Early Employment Expansion and Long-run Survival: Examining Employee Turnover as a Context Factor
Pernille Gjerløv-Juel and Christina Guenther (2019). "Early employment expansion and long-run survival: examining employee turnover as a context factor". Journal of Business Venturing, Volume 34, Issue 1,Pages 80-102. DOI: 10.1016/j.jbusvent.2018.05.005
Posted: 30 Mar 2012 Last revised: 10 Jan 2019
Date Written: 2019
We investigate under which circumstances early employment growth translates into greater long-run survival. Drawing on Penrose's growth theory, we suggest that the relationship between early employment growth and long-run survival is conditional on employee turnover. We argue that higher employee turnover reduces joint experience in the firm and disrupts the development and eventual exploitation of the firm's productive opportunity set, thereby reducing long-term utilization of early employment expansion. These arguments suggest that the firm's ability to realize long-term benefits of early employment growth is contingent upon low employee turnover following this initial expansion. Using the Danish Integrated Database for Labor Market Research, we show that only when employee turnover is low, will early employment growth lead to higher survival in the long run.
Keywords: Growth, Survival, Employees, Turnover, New ventures
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