Professor David Robinson on Entrepreneurial Finance
Professor David Robinson (Fuqua School of Business, Duke University) visited the GSF in August to teach a PhD course on “The Financial Economics of Entrepreneurship, Private Equity and Venture Capital”. The course was co-funded with the OP Group Research Foundation, and it was offered within the Nordic Finance Network (NFN). Like in prior years (this course was a version 3.0) David’s course attracted a good number of doctoral students from Denmark, Norway, Sweden, and Finland. This year the students’s backgrounds varied more than before as the course participants included PhD students from economics, finance, industrial engineering, and mathematical physics. Many of them were already working on their dissertation research so the course offered a great setting to interact and collect feedback from people doing research in the same area.
We spoke to David and asked about how he became interested in entrepreneurial finance in the first place as well as his thoughts on what policymakers can do to promote entrepreneurship and where the field of entrepreneurship research is going.
1. How did you become interested in entrepreneurship and entrepreneurial finance in the first place? What fascinates you about these topics?
I didn’t realize this until somewhat later in life, but I think my childhood had a big influence on my research interests. Growing up, my dad and my grandfather had a small business. The psychological ups and downs of that experience had a big impact on me growing up. Fast forward to college and grad school, and I had the good fortune of studying under Oliver Hart and John Moore at the LSE while doing a Master’s. Their thinking around the theory of the firm really made me start to think, “Why is it that some ideas need new firms in order to take life, while other ideas can come to life inside established companies?” That central question has kept me going all this time.
2. Based on academic research do we know what the prerequisites for flourishing entrepreneurship are? Can governments foster entrepreneurship, or should they even do so?
Understanding the role that “place” plays in entrepreneurship is one of the central questions in entrepreneurship research right now. Every mayor, governor, prime minister is trying to figure out how to stimulate entrepreneurship in his or her backyard. Most efforts fail. Honestly, I think most efforts fail because entrepreneurship is a “rare events” phenomenon, and most policy makers don’t have the patience or the political air-cover to put money into an activity that has a very high failure rate, but conditional on the rare success, is totally transformational. In the modern political climate we live in, there is no tolerance for failure. The best that governments can do is cut down the red tape around starting businesses, do their best to get out of the way, and create social policies that make it “okay to fail.”
3. What are the hot research topics in entrepreneurial finance today? Where is the field going?
One of the things that excites me about entrepreneurship research is that the foundational questions are very much up in the air. Is entrepreneurship on the decline or on the rise? What personality traits cause some people to select into entrepreneurship? How do capital market frictions impede entrepreneurship? How does the evolution of India, China and newer markets like Africa affect the trajectory of global entrepreneurship? These are all hot, unsettled questions in the field. In terms of where the field is going, entrepreneurship as a social force or economic phenomenon is being increasingly recognized as fundamental to the study of many of the questions of our day: income inequality, innovation, labor market participation, diversity. Seeing entrepreneurship diffuse across mainstream economics is really exciting.
About Professor David Robinson
David T. Robinson is the James and Gail Vander Weide Professor of Finance at Duke University’s Fuqua School of Business, and a Research Associate at the National Bureau of Economic Research. He is an internationally recognized expert in the fields of private equity, venture capital and entrepreneurial finance. His work has appeared in leading academic journals in finance and economics and has been featured in the New York Times, The Wall Street Journal, The Financial Times, and The Economist.
Professor Robinson is a scientific advisor to the Swedish House of Finance in Stockholm, Sweden, the Private Equity Research Council, the Private Capital Research Institute, as well as a number of private equity firms and technology startups. He is the former Vice Chair of the World Economic Forum’s Global Agenda Council on Private Capital.
He earned his PhD and MBA degrees at the University of Chicago, a Master of Science from the London School of Economics, a Bachelor of Arts from the University of North Carolina at Chapel Hill and an honorary doctorate from the Stockholm School of Economics. Prior to joining Duke University he was a Professor of Finance and Economics at Columbia University.