and out for a variety of reasons, evaluating the impact of these interventions poses a challenge, says Professor Kotha. The researchers thus plan to track a broad range of parameters, including simple statistics such as sales and employee growth, as well as more complex ‘softer’ characteristics such as growth in participants’ personal skills and capabilities, changes in their approaches to entrepreneurship and whether they are able to apply their new capabilities in future ventures.

While there is currently no shortage of training programmes for entrepreneurs, most aren’t backed by robust research, says Dr Lim. “Very often we do not know what works and what doesn’t. A proper research study will allow us to clearly identify a more structured and consistent approach that works and can be replicated,” says Dr Lim. “I believe that would make a significant change in the way entrepreneurs are trained today.”

Ultimately, Professor Kotha hopes that training programmes will teach participants to think systematically and scientifically about the process of entrepreneurship. “It’s important for entrepreneurs to think about their hypotheses about the market, how they can go about testing these hypotheses, what kind of information they can get from this, and what their next actions should be,” he emphasises.

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