Sheryl Winston Smith, PhD

As a scholar of entrepreneurship, Sheryl Winston Smith is a recognized teacher-scholar at the intersection of strategy, finance, and entrepreneurship.

 

Biography

Dr. Sheryl Winston Smith is Associate Professor of Entrepreneurship and Strategy at BI Norwegian Business School. Her research elucidates the nexus of strategic management, entrepreneurship and innovation. Currently, her focus is on the relationship between entrepreneurial strategy and financing in new firms and subsequent performance; the role of corporate venture in innovation and competitive strategy; and the significance of intellectual property and prior knowledge in firm performance.

 

She is the recipient of several grants and fellowships, including support from the Ewing Marion Kauffman Foundation for research on new firm performance. She served on the Program Committee of the 2011 Industry Studies Conference and was Chair of the Innovation and Entrepreneurship Track. She received the Kauffman Foundation Best Paper Prize at the Strategic Management Society Annual Meeting in Rome, 2010 and the Kauffman Foundation Promising Paper Award in 2011. Prior to coming to the Fox School of Business, she pursued postdoctoral work at the Sloan School of Management, MIT and at the Carlson School of Management, University of Minnesota. She also was awarded a Rotary Foundation Fellowship to study innovation in the Czech Republic. She received her Ph.D. from Harvard University and her B.S. from Yale University.

 

Sheryl is on the Advisory Board of Mid-Atlantic Diamond Ventures, a year-round venture forum and entrepreneurship-advisory program. Prior to her PhD work, she served as a research analyst for the U.S. Congress Office of Technology Assessment.

Research

 

Selected Published Work

Do Innovative Users Generate More Useful Insights? An Analysis of Corporate Venture Capital Investments in the Medical Device Industry 

Who Are User Entrepreneurs? Findings on Innovation, Founder Characteristics & Firm Characteristics 

Follow Me to the Innovation Frontier? Leaders, Laggards, and the Differential Effects of Imports and Exports on

Technological Innovation, 

Strategic Entrepreneurship Journal, 2013, Volume 7: 151–167 

Users are an important source of innovation. Scholars have suggested that established firms will gain valuable innovative insights by working with user innovators. However, no study compares the extent to which knowledge sourced from innovative users, as compared to other external sources of knowledge, triggers the creation of new technologies and commercial products within established firms. This leaves established firms with little guidance when it comes to choosing where to search for external knowledge that ignites innovation. Based on existing empirical work in the literature on user innovation, we build a theoretical framework that explains why user knowledge will provide established firms with more ‘useful’ innovative insights than will other sources of knowledge. We test this claim in the context of corporate venture capital investment in the medical device industry. We find that established firms incorporate more knowledge from user innovators than from other sources of external knowl- edge into their patents and highly innovative products. Accessing the knowledge contained in user-generated innovations enriches the product development outcomes of established firms. We trace the flow of knowledge from start-ups to established firms using both an established method based on backward patent citation data and a novel algorithmic method that compares the content of regulatory documents. 

Ewing Marion Kauffman Foundation Research Report, February 2012 

Little is known about the paths individuals traverse prior to founding firms and the ramifications of these different paths on entrepreneurial outcomes. We investigate one particular path and its effects: user entrepreneurship. User entrepreneurship describes entrepreneurship by individuals who create innovative products or services because they need them for their own use and subsequently found firms to commercialize their innovations. A small number of industry-level studies suggest that many important innovative products and services are first introduced to the commercial marketplace by user entrepreneurs. Detailed data support this idea and describe user entrepreneurs and their firms. Specifically, we distinguish between three types of user-founded firms and contrast these firms with both the full sample of firms and firms engaged in R&D activities with respect to founder demographics, firm characteristics, and patterns of revenue growth, job creation, R&D investment, and intellectual property creation. In addition, we provide the first documentation of the prevalence of user entrepreneurship in the United States: 10.7 percent of all startups and 46.6 percent of innovative startups founded in the United States that survive to age five are founded by users.

