Entry strategies, founder's human capital and start-up size

Abstract

This paper analyses empirically the determinants of new-born firms' initial size. As survival prospects of young firms tend to be linked to start-up size, a better understanding of the factors influencing start-up size is crucial. We find that in addition to industry effects start-up size is considerably influenced by firms' entry strategies. Firms with entry strategies based on the exploitation of new market opportunities exhibit a higher initial size while start-ups established for reasons of necessity appear to start at a smaller scale. Furthermore, founders' human capital is confirmed to be an important predictor of start-up size also in Germany.

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