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Are You Experienced? Prior Experience and the Survival of New Organizations

Michael Dahl () and Toke Reichstein ()

Industry and Innovation, 2007, vol. 14, issue 5, 497-511

Abstract: This paper investigates the relationship between the level of pre-entry experience of managers and founders, and the survival of their new firms. Using a comprehensive dataset covering the entire Danish labor market from 1980 to 2000, we are able to trace prior activities of all employees working in all Danish start-ups with at least one employee. We examine whether spin-offs from surviving parents, spin-offs from exiting parents or other start-ups are more likely to survive. Moreover, we investigate whether firms managed and founded by teams with higher levels of industry-specific experience have a higher chance of surviving. We find that spin-offs from a surviving parent and to a lesser degree industry-specific experience positively affects the likelihood of survival. We also find that spin-offs from a parent that exits are less likely to survive than either spin-offs from surviving parents or other start-ups.

Keywords: Organizational routines; pre-entry experience; survival of new firms; spin-offs (search for similar items in EconPapers)
Date: 2007
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