International trade and R&D offer significant opportunities for knowledge transfer through exports, but simultaneously increase potential competition through imports. In this paper, the author examines industry-level heterogeneity in the relationship between domestic innovation and international trade. Using a model of innovation in the global economy and a novel measure of relative industry strength, the paper examines differential effects of exports and imports in high-technology industries. These relationships are tested empirically using panel data from four high-technology industries in the US over the period 1973– 2001. In industries that are relative global leaders, the empirical evidence points to gains from both exporting and importing. On the other hand, in industries that are relative global laggards, the results are more fluid. The author finds that exporting contributes favorably to domestic innovation in both leading and lagging industries when foreign R&D is at its maximum; at lower levels of knowledge abroad, however, the net effect of exporting on lagging industries is negative. Results for importing are likewise nuanced. In industries that are relative leaders, increasingly sophisticated imports lead to greater domestic innovation when industry structure is more concentrated, providing a competi- tive kick-start. In industries that are relative laggards, this effect is not present. Journal of International Business Studies (2014) 45, 248–274. doi:10.1057/jibs.2013.57 

Strategic Entrepreneurship Journal, 2013, Volume 7: 151–167 

Journal of International Business Studies, 2014, Vol. 45: 248–274 

How Much Do Physician Entrepreneurs Contribute to New Medical Devices? 

Early Internationalization and the Role of Immigration New Venture Survival 

New Firm Financing and Performance 

Medical Care, 2013, Volume 51 (5):
461-467  (with Andrew Sfekas) 

Objectives: As recent public and private initiatives have sought to increase the transparency of physician-industry financial relation- ships (including calls for restricting collaboration), it is important to understand the extent of physicians’ contributions to new medical devices. We quantify the contribution of information from physi- cian-founded startup companies to 170 premarket approval (PMA) applications filed by 4 large incumbent medical device manu- facturers over the period 1978–2007. We ask: Are incumbents more likely to incorporate information from physician-founded firms than nonphysician-founded firms?

Methods: We matched the text in 4 incumbent medical device firms’ PMAs (Medtronic, Johnson & Johnson, Boston Scientific, and Guidant) to the text in patent applications of 118 startup companies that received investment from these incumbents between 1978 and 2007. We use a text-matching algorithm to quantify the information contribution from physician and nonphysician-founded startups to incumbent firms’ PMAs. We analyze correlates of backward citations and degree of overlap between incumbents’ PMAs and startups’ patents using negative binomial and tobit regressions.

Findings: On average, physician-founded companies account for 11% of the information in PMAs, compared with 4% from non- physician-founded companies. Regression results show that in- cumbents are significantly more likely to cite physician-founded companies’ patents and to incorporate them into new devices.

Conclusions: Physicians are an important source of medical device innovation. The results suggest that restrictions on financial rela- tionships between providers and industry, while potentially im- proving patients’ trust, may result in reduced medical innovation if physicians found fewer startups or if incumbent firms reduce investments in physician-founded startups. 

International Business Review,

2016, 25(6): 1285-1296. (with Guohua Jiang, Mike Kotabe, and Robert Hamilton)

Highlights

Immigrant-started new ventures (ISNVs) face the liability of ethnicity.

This study empirically examines the survival of immigrant-started new ventures.

An early internationalization strategy could enhance the ISNV survival.

Immigration status moderates the effect of an early internationalization strategy on the ISNV survival.

Immigrant-started new ventures face the liability of ethnicity because of their founders’ disadvantaged immigration status. It is extremely difficult for them to acquire human, social and financial capital and access market in founders’ country of residence to survive. This study empirically examines the survival of immigrant-started new ventures. We find that an early internationalization strategy could enhance those ventures’ survival and that immigration status moderates the effect of an early internationalization strategy on their survival. This study contributes to both immigrant and international entrepreneurship literature. Managerial and policy implications are also discussed.

