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Business experience and start-up size: Buying more lottery tickets next time around?

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  • Alex Coad

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  • Julian Frankish
  • Paul Nightingale
  • Richard Roberts

Abstract

This paper explores the determinants of start-up size by focusing on a cohort of 6,247 businesses that started trading in 2004, using a unique dataset on customer records at Barclays Bank. Quantile regressions show that prior business experience is significantly related with start-up size, as are a number of other variables such as age, education and bank account activity. Quantile treatment effects (QTE) estimates show similar results, with the effect of business experience on (log) start-up size being roughly constant across the quantiles. Prior personal business experience leads to an increase in expected start-up size of about 50 %. Instrumental variable QTE estimates are even higher, although there are concerns about the validity of the instrument. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Alex Coad & Julian Frankish & Paul Nightingale & Richard Roberts, 2014. "Business experience and start-up size: Buying more lottery tickets next time around?," Small Business Economics, Springer, vol. 43(3), pages 529-547, October.
  • Handle: RePEc:kap:sbusec:v:43:y:2014:i:3:p:529-547
    DOI: 10.1007/s11187-014-9568-2
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    Cited by:

    1. J. David Brown & John S. Earle & Mee Jung Kim & Kyung Min Lee, 2017. "High-Growth Entrepreneurship," Working Papers 17-53, Center for Economic Studies, U.S. Census Bureau.
    2. Alex Coad & Sven-Olov Daunfeldt & Daniel Halvarsson, 2018. "Bursting into life: firm growth and growth persistence by age," Small Business Economics, Springer, vol. 50(1), pages 55-75, January.
    3. Cosimo Abbate & Alessandro Sapio, 2016. "Gazelles and muppets in the City: Stock market listing, risk sharing, and firm growth quantiles," LEM Papers Series 2016/33, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    4. Alex Coad & Kristian Nielsen & Bram Timmermans, 2017. "My first employee: an empirical investigation," Small Business Economics, Springer, vol. 48(1), pages 25-45, January.
    5. Rocha, Vera & van Praag, Mirjam C. & Folta, Timothy B. & Carneiro, Anabela, 2016. "Entrepreneurial Choices of Initial Human Capital Endowments and New Venture Success," IZA Discussion Papers 9919, Institute for the Study of Labor (IZA).
    6. Kausik Chaudhuri & S. N Rajesh Raj & Subash Sasidharan, 2018. "Broadband Adoption and Firm Performance: Evidence from Informal Sector Firms in India," Working Papers id:12744, eSocialSciences.
    7. Alex Coad & Julian S. Frankish & Richard G. Roberts & David J. Storey, 2016. "Predicting new venture survival and growth: Does the fog lift?," Small Business Economics, Springer, vol. 47(1), pages 217-241, June.
    8. repec:spr:joevec:v:28:y:2018:i:1:d:10.1007_s00191-017-0502-z is not listed on IDEAS

    More about this item

    Keywords

    Start-up size; Entrepreneurship; Business experience; Learning; Quantile treatment effects; L26; L25;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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