Yulia Chhabra



"Entrepreneurial Innovation: Killer Apps in the iPhone Ecosystem." American Economic Review Papers and Proceedings, 2014, 104(5): 255-59 (with Pai-Ling Yin and Jason Davis).

Working papers

We've Already Hired a Black Girl: Empirical Evidence of Quotas in the Fashion Industry

This paper provides empirical evidence of race-based hiring quotas in a competitive labor market. Using novel data on the hiring of fashion models for high-end runway shows, I find that Black and Asian models are less likely to be hired if a designer retains more models of the same race from previous shows. The substitution effect between minority newcomers and incumbents of the same race is larger than the substitution effect between a random newcomer and incumbent or a newcomer and incumbent who are White. The substitution effect for minority models is also larger than the same effect derived from a simulation of race-blind hiring. The credentials of Black and Asian newcomers improve with the increase in the percentage of rehired models of the same race in a show. The findings suggest that designers choose a fixed quantity of minority models per show and become more selective of minority newcomers when they retain more models of the same race from previous shows.

Local Fiscal Multiplier on R&D and Science Spending: Evidence from the American Recovery and Reinvestment Act (with Margaret Levenstein and Jason Owen-Smith).

We use the American Recovery and Reinvestment Act (ARRA), a large stimulus package passed into law to combat the Great Recession, to estimate the effect of R&D and science spending on local employment. Unlike most fiscal stimuli, the R&D and science portion of ARRA did not target counties with poor economic conditions but rather was awarded following a peer review process, or based on innovative potential and research infrastructure. We find that, over the program’s five-year disbursement period, each one million USD in R&D and science spending was associated with twenty-seven additional jobs. The estimated job-year cost is about $15,000.

Experimentation Strategies and Entrepreneurial Innovation: Parallel and Sequential Innovation in the iPhone App Ecosystem (with Jason Davis and Pai-Ling Yin).

We explore the role of entrepreneurial strategies and innovation by examining the choice between parallel and sequential experimentation strategies in iPhone app development and innovation outcomes. Distinguishing between design uncertainty (whether potential innovations match a market need) and execution uncertainty (whether innovations are produced at sufficient quality), we argue that parallel search is relatively well suited to ecosystem sub-markets with high design uncertainty. Using unique data on the parallel and sequential experimentation strategies and innovation outcomes of firms producing iPhone applications, we then show that firms that adopt experimentation strategies appropriate to the type of uncertainty they face outperform those that adopt the less-well suited strategy.

Escalation of Commitment and the Scope of New Firms: Entrepreneurial Diversification in the iPhone Application Ecosystem (with Jason Davis and Pai-Ling Yin).

We use the data on iPhone app developers to examine their choice of product categories, specifically, why entrepreneurial firms undertake within-industry diversification of products. Prior research on diversification generally concludes that firms should focus first on diversifying into related markets. The assumptions and empirical findings underlying this conclusion, however, emphasize large, established firms with extensive resource portfolios that can take advantage of significant scale and scope advantages. In this paper, we suggest a different perspective in which entrepreneurial diversification is explained by an experimentation rationale in which resource constrained firms use product entry into new markets to search for the markets that best fit their current capabilities. Because the outcomes of experimentation are inherently uncertain, entrepreneurs use all available credible signals to constrain the experimentation process. We identify one such source of information, the attention that product-experiments receive through customer feedback. We argue that the salience (amount of feedback) and valence (good or bad feedback) of attention given to products by customers shape whether entrepreneurs will focus or diversify away from prior market categories. We test these ideas using unique data on customer feedback and entrepreneurial diversification decisions available on Apple's iPhone application ecosystem. We find that while new organizations with no feedback may be inclined to continue experimentation through diversification, those who receive significant positive feedback escalate commitment to the focal category with new products. A surprising result is that the presence of bad feedback does not inspire diversification, perhaps because it offers a credible signal that the market is paying attention and may appreciate new product development efforts in the focal category. This study contributes to studies of entrepreneurial strategy with new insights about how escalation of commitment and diversification are linked to dimensions of market attention.

The Bayh-Dole Act, Technology Transfer Offices, and Faculty Patenting Inside and Outside University.

I analyze the effect of the Bayh-Dole Act on patenting activity by university faculty. The estimation of the Bayh-Dole effect is complicated by the endogeneity issues. For some universities, the act legitimized patenting practices already in place, other universities took decades to set up internal structures and claim their first patents. I use the establishment of a technology transfer office at a university as an "institutional shock", a realization of policies specified in the Bayh-Dole Act in the context of specific university. Fixed effects and survival analyses suggest a 25% decrease in outside patenting by faculty following the establishment of a technology transfer office. The effect is larger for the faculty who is new to patenting. The paper enhances our understanding of how institutional change after the Bayh-Dole Act affects the incentives of university scientists and their contributions to private sector research.