EconPapers    
Economics at your fingertips  
 

Practice makes perfect: Entrepreneurial-experience curves and venture performance

Rasmus Toft-Kehler, Karl Wennberg (karl.wennberg@hhs.se) and Phillip H. Kim

Journal of Business Venturing, 2014, vol. 29, issue 4, 453-470

Abstract: This study tackles the puzzle of why increasing entrepreneurial experience does not always lead to improved financial performance of new ventures. We propose an alternate framework demonstrating how experience translates into expertise by arguing that the positive experience–performance relationship only appears to expert entrepreneurs, while novice entrepreneurs may actually perform increasingly worse because of their inability to generalize their experiential knowledge accurately into new ventures. These negative performance implications can be alleviated if the level of contextual similarity between prior and current ventures is high. Using matched employee–employer data of an entire population of Swedish founder-managers between 1990 and 2007, we find a non-linear relationship between entrepreneurial experience and financial performance consistent with our framework. Moreover, the level of industry, geographic, and temporal similarities between prior and current ventures positively moderates this relationship. Our work provides both theoretical and practical implications for entrepreneurial experience—people can learn entrepreneurship and pursue it with greater success as long as they have multiple opportunities to gain experience, overcome barriers to learning, and build an entrepreneurial-experience curve.

Keywords: Serial entrepreneurship; Learning curves; Experience; Similarity; Performance (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (53)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0883902613000670
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Practice Makes Perfect: Entrepreneurial-Experience Curves and Venture Performance (2013) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbvent:v:29:y:2014:i:4:p:453-470

DOI: 10.1016/j.jbusvent.2013.07.001

Access Statistics for this article

Journal of Business Venturing is currently edited by S. Venkataraman

More articles in Journal of Business Venturing from Elsevier
Bibliographic data for series maintained by Catherine Liu (repec@elsevier.com).

 
Page updated 2024-12-28
Handle: RePEc:eee:jbvent:v:29:y:2014:i:4:p:453-470