Success Begets Success in Entrepreneurship
No great surprise here, but a Harvard working paper finds that entrepreneurs with a track record of success are much more likely to succeed than first-time entrepreneurs and those who have previously failed. In particular, they exhibit persistence in selecting the right industry and time to start new ventures. Those who have previously failed have a slightly higher subsequent success rate than first-timers, suggesting that they learn something from their failure.
… all else equal, a venture-capital-backed entrepreneur who succeeds in a venture (by our definition, starts a company that goes public) has a 30% chance of succeeding in his next venture. By contrast, first-time entrepreneurs have only an 18% chance of succeeding and entrepreneurs who previously failed have a 20% chance of succeeding.
The paper also finds that entrepreneurs with demonstrated market timing skill are also more likely to outperform industry peers in their subsequent ventures. “This is consistent with the view that if suppliers and customers perceive the entrepreneur to have market timing skill, and is therefore more likely to succeed, they will be more willing to commit resources to the firm. In this way, success breeds success and strengthens performance persistence,” writes Paul Gompers, Professor of Business Administration at Harvard Business School.
Performance Persistence in Entrepreneurship
Paul Gompers, Anna Kovner, Josh Lerner, and David Scharfstein
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