Early Employment Expansion and Long-run Survival: Examining Employee Turnover as a Context Factor

Pernille Gjerløv-Juel and Christina Guenther (2019). "Early employment expansion and long-run survival: examining employee turnover as a context factor". Journal of Business Venturing, Volume 34, Issue 1,Pages 80-102. DOI: 10.1016/j.jbusvent.2018.05.005

Posted: 30 Mar 2012 Last revised: 10 Jan 2019

See all articles by Pernille Gjerløv-Juel

Pernille Gjerløv-Juel

Aalborg University - Department of Business and Management

Christina Günther

WHU - Otto Beisheim School of Management

Date Written: 2019

Abstract

We investigate under which circumstances early employment growth translates into greater long-run survival. Drawing on Penrose's growth theory, we suggest that the relationship between early employment growth and long-run survival is conditional on employee turnover. We argue that higher employee turnover reduces joint experience in the firm and disrupts the development and eventual exploitation of the firm's productive opportunity set, thereby reducing long-term utilization of early employment expansion. These arguments suggest that the firm's ability to realize long-term benefits of early employment growth is contingent upon low employee turnover following this initial expansion. Using the Danish Integrated Database for Labor Market Research, we show that only when employee turnover is low, will early employment growth lead to higher survival in the long run.

Keywords: Growth, Survival, Employees, Turnover, New ventures

Suggested Citation

Gjerløv-Juel, Pernille and Guenther, Christina, Early Employment Expansion and Long-run Survival: Examining Employee Turnover as a Context Factor (2019). Pernille Gjerløv-Juel and Christina Guenther (2019). "Early employment expansion and long-run survival: examining employee turnover as a context factor". Journal of Business Venturing, Volume 34, Issue 1,Pages 80-102. DOI: 10.1016/j.jbusvent.2018.05.005, Available at SSRN: https://ssrn.com/abstract=2016798 or http://dx.doi.org/10.2139/ssrn.2016798

Pernille Gjerløv-Juel (Contact Author)

Aalborg University - Department of Business and Management ( email )

Denmark

Christina Guenther

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

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