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Size Really Matters--New Insights for Start-ups' Survival

Author

Listed:
  • Ornit Raz

    (Sloan School of Management, Massachusetts Institute of Technology, E40-339, 77 Massachusetts Avenue, Cambridge, Massachusetts 02139-4307)

  • Peter A. Gloor

    (Sloan School of Management, Massachusetts Institute of Technology, E40-339, 77 Massachusetts Avenue, Cambridge, Massachusetts 02139-4307)

Abstract

This paper presents new evidence regarding a firm's probability for survival, based on the network structure of the firm's managers. We found that start-ups that have larger informal communication networks increased their chance to survive external shock. Original data have been collected from Israeli software start-ups during the dot-com economic growth. About eight years later, we added information about their ability to survive the burst of the dot-com bubble. From a theoretical point of view, this paper highlights the power of the classic social networks approach in explaining organizational performance. From a practical point of view, these findings offer some guidelines for managers of start-ups. Our results show that the size of informal interfirm networks really matters.

Suggested Citation

  • Ornit Raz & Peter A. Gloor, 2007. "Size Really Matters--New Insights for Start-ups' Survival," Management Science, INFORMS, vol. 53(2), pages 169-177, February.
    • Handle: RePEc:inm:ormnsc:v:53:y:2007:i:2:p:169-177
    DOI: 10.1287/mnsc.1060.0609
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    References listed on IDEAS

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