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Predicting new venture survival and growth: does the fog lift?

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posted on 2023-06-09, 00:58 authored by Alex Coad, Julian S Frankish, Richard G Roberts, David Storey
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, 1991) 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.

History

Publication status

  • Published

File Version

  • Published version

Journal

Small Business Economics

ISSN

0921-898X

Publisher

Springer

Issue

1

Volume

47

Page range

217-241

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2016-04-20

First Open Access (FOA) Date

2016-04-20

First Compliant Deposit (FCD) Date

2016-04-20

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