The persistence and dynamics of new venture growth

Yan Chen () and Michael Song ()
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Yan Chen: Stevens Institute of Technology
Michael Song: Xi’an Technological University

Small Business Economics, 2022, vol. 58, issue 1, No 19, 303-322

Abstract: Abstract Extensive research has suggested that new ventures’ growth rates lack persistence. However, existing studies tend not to differentiate between positive and negative growth rates or examine their respective persistence and dynamics. Building on performance feedback theory, we show that positive and negative growth rates exhibit different dynamics over time. Especially, negative growth rates are less likely to persist and more likely to reverse than positive ones. Furthermore, firm size and team size influence the persistence—or the lack of thereof—of both positive and negative growth rates. Specifically, new ventures that are smaller, as well as those managed by larger teams, are more likely to maintain positive growth and reverse negative growth, relative to their respective counterparts. Overall, this study suggests that positive and negative growth rates differ in their persistence and that new ventures can shape the dynamics of both positive and negative growth.

Keywords: New venture growth; Growth persistence; Growth dynamics; Performance feedback; Dynamic panel data model (search for similar items in EconPapers)
JEL-codes: L26 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11187-020-00411-2

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