Work

The survival of newly-incorporated companies and founding director characteristics

Year: 2013

Type: article

Abstract: The founding directors of newly incorporated companies bring social capital (reputation, networks, business relationships) and human capital (task-related, professional and director experience) to a new venture and founding boards vary in degree of heterogeneity (size, diversity, turnover). This paper is exploratory and seeks to uncover new insights relating to the link between the characteristics of the board of directors of newly incorporated firms and the likelihood of company survival in the early years. Hypotheses are tested within a discrete-time duration-dependent (competing risks) hazard model which controls for macro-economic conditions and likely recursive relationships. Analyses of sub-sample marginal effects are used to confirm the magnitude and economic significance of our results. The study utilizes a unique and considerable dataset of over 5.8 million company-year observations (near population) of newly incorporated companies and early stage board characteristics. Results suggest that the background, experience, networking, diversity and composition of new boards are important in determining the trajectory of success/failure of new firms.

Source: International Small Business Journal Researching Entrepreneurship

DOI: 10.1177/0266242613476317

Authors: Nick Wilson, Mike Wright, Ali Altanlar

Institutions: University of Leeds, Ghent University

Language: English

Topic: Entrepreneurship Studies and Influences

Subfield: Management of Technology and Innovation

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

Funder: Economic and Social Research Council

Award: G7706841186