Early Joiners and Startup Performance

Joonkyu Choi, Nathan Goldschlag, John Haltiwanger and J. Daniel Kim
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Joonkyu Choi: https://www.federalreserve.gov/econres/joonkyu-choi.htm

No 2023-012, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We show that early joiners---non-founder employees in the first year of a startup---play a critical role in explaining firm performance. We use administrative employee-employer matched data on all US startups and utilize the premature death of workers as a natural experiment exogenously separating talent from young firms. We find that losing an early joiner has a large negative effect on firm size that persists for at least ten years. When compared to that of a founder, losing an early joiner has a smaller effect on firm death but intensive margin effects on firm size are similar in magnitude. We also find that early joiners become relatively more important with the age of the firm. In contrast, losing a later joiner yields only a small and temporary decline in firm performance. We provide evidence that is consistent with the idea that organization capital, an important driver of startup success, is embodied in early joiners.

Keywords: Founding teams; Premature death; Firm dynamics; Young firm growth; Organization capital (search for similar items in EconPapers)
Pages: 70 p.
Date: 2023-02-09
New Economics Papers: this item is included in nep-bec, nep-ent, nep-ino and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Early Joiners and Startup Performance (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2023-12

DOI: 10.17016/FEDS.2023.012

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