The persistence and dynamics of new venture growth

Yan Chen, Michael Song

Research output: Contribution to journalArticlepeer-review

6 Scopus citations

Abstract

Extensive research has suggested that new ventures’ growth rates lack persistence. However, existing studies tend not to differentiate between positive and negative growth rates or examine their respective persistence and dynamics. Building on performance feedback theory, we show that positive and negative growth rates exhibit different dynamics over time. Especially, negative growth rates are less likely to persist and more likely to reverse than positive ones. Furthermore, firm size and team size influence the persistence—or the lack of thereof—of both positive and negative growth rates. Specifically, new ventures that are smaller, as well as those managed by larger teams, are more likely to maintain positive growth and reverse negative growth, relative to their respective counterparts. Overall, this study suggests that positive and negative growth rates differ in their persistence and that new ventures can shape the dynamics of both positive and negative growth.

Original languageEnglish
Pages (from-to)303-322
Number of pages20
JournalSmall Business Economics
Volume58
Issue number1
DOIs
StatePublished - Jan 2022

Keywords

  • Dynamic panel data model
  • Growth dynamics
  • Growth persistence
  • New venture growth
  • Performance feedback

Fingerprint

Dive into the research topics of 'The persistence and dynamics of new venture growth'. Together they form a unique fingerprint.

Cite this