1. Predicting new venture survival and growth: Does the fog lift?
- Author
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Coad, Alex, Frankish, Julian, Roberts, Richard, and Storey, David
- Subjects
NEW business enterprises ,ORGANIZATIONAL performance ,RANDOM walks ,BUSINESS expansion ,STOCKS (Finance) ,MARKET entry - Abstract
This paper investigates whether new venture performance becomes easier to predict as the venture ages: does the fog lift? To address this question we primarily draw upon a theoretical framework, initially formulated in a managerial context by Levinthal (Adm Sci Q 36(3):397-420, ) that sees new venture sales as a random walk but survival being determined by the stock of available resources (proxied by size). We derive theoretical predictions that are tested with a 10-year cohort of 6579 UK new ventures in the UK. We observe that our ability to predict firm growth deteriorates in the years after entry-in terms of the selection environment, the 'fog' seems to thicken. However, our survival predictions improve with time-implying that the 'fog' does lift. [ABSTRACT FROM AUTHOR]
- Published
- 2016
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