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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Ornit Raz & Peter A. Gloor, 2007. "Size Really Matters--New Insights for Start-ups' Survival," Management Science, INFORMS, vol. 53(2), pages 169-177, February.
  • Handle: RePEc:inm:ormnsc:v:53:y:2007:i:2:p:169-177
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    File URL: http://dx.doi.org/10.1287/mnsc.1060.0609
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    References listed on IDEAS

    as
    1. Evans, David S, 1987. "The Relationship between Firm Growth, Size, and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 567-581, June.
    2. Clayton M. Christensen & Fernando F. Suárez & James M. Utterback, 1998. "Strategies for Survival in Fast-Changing Industries," Management Science, INFORMS, vol. 44(12-Part-2), pages 207-220, December.
    3. Christine Moorman & Rex Du & Carl F. Mela, 2005. "The Effect of Standardized Information on Firm Survival and Marketing Strategies," Marketing Science, INFORMS, vol. 24(2), pages 263-274, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Kwangsoo Shin & Gunno Park & Jae Young Choi & Minkyung Choy, 2017. "Factors Affecting the Survival of SMEs: A Study of Biotechnology Firms in South Korea," Sustainability, MDPI, Open Access Journal, vol. 9(1), pages 1-18, January.
    2. Walter, Sascha & Heinrichs, Simon & Walter, Achim, 2013. "Hostile Parent Firms and Child Firm Performance," EconStor Preprints 68592, ZBW - German National Library of Economics.
    3. Dakshina Garfield De Silva & Marina Gertsberg & Georgia Kosmopoulou & Rachel Pownall, 2017. "Dealer Networks in the World of Art," Working Papers 198144199, Lancaster University Management School, Economics Department.
    4. Priscila Ferreira & George Saridakis, 2016. "Firm Shutdown During the Financial and Sovereign Debt Crises: Empirical Evidence from Portugal," NIMA Working Papers 61, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
    5. Kai Fischbach & Peter A. Gloor & Detlef Schoder, 2009. "Analysis of Informal Communication Networks – A Case Study," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 1(2), pages 140-149, April.
    6. repec:spr:manint:v:50:y:2010:i:3:d:10.1007_s11575-010-0037-0 is not listed on IDEAS
    7. 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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