The Age Effect of Entrepreneurship: Founder's Tenure, Firm Performance and the Economic Environment

Marco Cucculelli and Giacinto Micucci ()
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Giacinto Micucci: Banck of Italy - Ancona

No 21, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

Abstract: This paper tests the effect of founder's tenure on firm performance by taking into account the impact of the changes occurring in the economic environment. We use a large dataset of founder-run firms that includes, in addition to financial data, company data directly collected through a survey of about 2,000 Italian firms. Unlike the negative relationship reported in most empirical papers, we found an inverted U-shaped relationship between founder-CEO tenure and firm performance. This relationship is strongly influenced by the characteristics of the environment in which the company competes: while experience plays a key role in fostering performance in less innovativeand less competitive sectors, a dynamic environment makes the performance of the firm less responsive to the benefits of founder tenure. From the viewpoint of policy, growing environment dynamism calls for greater efficiency of the market for corporate control, in order to assure a continued match between skills of CEOs and the external environment.

Keywords: ageing; changing environment; entrepreneurship; founder-run firms (search for similar items in EconPapers)
JEL-codes: G34 J24 L25 (search for similar items in EconPapers)
Pages: 27
Date: 2009-03
New Economics Papers: this item is included in nep-age, nep-cse, nep-ent and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:anc:wmofir:21

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