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Are You Experienced? Prior Experience and the Survival of New Organizations

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  • Michael Dahl
  • Toke Reichstein

Abstract

This paper investigates the relationship between the level of pre-entry experience of managers and founders, and the survival of their new firms. Using a comprehensive dataset covering the entire Danish labor market from 1980 to 2000, we are able to trace prior activities of all employees working in all Danish start-ups with at least one employee. We examine whether spin-offs from surviving parents, spin-offs from exiting parents or other start-ups are more likely to survive. Moreover, we investigate whether firms managed and founded by teams with higher levels of industry-specific experience have a higher chance of surviving. We find that spin-offs from a surviving parent and to a lesser degree industry-specific experience positively affects the likelihood of survival. We also find that spin-offs from a parent that exits are less likely to survive than either spin-offs from surviving parents or other start-ups.

Suggested Citation

  • Michael Dahl & Toke Reichstein, 2007. "Are You Experienced? Prior Experience and the Survival of New Organizations," Industry and Innovation, Taylor & Francis Journals, vol. 14(5), pages 497-511.
  • Handle: RePEc:taf:indinn:v:14:y:2007:i:5:p:497-511
    DOI: 10.1080/13662710701711414
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    References listed on IDEAS

    as
    1. Bingley, Paul & Westergaard-Nielsen, Niels, 2004. "Personnel policy and profit," Journal of Business Research, Elsevier, vol. 57(5), pages 557-563, May.
    2. Klepper, Steven, 2001. "Employee Startups in High-Tech Industries," Industrial and Corporate Change, Oxford University Press, vol. 10(3), pages 639-674, September.
    3. Constance E. Helfat & Marvin B. Lieberman, 2002. "The birth of capabilities: market entry and the importance of pre-history," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 725-760, August.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Organizational routines; pre-entry experience; survival of new firms; spin-offs;

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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