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Size Really Matters--New Insights for Start-ups' Survival

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  • Ornit Raz

    ()
    (Sloan School of Management, Massachusetts Institute of Technology, E40-339, 77 Massachusetts Avenue, Cambridge, Massachusetts 02139-4307)

  • Peter A. Gloor

    ()
    (Sloan School of Management, Massachusetts Institute of Technology, E40-339, 77 Massachusetts Avenue, Cambridge, Massachusetts 02139-4307)

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    Abstract

    This paper presents new evidence regarding a firm's probability for survival, based on the network structure of the firm's managers. We found that start-ups that have larger informal communication networks increased their chance to survive external shock. Original data have been collected from Israeli software start-ups during the dot-com economic growth. About eight years later, we added information about their ability to survive the burst of the dot-com bubble. From a theoretical point of view, this paper highlights the power of the classic social networks approach in explaining organizational performance. From a practical point of view, these findings offer some guidelines for managers of start-ups. Our results show that the size of informal interfirm networks really matters.

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    File URL: http://dx.doi.org/10.1287/mnsc.1060.0609
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 53 (2007)
    Issue (Month): 2 (February)
    Pages: 169-177

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    Handle: RePEc:inm:ormnsc:v:53:y:2007:i:2:p:169-177

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    Related research

    Keywords: organizational studies; strategy; communication networks; start-ups;

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    Cited by:
    1. Walter, Sascha & Heinrichs, Simon & Walter, Achim, 2013. "Hostile Parent Firms and Child Firm Performance," EconStor Preprints 68592, ZBW - German National Library of Economics.
    2. Kai Fischbach & Peter A. Gloor & Detlef Schoder, 2009. "Analysis of Informal Communication Networks – A Case Study," Business & Information Systems Engineering, Springer, vol. 1(2), pages 140-149, April.
    3. Mayer-Haug, Katrin & Read, Stuart & Brinckmann, Jan & Dew, Nicholas & Grichnik, Dietmar, 2013. "Entrepreneurial talent and venture performance: A meta-analytic investigation of SMEs," Research Policy, Elsevier, vol. 42(6), pages 1251-1273.

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