A startup’s survival may not be a matter of the fittest, but of landing on the best fit.
A study by Florence Honoré, assistant professor of management and human resources at the Wisconsin School of Business, found that startups with a combination of founders with two distinct types of experience had greater odds of survival in the longer term.
Using data from the U.S. Census Bureau’s Longitudinal Employer-Household Dynamics program, Honoré looked at prior work experience for founders who had individually held positions across multiple firms—a concept she coined “within-founder experience variety”—as well as founders who had worked together in the same company in the same industry as their startup, or “shared experience.”
In this model, each group brings to the table its specific strength from its prior experience. The new venture benefits from the innovation and skills of founders who have gained expertise across a breadth of firms, as it also does from founders who come from a single “incumbent” firm and can offer their common knowledge and routines. Joined together, the two founder groups hedge against failure, creating a greater likelihood of startup success.
Interestingly, the study findings flipped for founders with experience variety alone. They were found to have higher rates of failure on their own.
Rosy venture success stories and the “sky’s-the-limit” potential of entrepreneurship as a field are often touted, but survival is widely studied in startup literature for a reason, says Honoré, whose own research also examines areas such as hiring, managerial practices, and alliances, in the context of founders’ prior work experiences.
“Startup survival is the necessary condition for any success dreams entrepreneurs might have. Choosing carefully their co-founders will determine the startup’s fate. In my study, I identify a crucial dimension in the founding team: founders who can combine a variety of prior experiences with a shared experience from the same previous employer will see their startup survive longer.”
Watch the video abstract:
Read the paper: Honoré, F. Joining Forces: How Can Founding Members’ Prior Experience Variety and Shared Experience Increase Startup Survival? published in Academy of Management Journal.
Florence Honoré is a 2021 recipient of the Erwin A. Gaumnitz Distinguished Junior Faculty Research Award and an assistant professor in the Department of Management and Human Resources at the Wisconsin School of Business.