Is It All About Who You Know? Prior Work Connections and Entrepreneurial Success
Sarada and
Oana Tocoian
ILR Review, 2019, vol. 72, issue 5, 1200-1224
Abstract:
This article studies how prior professional connections among founding employees predict a new firm’s short- and medium-term success. The authors apply three employment network measures to a large employer–employee matched Brazilian panel data set to find that network structures are strongly predictive of both firm survival and growth. All else equal, new firms with previously connected founding employees experience higher survival odds but slower early growth. Results suggest that working with former co-workers confers benefits such as resolved informational asymmetries, increased resource sharing, and nonpecuniary gains—qualities that are vital to new firm survival. High growth, however, likely benefits from a more varied resource set, facilitated by drawing on individuals from a multiplicity of employment backgrounds. In addition, the absence of prior ties may itself render the profit motive dominant, thereby increasing growth. Results are consistent across most sectors, initial firm sizes, and other sample selection criteria.
Keywords: entrepreneurship; employee networks; firm performance; founding teams (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0019793919835550 (text/html)
Related works:
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:sae:ilrrev:v:72:y:2019:i:5:p:1200-1224
DOI: 10.1177/0019793919835550
Access Statistics for this article
More articles in ILR Review from Cornell University, ILR School
Bibliographic data for series maintained by SAGE Publications ().