Industry and Startup Experience on Entrepreneur Forecast Performance in New Firms

Abstract:     
I theoretically develop and empirically investigate the role of industry and startup experience on the forecast performance of 2,304 entrepreneurs who have started new businesses. Using the Kauffman Firm Survey I show that industry experience is associated with more accurate and less biased entrepreneur expectations. Further, the benefit of industry experience on entrepreneurial forecast performance is greater in high-technology industries. These findings are consistent with knowledge of the setting informing entrepreneurial decision making, especially in highly uncertain environments. However, in contrast to the prevailing view in the literature, I find no significant evidence that startup experience improves entrepreneurial forecast performance.

Keywords: bias, entry, entrepreneur, expectations, experience, forecasting, growth, new firms, technology

JEL Classification: D80, D83, D84, M13

Accepted Paper Series