When things get tough do the tough get going? Founders' pre-entry work experience and high-tech start-up survival during an industry crisis

Luca Grilli

No 2008-22, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: This article adds new insights into the relationship between founders' human capital and the survival prospects of startup businesses. The impact of founders' human capital on firm survival is controversial. On one hand, more experienced and skilled individuals are likely to create start-up businesses with a high chance of survival; on the other hand, their opportunity costs to run the firm may be high given the potential returns for investing their efforts in alternative employment opportunities. Analysing a sample of 179 Italian start-up companies created during 1995-early 2000 and operating in ICT services markets, this study provides evidence that, in intense industry crises (early 2000-2003), highly work experienced entrepreneurs may pursue an exit strategy and highlights the importance of distinguishing between different types of work experience and different exit routes. In particular, founding teams with highly specific work experience show higher probability of following the M&A route, while a higher level of generic work experience is more conducive to closure.

Keywords: High-tech entrepreneurship; Start-up exit; Founders' human capital; ICT (search for similar items in EconPapers)
JEL-codes: L26 L86 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2009-03
New Economics Papers: this item is included in nep-ent and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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