Ability matching and survival of start-ups
AbstractIn this paper, I analyse how the survival of new firms is affected by the average ability level in the founding team, the team size, team members' homogeneity with respect to ability, and team members' heterogeneity with respect to education. As a theoretical basis, I apply the O-ring theory (Kremer (1993)). Using a rich employer-employee data set on the whole population of Danish firms founded in 1998, I find that the average ability level in a team and the team size have positive effects on firm survival. Having a team at all is the most crucial factor for the probability of survival of young firms. The degree of homogeneity with respect to ability and the degree of heterogeneity with respect to educations have no effect on the survival probability. --
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Bibliographic InfoPaper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 09-041.
Date of creation: 2009
Date of revision:
Entrepreneurship; firm survival; O-ring theory; start-ups;
Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-09-19 (All new papers)
- NEP-ENT-2009-09-19 (Entrepreneurship)
- NEP-LAB-2009-09-19 (Labour Economics)
- NEP-SBM-2009-09-19 (Small Business Management)
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