Is Success Hereditary? Evidence on the Performance of Spawned Ventures
Centre for European Economic Research (ZEW)
Universite du Luxembourg; Catholic University of Leuven (KUL); Centre for European Economic Research (ZEW)
Boris F. Blumberg
Maastricht University - Business Investment Research Center (BIRC)
Maastricht University, School of Business and Economics
May 1, 2013
Small Business Economics 40, 911-931
A common phenomenon in entrepreneurship is that employees turn away from employment to found their own businesses. Prior literature discusses the former employers’ characteristics that influence the creation of entrepreneurial ventures. An investigation of whether these characteristics also affect the success of the spawned ventures is missing so far. This paper contributes to the literature by showing that entrepreneurial ventures spawned by well performing firms are financially more successful than ventures stemming from bad performing firms. This suggests that spawned entrepreneurs are able to exploit valuable knowledge from their previous employers which impacts their ventures’ performance positively. The analysis is based on a linked employee-employer dataset for the Netherlands for the period 1999-2004.
Keywords: entrepreneurship, entrepreneurial spawning, start-ups, firm performance
JEL Classification: L26, M13, L25
Date posted: June 24, 2011 ; Last revised: May 16, 2013
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