Pre-entry experience, technological complementarities, and the survival of de-novo entrants. Evidence from the US telecommunications industry

Roberto Fontana, Franco Malerba and Astrid Marinoni

Economics of Innovation and New Technology, 2016, vol. 25, issue 6, 573-593

Abstract: We investigate the effect of pre-entry experience on firms’ performance in terms of survival. In particular we focus on entrants from a related upstream industry -- semiconductors -- into a downstream industry -- telecommunications. We examine a sample of 336 de-novo start-ups in the US telecommunication industry and we estimate a discrete time hazard model of firm exit. Our findings show that, after controlling for both firms and founders’ characteristics, firms whose founders had prior experience in a related upstream industry such as semiconductors enjoy a relatively lower hazard of exit with respect to intra-industry spinoffs and other types of start-ups. Additionally, background heterogeneity of the founding team is an important determinant of survival for the firms in our sample. Our results point to the role of interdependences and technological complementarities between two vertically related industries in affecting the performance of new entrants.

Date: 2016
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DOI: 10.1080/10438599.2015.1087687

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