Pre-Entry Knowledge, Learning, and the Survival of New Firms
Open accessAbstract
New firms are endowed with knowledge and experience at birth through the human capital of their founder(s). Existing empirical research suggests that this pre-entry knowledge and experience will influence the firm's chances of survival; however, the mechanisms underlying this relationship have yet to be investigated. We seek to better understand and unpack this relationship. Specifically, we study the extent to which a founder's pre-entry knowledge of the business activity and pre-entry management experience influence the effectiveness of two subsequent learning activities—namely, early-stage business planning and product-line change. Our findings suggest that pre-entry knowledge and management experience increase firm survival through moderating the effects of these subsequent learning activities. We also find that learning activities are not always beneficial; in our sample, early-stage business planning is associated with decreased firm survival, and product line change is associated with increased firm survival. We examine these patterns using survey data collected from 436 individuals in the Munich region who founded their own firms as an alternative to continued unemployment. Our results have theoretical implications for the entrepreneurship, evolutionary economics, and organizational learning literatures.
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For necessity entrepreneurs who experience a persistent lack of resources and are marginalized in business, a fixed mindset may limit the likelihood that they will possess sufficient entrepreneurial self-efficacy to try new ways of doing things.
“Thus, for necessity entrepreneurs who experience a persistent lack of resources, and who tend to be marginalized in the world of business, a fixed mindset may limit the likelihood that they will possess sufficient entrepreneurial self-efficacy that would aid in the willingness to try new ways of doing things that can be seen as difficult or not guaranteed to work (Dencker et al., 2009).”
From The impact of growth mindset training on entrepreneurial action among necessity entrepreneurs: Evidence from a randomized control trial (2023) · cites this paper as Dencker et al., 2009
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Are formal planners more likely to achieve new venture viability
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“Evaluating progress against key targets is particularly important when faced with crucial decisions such as the deployment of capital equipment (Grinyer et al., 1986) or the opportune time for employing staff (Dencker et al., 2009b).”
InfluentialRecession and firm survival: is selection based on cleansing or skill accumulation?
Bartoloni, E., Arrighetti, A., & Landini, F. (2020) · Small Business Economics · doi:10.1007/s11187-020-00378-0 · Cited by 34 · see citing works
The state of opportunities: clarifying the transitions between opportunity types
Welter, C., & Alvarez, S. (2015) · Management Decision · doi:10.1108/md-07-2014-0466 · Cited by 34 · see citing works
Assenova, V., & Amit, R. H. (2024) · Strategic Management Journal · doi:10.1002/smj.3581 · Cited by 53 · see citing works
“…complements and builds upon prior research on the role of founders' pre-entry knowledge and experience in startup performance (Cao & Posen, 2023; Dencker et al., 2009) by showing that the benefits of accelerator participation — and the impact of knowledge-building programming within…”
ResultThe Liability of Volatility and How it Changes Over Time Among New Ventures
Lundmark, E., Coad, A., Frankish, J., & Storey, D. (2020) · Entrepreneurship: Theory & Practice · doi:10.1177/1042258719867564 · Cited by 32
“The education of the founder (Parker, 2018) and also the amount of previous (personal or parental) business experience (Gimeno et al.,1997; Dencker et al., 2009) are seen by some to capture different dimensions of human capital, and perhaps higher levels of entrepreneurial skills and capabilities,…”
BackgroundHabersetzer, A., Rataj, M., Eriksson, R., & Mayer, H. (2020) · Regional studies · doi:10.1080/00343404.2020.1826038 · Cited by 31 · see citing works
“Organizational routines are a specific type of tacit knowledge (Boschma & Frenken, 2006), which is acquired through work experience, and is understood to influence the chance of firm survival (Dencker et al., 2009).”
BackgroundThe unshackled entrepreneur: Occupational determinants of entrepreneurial effort
Laffineur, C., Barbosa, S. D., Fayolle, A., & Montmartin, B. (2020) · Journal of Business Venturing · doi:10.1016/j.jbusvent.2019.105983 · Cited by 31 · see citing works
Predicting the growth of high-growth SMEs: evidence from family business firms
Megaravalli, A. V., & Sampagnaro, G. (2019) · Journal of Family Business Management · doi:10.1108/jfbm-09-2017-0029 · Cited by 31
Clayton, P. (2024) · Research Policy · doi:10.1016/j.respol.2024.104975 · Cited by 30 · see citing works
Mardikaningsih, R., & Arifin, S. (2021) · Journal of Social Science Studies (JOS3) · doi:10.56348/jos3.v1i1.7 · Cited by 30
“Previous studies have stated that knowledge-based factors influence a person's propensity to become an entrepreneur (Dencker et al., 2009; Ghio et al., 2015).”
