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

  • 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)

Registered author(s):

    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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    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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    1. Evans, David S., 1986. "The Relationship Between Firm Growth, Size, and Age: Estimates for 100 Manufacturing Industries," Working Papers 86-33, C.V. Starr Center for Applied Economics, New York University.
    2. 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.
    3. 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 S207-S220, December.
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