IVS seminar

Abstract

This paper investigates the relationship between inherited organizational routines of managers and founders, and the likelihood of survival of their new firms. We take advantage of a comprehensive dataset covering the entire Danish labor market from 1980-2000. This is used to trace the activities of top ranked members of start-ups prior to their founding, and follow the fate of these firms. We compare the survival of spin-offs from surviving parents, spin-offs from exiting parents, and other start-ups. Moreover, we investigate whether firms managed and founded by teams that have a longer experience in their parent organization are more likely to survive. Distinguishing between survivors and firms that have been acquired, we find that spin-offs from a surviving parent company positively affects the likelihood of survival. We also find that teams with relatively longer experience are more likely to survive, because they have a stronger organizational heritage from their parent firms. These findings support the theoretical arguments that organizational heritage is important for the survival of new organizations.