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Firm survival in traded industries: does localization moderate the effects of founding team experience?

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  • Cheng Shu

    (University of Missouri Kansas City)

  • Sharon A. Simmons

    (University of Missouri Kansas City)

Abstract

Prior studies of the impact of founder team industry and start-up experience on firm survival have paid little attention to location decisions or cluster effects. In this paper, we focus on young firms doing business in industries that compete for customers in geographically dispersed markets (traded industries). We examine whether regional concentrations (localization) of related industrial firms moderate the effects of founder team industry and start-up experience on firm survival. The study draws on firm-level data from the Kauffman Firm Survey and on county business patterns data from the US Census Bureau. We found that localization negatively moderates the positive effects of founder team prior industry experience on firm survival. We did not find significant moderating effects of localization on founder team prior start-up experience. Our findings highlight the importance of accounting for location decisions and cluster effects when evaluating the human capital inputs of founder teams.

Suggested Citation

  • Cheng Shu & Sharon A. Simmons, 2018. "Firm survival in traded industries: does localization moderate the effects of founding team experience?," Small Business Economics, Springer, vol. 50(3), pages 643-655, March.
    • Handle: RePEc:kap:sbusec:v:50:y:2018:i:3:d:10.1007_s11187-017-9912-4
    DOI: 10.1007/s11187-017-9912-4
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    4. Tavassoli, Sam & Jienwatcharamongkhol, Viroj & Arenius, Pia, 2021. "Colocation of Entrepreneurs and New Firm Survival: Role of New Firm Founder’s Experiential Relatedness to Local Entrepreneurs," Papers in Innovation Studies 2021/13, Lund University, CIRCLE - Centre for Innovation Research.
    5. Zichun Yan & Kai Wang & Ze-Yu Wang & Jian Yu & Sang-Bing Tsai & Guodong Li, 2018. "Agricultural Internet Entrepreneurs’ Social Network Behaviors and Entrepreneurship Financing Performance," Sustainability, MDPI, vol. 10(8), pages 1-17, July.
    6. Víctor Manuel Bellido‐Jiménez & Domingo Martín‐Martín & Isidoro Romero, 2021. "The survival of new businesses in Andalusia (Spain): Impact of urbanization, education, and gender," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(1), pages 25-41, February.
    7. Cheng, Ruiqi & Yuan, Peng & Jiang, Gongxiong, 2023. "Growth, agglomeration externalities, and survival: Evidence from Chinese manufacturing start-ups," Journal of Business Research, Elsevier, vol. 154(C).

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    More about this item

    Keywords

    Entrepreneur; Teams; Experience; Agglomeration; Survival;
    All these keywords.

    JEL classification:

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

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