1 Introduction
2 Theory development
The Levinthal (1991) model also puts forward that the amount of the assets is determined by two factors—past performance and initial resources. We assume that access to more financial resources improves the chances of survival. However, there are two key respects in which the assets of the new venture differ from that in an established firm. The first is that, in an established venture, the assets primarily comprise those accumulated over time, whereas those available to the new venture are considerably more likely to be those in place when the venture begins. Second, in an established firm the accumulated assets constitute a ‘track-record’ which can help internal and external parties assess future performance, whereas no such record exists for a new venture. This is particularly problematic for external suppliers of finance—banks, trade creditors—who then seek ‘signals’ of credibility, such as collateral (Voordeckers and Steijvers 2006).While variation in competence should shift the mean of the possible distribution of outcomes, and perhaps the variance as well, the presence or absence of competence does not fundamentally alter the stochastic nature of the process.
3 Hypotheses derivation
3.1 Growth
3.2 Survival
4 Testing for changes in the density of the fog
5 The dataset: Barclays bank customer accounts
5.1 Start-up: definition
5.2 Start-up: data
5.3 Ongoing data
5.4 Exit and closure
5.4.1 Dependent variables
5.4.2 Independent variables
5.5 Summary statistics
Mean | SD | 10 % | 25 % | Median | 75 % | 90 % | Obs. | |
---|---|---|---|---|---|---|---|---|
Sales | ||||||||
Year 1 | 114,095 | 508,678 | 5475 | 14,687 | 38,712 | 103,658 | 260,652 | 5524 |
Year 2 | 144,319 | 546,146 | 5547 | 16,529 | 44,524 | 124,414 | 323,178 | 4162 |
Year 3 | 168,352 | 645,409 | 5222 | 17,253 | 47,855 | 138,347 | 373,255 | 3211 |
Year 4 | 183,939 | 542,018 | 5438 | 18,532 | 51,964 | 158,026 | 428,499 | 2593 |
Year 5 | 190,217 | 552,839 | 5945 | 17,996 | 51,168 | 152,264 | 451,445 | 2152 |
Year 6 | 192,157 | 706,588 | 5239 | 17,517 | 47,924 | 147,866 | 453,727 | 1823 |
Year 7 | 213,050 | 938,730 | 5700 | 18,475 | 53,019 | 161,941 | 512,618 | 1604 |
Year 8 | 253,250 | 1,333,538 | 6668 | 19,516 | 58,134 | 177,112 | 577,178 | 1424 |
Year 9 | 277,643 | 1,640,798 | 6533 | 19,274 | 57,258 | 180,390 | 595,597 | 1311 |
Year 10 | 300,699 | 2,046,271 | 6860 | 22,673 | 64,989 | 196,821 | 592,880 | 1208 |
Sales growth | ||||||||
Year 1 | – | – | – | – | – | – | – | – |
Year 2 | −0.055 | 0.940 | −0.964 | −0.270 | 0.053 | 0.356 | 0.753 | 4162 |
Year 3 | −0.133 | 0.946 | −1.001 | −0.303 | 0.022 | 0.240 | 0.566 | 3211 |
Year 4 | −0.110 | 0.864 | −0.873 | −0.280 | 0.013 | 0.226 | 0.503 | 2593 |
Year 5 | −0.189 | 0.907 | −0.991 | −0.378 | −0.067 | 0.135 | 0.427 | 2152 |
Year 6 | −0.221 | 0.833 | −0.864 | −0.368 | −0.080 | 0.086 | 0.359 | 1823 |
Year 7 | −0.089 | 0.772 | −0.696 | −0.207 | 0.005 | 0.185 | 0.475 | 1604 |
Year 8 | −0.055 | 0.698 | −0.593 | −0.198 | 0.000 | 0.184 | 0.458 | 1424 |
Year 9 | −0.078 | 0.731 | −0.592 | −0.222 | −0.022 | 0.147 | 0.436 | 1311 |
Year 10 | −0.037 | 0.678 | −0.518 | −0.175 | 0.020 | 0.203 | 0.484 | 1208 |