The Effect of Prior Joint Work Experience on New Venture Performance
26 Pages Posted: 27 Sep 2012 Last revised: 20 Mar 2013
Date Written: November 23, 2012
Previous research has proposed a range of factors that can assist in overcoming the challenges that explain the mortality rate of new ventures. The underlying premise of this liability of newness argument is that the lack of social interaction and social structures result in higher risk of failure but that this risk decreases as the organization ages. However, these previous studies mainly list non-social factors, e.g., firm environment, firm strategy, and individual characteristics. The purpose of this article is to address this phenomenon by focusing on prior co-worker experience. I propose that this pre-founding experience can overcome: (i) the lack of an organizational culture, (ii) the lack of internal social capital, and (iii) the lack of routines in coordinating co-workers’ activities. By using the Danish employer- employee register I am able to investigate the effect of prior co-worker experience in more detail. Based on a large and generalizable sample of 4,219 new ventures I find that priorco-worker experience has a positive effect on survival and growth.
Keywords: Entrepreneurial Teams, Co-worker experience, survival, growth
JEL Classification: L26, L25, D23
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