FROM BECOMING TO BEING: MEASURING FIRM CREATION

Abstract

Over the past decade, research efforts to address a lack of knowledge concerning the process of firm formation have intensified. Surprisingly, though, measurement of the primary dependent variable has been ignored. In aiming to establish a basis for measuring firm creation, we identify and address three critical deficiencies in the literature: a lack of definition, inappropriate theoretical underpinnings, and, weaknesses in the research design. Beginning with a general meaning of the term 'new firm,' we use a process-oriented event-driven theoretical perspective to propose an operational definition consisting of three key dimensions: recency or newness, a form of organization, and sales. The appropriateness of our proposed multidimensional measure (that also assesses a firm's sustainability) is explored as part of a larger research project studying Canadian nascent entrepreneurs. As members of the Entrepreneurial Research Consortium (ERC) we use standardized methods to identify and track these nascent entrepreneurs over a four year period. Since the research was designed with a capacity to test different theoretical perspectives, the instruments contain a range of items that have been used as indicators of start-up. A comparison of the proposed measure to selected single item measures indicates, among other things, that making the transition from becoming to 'being' a new firm involves meeting two key criteria: being newly operational and being sustainable. Implications, limitations, and suggestions for future research are discussed.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 17 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.