BackgroundZhan, S., Uy, M. A., & Hong, Y. (2020) · Entrepreneurship Theory and Practice · doi:10.1177/1042258720952291 · Cited by 36 · see citing works
“…al., 2009), benefits new venture processes and outcomes ranging from sales performance (Delmar & Shane, 2006) and new venture success (Stuart & Abetti, 1990) to longevity of the next business opened (Lafontaine & Shaw, 2016) and overall survival rates (Brüderl et al., 1992; Dencker et al., 2009).”
BackgroundMarvel, M. R., Wolfe, M., Kuratko, D., & Fisher, G. (2020) · Journal of Small Business Management · doi:10.1080/00472778.2020.1762626 · Cited by 30 · see citing works
“Conversely, other scholars and practitioners emphasize that entrepreneurs are best served if they launch a venture as soon as possible so that they might learn from market reactions and customer feedback after the launch (Dencker et al., 2009).”
BackgroundLinking vertically related industries: entry by employee spinouts across industry boundaries
Adams, P., Fontana, R., & Malerba, F. (2019) · Industrial and Corporate Change · doi:10.1093/icc/dtz014 · Cited by 29 · see citing works
The Advocacy Trap: When Legitimacy Building Inhibits Organizational Learning
Zuzul, T., & Edmondson, A. (2017) · Academy of Management Discoveries · doi:10.5465/amd.2015.0086 · Cited by 29 · see citing works
Human capital, institutions, and ambitious entrepreneurship during good times and two crises
Epure, M., Martin-Sanchez, V., Aparicio, S., & Urbano, D. (2023) · Strategic Entrepreneurship Journal · doi:10.1002/sej.1492 · Cited by 26 · see citing works
Hopp, C., & Martin, J. (2017) · doi:10.1080/08985626.2017.1299224 · Cited by 26
“If experience, for example, affects the likelihood of self-employment and the subsequent earnings generated simultaneously, the error terms of the decision to become self-employed are correlated with the outcome regression (earnings) (Dencker, Gruber, and Shah 2009; Unger et al. 2011).”
MethodDeGeest, D., Follmer, E. H., Walter, S. L., & O’Boyle, E. H. (2015) · Journal of Management · doi:10.1177/0149206315569313 · Cited by 26 · see citing works
“The education of the founders indicates a stock of high-quality, well-trained human capital, which can serve as a key resource for a firm (Brüderl, Preisendörfer, & Ziegler, 1992; Cooper et al., 1994; Dencker et al., 2009; Gimeno et al., 1997).”
BackgroundRetractedGately, C., & Cunningham, J. A. (2014) · doi:10.1108/s1074-754020140000016007 · Cited by 26
- Authors
- Dencker, J. C., Gruber, M., & Shah, S. K.
- Affiliations
- University of Illinois Urbana-Champaign (US)
- École Polytechnique Fédérale de Lausanne (CH)
- University of Washington (US)
- Venue
- Organization Science
- Published
- 2009-06
- Volume
- 20
- Issue
- 3
- Pages
- 516-537
- ISSN
- 1047-7039 (ISSN-L)
- 1526-5455
- OpenAlex
- W2166346994
- Cited by
- 369
- References
- 0
- Citations by year
- 2026: 11 · 2025: 19 · 2024: 28 · 2023: 35 · 2022: 21 · 2021: 35 · 2020: 29 · 2019: 22 · 2018: 24 · 2017: 16 · 2016: 26 · 2015: 22 · 2014: 22 · 2013: 23 · 2012: 11
- FWCI
- 14.18
- Type
- journal article
- Language
- en
- Open access
- green
- infoscience.epfl.ch
- Locations
- Organization Science (publishedVersion)
- Infoscience (Ecole Polytechnique Fédérale de Lausanne) (submittedVersion)
- Infoscience (Ecole Polytechnique Fédérale de Lausanne) (submittedVersion, cc-by-nc-nd)
- Topics
- Social Sciences › Business, Management and Accounting › Management of Technology and Innovation › Entrepreneurship Studies and Influences
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Firm Innovation and Growth
- Social Sciences › Business, Management and Accounting › Strategy and Management › Innovation and Knowledge Management
- Keywords
- new firm survival, founder human capital, managerial experience, organizational learning, entrepreneurship, moderating effect, self-employment
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