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Organizational Endowments and the Performance of University Start-ups

Author

Listed:
  • Scott Shane

    () (R. H. Smith School of Business, University of Maryland, College Park, Maryland 20742)

  • Toby Stuart

    () (Graduate School of Business, University of Chicago, 1101 East 58th Street, Chicago, Illinois 60637)

Abstract

The question of how initial resource endowments-the stocks of resources that entrepreneurs contribute to their new ventures at the time of founding-affect organizational life chances is one of significant interest in organizational ecology, evolutionary theory, and entrepreneurship research. Using data on the life histories of all 134 firms founded to exploit MIT-assigned inventions during the 1980-1996 period, the study analyzes how resource endowments affect the likelihood of three critical outcomes: that new ventures attract venture capital financing, experience initial public offerings, and fail. Our analysis focuses on the role of founders' social capital as a determinant of these outcomes. Event history analyses show that new ventures with founders having direct and indirect relationships with venture investors are most likely to receive venture funding and are less likely to fail. In turn, receiving venture funding is the single most important determinant of the likelihood of IPO. We conclude that the social capital of company founders represents an important endowment for early-stage organizations.

Suggested Citation

  • Scott Shane & Toby Stuart, 2002. "Organizational Endowments and the Performance of University Start-ups," Management Science, INFORMS, vol. 48(1), pages 154-170, January.
  • Handle: RePEc:inm:ormnsc:v:48:y:2002:i:1:p:154-170
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    File URL: http://dx.doi.org/10.1287/mnsc.48.1.154.14280
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    References listed on IDEAS

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    1. David J. TEECE, 2008. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," World Scientific Book Chapters,in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 5, pages 67-87 World Scientific Publishing Co. Pte. Ltd..
    2. Scott Shane, 2002. "Selling University Technology: Patterns from MIT," Management Science, INFORMS, vol. 48(1), pages 122-137, January.
    3. Tyzoon T. Tyebjee & Albert V. Bruno, 1984. "A Model of Venture Capitalist Investment Activity," Management Science, INFORMS, vol. 30(9), pages 1051-1066, September.
    4. Levinthal, D.A. & Fichman, M., 1991. "Honeymoons and the Liability of Adolescence : A New Perspective on Duration Dependence in Social Organizational Relationships," GSIA Working Papers 1991-34, Carnegie Mellon University, Tepper School of Business.
    5. Baron, James N & Burton, M Diane & Hannan, Michael T, 1996. "The Road Taken: Origins and Evolution of Employment Systems in Emerging Companies," Industrial and Corporate Change, Oxford University Press, vol. 5(2), pages 239-275.
    6. Joshua Lerner, 1994. "The Syndication of Venture Capital Investments," Financial Management, Financial Management Association, vol. 23(3), Fall.
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    Keywords

    Entrepreneurship; Social Capital; Financing;

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