Sampling bias in entrepreneurial experiments
File(s)blinded_manuscript.pdf (2.46 MB)
Accepted version
Author(s)
Cao, Ruiqing
Koning, Rembrand
Nanda, Ramana
Type
Journal Article
Abstract
Using data from a prominent online platform for launching new digital products, we document that ‘sampling bias’—defined as the difference between a startup’s target customer base and the actual sample on which early ‘beta tests’ are conducted—has a systematic and persistent impact on the venture’s success. Specifically, we show that products with a female-focused target market launching on a typical day, when nine in ten users on this platform are men, experience 45% less growth a year after launch than those for whom the target market is more male-focused. By isolating exogenous variation in the composition of beta testers unrelated to the characteristics of launched products on that day, we find that on days when there are unexpectedly more women beta testers on the platform—reducing the amount of sampling bias for female-focused products—the gender-performance gap shrinks towards zero. Our results high-light how sampling bias can lead to fewer successfully commercialized innovations for consumers who are underrepresented among early users.
Date Issued
2024-10-01
Date Acceptance
2023-05-01
Citation
Management Science, 2024, 70 (10), pp.7283-7307
ISSN
0025-1909
Publisher
Institute for Operations Research and Management Sciences
Start Page
7283
End Page
7307
Journal / Book Title
Management Science
Volume
70
Issue
10
Copyright Statement
Copyright © 2023, INFORMS
Identifier
https://pubsonline.informs.org/doi/10.1287/mnsc.2021.01740
Publication Status
Published
Date Publish Online
2023-12-14