The objective of this chapter is to provide an integrated framework for understanding the financing of entrepreneurial ventures.  This chapter first synthesizes the existing literature on new firm financing.  The chapter then outlines the literature on the relationship between new firm financing and outcomes of economic and policy interest: new firm survival and innovation. Next, a new panel microdataset, the Kauffman Firm Survey, is used to explore the types and sources of financing used in new firms at the start and over the first four years of existence.    The chapter concludes with a discussion of the factors that contribute to new firm survival and growth.

 

Oxford Handbook of Entrepreneurial Finance, Chapter 4, Ed. Douglas Cumming, (Oxford University Press, 2012) 

Teaching

The Crowd, The Cloud, and Open Innovation

MBA: Fall 2014, Fall 2015, Fall 2016

This course tackles distinct challenges and opportunities posed by the confluence of digital community, powerful and expanding data gathering and analytics, and the intertwining of technological change and business models. The course addresses the impact ofdramatic advances in technology and data analytics on nearly all companies and industries, from established industry giants to high-growth companies in new technology areas. 

Financing Entrepreneurial and Corporate Ventures

MBA: Spring 2015, Spring 2016, Spring 2017

 This course incorporates data and analytic resources at the forefront of decision-making for early stage investors such as accelerators, angel groups, and venture capitalists.  This course integrates the skills and context that students need to be well-positioned in a rapidly evolving innovation and entrepreneurship ecosystem that presents both opportunities and challenges for entrepreneurs as well as for established corporations seeking fresh entrepreneurial ideas.  

Theoretical Foundations of Entrepreneurship

Ph.D: 2012-

Doctoral students are lead on a voyage of scholarly discovery as they master the critical theoretical underpinnings to analyze—and ultimately contribute to—the research dialogue in the field of entrepreneurship. A required course in the Strategic Management PhD program, the course further appeals across all of the PhD concentrations, and this course attracts students from Finance, International Business, MIS, and Marketing.  As well, visiting international PhD students have joined  this course from top global universities over several semesters.

 

Selected Working Papers

Swinging for the fences or calling it quits? Accelerators, angel groups, and new venture trajectories

Peering Inside: Peer Composition, Founding Teams, and Startup Outcomes (with Laura Gasiorowski  )

“Ability, Stigma, and International Entrepreneurship” (with Ram Mudambi & David Deeds) 

For a growing number of young ventures, accelerators provide a new paradigm for early funding. We theorize that accelerator incentives tolerate earlier exit through quitting or acquisition due to “home run” expectations for the portfolio, and that structural features—cohort-based learning culminating in a high-stakes “demonstration day”—hasten VC investment for standouts but delay VC investment for others. We use novel, hand-collected data on a matched sample of n= 654 startups receiving funding from accelerators or angel groups (2005-2011). We track exit and follow-on investment through 2016. We find accelerators unambiguously accelerate exit outcomes, particularly quitting. We also find a pronounced “Demo Day” effect: accelerators hasten VC investment in the short-term; beyond that, accelerator-backed startups take longer to receive VC investment relative to angel-backed counterparts. 

Startups balance simultaneous pressures to learn and evolve while differentiating themselves from similar firms competing for resources. A growing literature on “peer effects” points to the salience of learning from the combined experience of similar individuals. Given the lasting impact of founding conditions, we ask: To what extent are founding teams and startups shaped by peer experience? We posit that the collaborative microcosm of the cohort experience in accelerators amplifies transmission of peer learning but also increases competition. We leverage a novel, hand-collected dataset on founding teams, startups, and cohorts in accelerators to answer this question. We observe differences in exit and funding outcomes as a function of different types of experience: founding teams with prior scientific backgrounds are more likely to exit via quitting; those with prior coding experience are more likely to exit via acquisitions; and those with prior entrepreneurial or managerial experience are more likely to receive VC funding. We find that the relative similarity between the prior experience of the founding team and the distribution of prior experience within the cohort amplify both learning and competition. 

