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Size Really Matters: New Insights for Start-Ups' Survival

Ornit Raz and Peter A. Gloor
Management Science
Vol. 53, No. 2 (Feb., 2007), pp. 169-177
Published by: INFORMS
Stable URL: http://www.jstor.org/stable/20110688
Page Count: 9
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Size Really Matters: New Insights for Start-Ups' Survival
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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.

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