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Early employment expansion and long-run survival

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  • Gjerløv-Juel, Pernille
  • Guenther, Christina

Abstract

We investigate under which circumstances early employment growth translates into greater long-run survival. Drawing on Penrose's growth theory, we suggest that the relationship between early employment growth and long-run survival is conditional on employee turnover. We argue that higher employee turnover reduces joint experience in the firm and disrupts the development and eventual exploitation of the firm's productive opportunity set, thereby reducing long-term utilization of early employment expansion. These arguments suggest that the firm's ability to realize long-term benefits of early employment growth is contingent upon low employee turnover following this initial expansion. Using the Danish Integrated Database for Labor Market Research, we show that only when employee turnover is low, will early employment growth lead to higher survival in the long run.

Suggested Citation

  • Gjerløv-Juel, Pernille & Guenther, Christina, 2019. "Early employment expansion and long-run survival," Journal of Business Venturing, Elsevier, vol. 34(1), pages 80-102.
    • Handle: RePEc:eee:jbvent:v:34:y:2019:i:1:p:80-102
    DOI: 10.1016/j.jbusvent.2018.05.005
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    4. Gjerløv-Juel, Pernille, 2019. "Executive turnover – Firms’ subsequent performances and the moderating role of organizational characteristics," European Management Journal, Elsevier, vol. 37(6), pages 794-805.
    5. Pei-Hsuan Tsai & Chih-Jou Chen & Jia-Wei Tang, 2021. "Key Factors Influencing Talent Retention and Turnover in Convenience Stores: A Comparison of Managers’ and Employees’ Perspectives," SAGE Open, , vol. 11(4), pages 21582440211, December.
    6. Robert Gillanders & Roisin Lyons & Lisa van der Werff, 2021. "Social sexual behaviour and co-worker trust in start-up enterprises," Small Business Economics, Springer, vol. 57(2), pages 765-780, August.
    7. James K.C. Chen, 2020. "Perspective on the Influence of Leadership on Job Satisfaction and Lower Employee Turnover in the Mineral Industry," Sustainability, MDPI, vol. 12(14), pages 1-16, July.

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