We focus on national differences in perceived stigma associated with entrepreneurial failure. We set up a theoretical model designed to capture the notion that the population of entrepreneurs in any economy develops through time governed by a hurdle process with feedback. We argue that the height of these hurdles is determined by institutional and cognitive factors. Variation in these factors amongst countries leads to variation in the rate and nature of entrepreneurship. We illustrate the theory using agent-based simulation techniques. We find that the higher the perceived stigma associated with entrepreneurial failure in a nation, the lower average quality of the entrepreneurial pool through adverse selection. Conversely, through the same mechanism, we find that lower perceived stigma leads to higher average quality of the entrepreneurial pool. 

 

The authors gratefully acknowledge support from the National Science Foundation (Award # 1360152 “The Impact of Seed Accelerators on Innovation and Entrepreneurial Decision- Making”) and from the Fox School of Business Young Scholars Fund. The manuscript has benefitted greatly from Rosemarie Ziedonis, Josh Lerner, Charlie Williams, Nel Dutt, seminar participants at Bocconi University, Berkeley, MIT, Temple University and from conference participants at DRUID, Kauffman Foundation Accelerator Group, the Colorado University- Kauffman Foundation Conference on Crowdfunding, Strategic Management Society, and Academy of Management. 

The authors gratefully acknowledge support from the National Science Foundation (Award # 1360152 “The Impact of Seed Accelerators on Innovation and Entrepreneurial Decision- Making”) and from the Fox School of Business Young Scholars Fund. We appreciate helpful comments from participants at AOM Vancouver, SMS Madrid, the Kauffman Foundation-Emory University Colloquium on Accelerator Research, Wharton Technology Conference, and at Imperial College London. 

Selected Working Papers

Swinging for the fences or calling it quits? Accelerators, angel groups, and new venture trajectories

Peering Inside: Peer Composition, Founding Teams, and Startup Outcomes (with Laura Gasiorowski  )

“Ability, Stigma, and International Entrepreneurship” (with Ram Mudambi & David Deeds) 

For a growing number of young ventures, accelerators provide a new paradigm for early funding. We theorize that accelerator incentives tolerate earlier exit through quitting or acquisition due to “home run” expectations for the portfolio, and that structural features—cohort-based learning culminating in a high-stakes “demonstration day”—hasten VC investment for standouts but delay VC investment for others. We use novel, hand-collected data on a matched sample of n= 654 startups receiving funding from accelerators or angel groups (2005-2011). We track exit and follow-on investment through 2016. We find accelerators unambiguously accelerate exit outcomes, particularly quitting. We also find a pronounced “Demo Day” effect: accelerators hasten VC investment in the short-term; beyond that, accelerator-backed startups take longer to receive VC investment relative to angel-backed counterparts. 

Startups balance simultaneous pressures to learn and evolve while differentiating themselves from similar firms competing for resources. A growing literature on “peer effects” points to the salience of learning from the combined experience of similar individuals. Given the lasting impact of founding conditions, we ask: To what extent are founding teams and startups shaped by peer experience? We posit that the collaborative microcosm of the cohort experience in accelerators amplifies transmission of peer learning but also increases competition. We leverage a novel, hand-collected dataset on founding teams, startups, and cohorts in accelerators to answer this question. We observe differences in exit and funding outcomes as a function of different types of experience: founding teams with prior scientific backgrounds are more likely to exit via quitting; those with prior coding experience are more likely to exit via acquisitions; and those with prior entrepreneurial or managerial experience are more likely to receive VC funding. We find that the relative similarity between the prior experience of the founding team and the distribution of prior experience within the cohort amplify both learning and competition. 

We focus on national differences in perceived stigma associated with entrepreneurial failure. We set up a theoretical model designed to capture the notion that the population of entrepreneurs in any economy develops through time governed by a hurdle process with feedback. We argue that the height of these hurdles is determined by institutional and cognitive factors. Variation in these factors amongst countries leads to variation in the rate and nature of entrepreneurship. We illustrate the theory using agent-based simulation techniques. We find that the higher the perceived stigma associated with entrepreneurial failure in a nation, the lower average quality of the entrepreneurial pool through adverse selection. Conversely, through the same mechanism, we find that lower perceived stigma leads to higher average quality of the entrepreneurial pool. 

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