 New venture survival and growth: does the fog lift?Alex Coad (),
David J Storey (),
Richard G Storey and
Julian S Frankish
No 2013/36, Working Papers from Institut d'Economia de Barcelona (IEB) Abstract: Does our ability to predict the performance of new ventures improve in the years after start-up? We investigate the growth and survival of 6247 new ventures that are tracked using the customer records at Barclays Bank. We put forward Gambler’s Ruin as a simple theory for understanding new venture growth and survival. Gambler’s Ruin predicts that the R2 remains low for growth rate regressions, but that the R2 increases in the years since start-up for survival regressions. The Nagelkerke R2 obtained from growth rate regressions decreases significantly in the years after start-up, which suggests that the fog gets thicker with respect to growth. When we focus only on firms surviving until the end of the period, however, there is no visible change in the R2 over time. In contrast, the Nagelkerke R2 of survival regressions increases in the years after start-up. Interestingly, a blip in year 5 suggests that macro-economic factors may have a strong effect on the amount of ‘fog’. Keywords: Entrepreneurship; firm growth; survival; exit probability; coefficient of determination; selection environment; Gambler’s Ruin theory; Strategic Entrepreneurship; cohort study (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ieb:wpaper:doc2013-36 Access Statistics for this paper More papers in Working Papers from Institut d'Economia de Barcelona (IEB) Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.