Size Really Matters--New Insights for Start-ups' Survival

Ornit Raz () and Peter A. Gloor ()
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Ornit Raz: Sloan School of Management, Massachusetts Institute of Technology, E40-339, 77 Massachusetts Avenue, Cambridge, Massachusetts 02139-4307
Peter A. Gloor: Sloan School of Management, Massachusetts Institute of Technology, E40-339, 77 Massachusetts Avenue, Cambridge, Massachusetts 02139-4307

Management Science, 2007, vol. 53, issue 2, 169-177

Abstract: This paper presents new evidence regarding a firm's probability for survival, based on the network structure of the firm's managers. We found that start-ups that have larger informal communication networks increased their chance to survive external shock. Original data have been collected from Israeli software start-ups during the dot-com economic growth. About eight years later, we added information about their ability to survive the burst of the dot-com bubble. From a theoretical point of view, this paper highlights the power of the classic social networks approach in explaining organizational performance. From a practical point of view, these findings offer some guidelines for managers of start-ups. Our results show that the size of informal interfirm networks really matters.

Keywords: organizational studies; strategy; communication networks; start-ups (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (27)

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