Determinants of new firm success

Abstract

The differences between new firms, even the differences present right at the start, may affect their life course and success over time. This article addresses the determinants of success of Dutch start-ups from a longitudinal perspective. After an overview of the literature on both the definition of success and the success factors of new firms we test how new firm characteristics relate to firm growth in number of employees using a panel of nearly 2,000 firms. In addition to a large firm size right from the start, good preparation, having a business partner, and some years in salaried employment also enhance firm growth. Based on these success determinants we construct a typology of starters that may be used to predict future growth chances. JEL classification: D21, M13, R30

Small firm growth in a post-conflict environment: the role of human capital, institutional quality, and managerial capacities

“…The legal type of business is not a significant factor in explaining small firm growth in different sectors and for different sizes (H 3 not supported). Findings partially support (only for manufacturing firms, H 7 partially supported), previous research suggesting that firms funded by an entrepreneurial team are more likely to grow faster in comparison to those funded by an individual (Schutjens and Wever 2000). One possible explanation for this finding is that manufacturing firms benefit from engaging in rather larger investment projects needing large funds which are made possible by a larger group of investors, compared to their counterparts in the services and trade.…”

“…The synergy effects of the knowledge of founders, especially in teams with those members who have complementary skills (Corbett 2007). The synergy effect expands knowledge, increases managerial capabilities and in addition to the knowledge synergy the partners may act as a signalling for potential creditors and lenders of the seriousness and economic strength of the business leading to higher growth (Schutjens and Wever 2000;Pasanen and Laukkanen 2006). Thus, the following hypothesis states: H 7 : Growth is positively associated with the entrepreneurial teams…”

Individual, organizational and environmental determinants of new firm employment growth: evidence from Latin America

“…However, evidence is not conclusive with regard to the effect of firm location on growth (Almus & Nerlinger, 1999;Brixy & Kohaut, 1999;McPherson, 1996;Schutjens & Wever, 2000;Storey, 1994). Furthermore, Hoogstra and van Dijk (2004) found that the effect of location differs by the type of economic activity.…”

“…The presence of an entrepreneurial team has also been shown to have a positive influence on growth. Evidence suggests that new ventures founded by a team are more likely to grow faster than those founded by an individual (Almus & Nerlinger, 1999;Schutjens & Wever, 2000;Storey, 1994).…”

The shadow of death: do regional differences matter for firm survival across native and immigrant entrepreneurs?

“…The explanation for this positive relationship is twofold. First, there are factors inherent in newly established enterprises that limit their average life expectation (Schutjens and Wever 2000), and lead to the 'revolving door' regime described by Audretsch and Fritsch (1992). Second, newly founded companies compete with existing firms and force them to adapt or even to close, although closures of established enterprises are less frequent than the displacement of young firms by new ones.…”