New-Born Startups Performance: Influences of Resources and Entrepreneurial Team Experiences

Abstract

This study examines the interaction effects of entrepreneurial team experiences and resources on new-born startup firm performance, from a contextual view point of entrepreneurship. The sample is from a longitudinal panel data of Kauffman Firm Survey conducted over the period of 2005-2012 by the Ewing Marion Kauffman Foundation. Results suggest that financial resources have positive impacts on startup firms’ profitability; whereas the impacts of initial firm size on profitability are negative. Startups are more likely to be profitable when the firm size is small at the new-born stage. The positive impact of financial resources on profitability is greater when entrepreneurial teams have strong industry experience; whereas entrepreneurial teams’ industry experience and intangible resources have a negative interaction effect on profitability. Entrepreneurial team’s startup experience has most negative interaction effects on new-born startup firms’ profitability. This finding indicates that the entrepreneurial team’s startup experience plays stronger roles in venturing profitable startups when the amount of financial resources and initial firm size are small; however, the team’s startup experience and intangible resources have positive interaction effects on new-born startups’ profitability.