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Ability matching and survival of start-ups

Bettina Müller

No 09-041, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: In this paper, I analyse how the survival of new firms is affected by the average ability level in the founding team, the team size, team members' homogeneity with respect to ability, and team members' heterogeneity with respect to education. As a theoretical basis, I apply the O-ring theory (Kremer (1993)). Using a rich employer-employee data set on the whole population of Danish firms founded in 1998, I find that the average ability level in a team and the team size have positive effects on firm survival. Having a team at all is the most crucial factor for the probability of survival of young firms. The degree of homogeneity with respect to ability and the degree of heterogeneity with respect to educations have no effect on the survival probability.

Keywords: Entrepreneurship; firm survival; O-ring theory; start-ups (search for similar items in EconPapers)
JEL-codes: D23 L25 L26 M13 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-ent, nep-lab and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:09041

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