Diversification and Survival of Young, Small Firms
Instituto Superior Tecnico, Technical University of Lisbon
Technical University of Lisbon
affiliation not provided to SSRN
February 23, 2012
Young firm diversification is examined investigating whether diversifying firms have higher survival chances. We use extensive longitudinal data containing information on firms’ characteristics and environmental conditions, and their evolution over time. Firms that are born diversified are more likely to survive, suggesting that pre-entry capabilities play an important role in early diversification. Firms diversifying after birth are more likely to survive the older they are at the moment of diversification, suggesting that early diversification may be associated with entry mistakes by firms that have not yet accumulated the required resources and capabilities to diversify successfully.
Number of Pages in PDF File: 38
Keywords: diversification, start-ups, small business, resource-based view, entry mistakes
JEL Classification: M13, L20, M20working papers series
Date posted: February 23, 2012
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