This paper was presented at the 2009 Academy of Management Conference in Chicago, Illinois.
What are the organizational factors that influence performance variability?
For nascent firms, potential for extreme outcomes matters, sometimes more than outcomes on average. Extreme outcomes can be driven both by average and variability effects. Few organizational factors are known to influence performance variability.
Objectives of the research
In the context of nascent firms, discover the organizational factors that influence performance variability and whether those have extreme effects accordingly
- Continuous measures of performance: Net Profit (logged, and signed) at t4
- Measures of extremely low performance: permanently stopped firms at t4 + dummies to distinguish depth of failure (ranking on losses + value of time)
- Measures of extremely high performance: received investments from external sources (VCs, angels, corporate investors) anytime between t1 and t4 + dummies to distinguish height of success (ranking on amount raised)
- Equity raised at t0
- Number of founders at t0
- Whether the firms hires employees at t0
- Whether founder was female
- Whether founder had previous startup experience
- Industry dummies (2-digits NAICS)
- MLE modeling jointly mean and average effects, stratified
- Stratified Logit on each dependent binary variable
- Success in high outcomes: fund raising from premium investors (angels, VC, corp.), at 12% over 3 years
- Success in low extreme outcomes: survival, at 82% after 3 years
- Additional dummies are created by ranking top and extreme performers
- Effects are expected according to risk
- Variability effects mainly on organizational factors
- Mean effects mainly on industry dummies
- Factors influencing risk have consistent effects on extremes
- Except experienced entrepreneurs avoid catastrophes
- Organizational Factors influencing mean have consistent effects on extremes
- Industry factors influencing mean have inconsistent effects on extremes
- Different outcomes can be distinguished
- Considering effects on variability (risk) explains contradictions, of interest to entrepreneurship
- Firm vs. industry effects?
- Substantive paper on resource effects
- Literature: existing studies predicting effects (mean, funding, bankruptcy) of equity and founder # ?
- Literature: existing studies predicting variability and/or extreme effects?
- Performance vs. outcomes
- Substantive contribution (resource curse? Entrepreneurship? OT? Method?)
- Is correlation with resource and depth of failure spurious?
In "Related Documents" on the right, the PowerPoint of this presentation represents the a more thorough analysis of the research than the description below. .