Heritage of Employee Startups: Founder Experiences and Survival of New Firms

Recent studies have highlighted the superior performance of intra-industry spin-offs over both diversifying firms and other de novo entrants. It is often argued that superior knowledge endowments of founders are the explanation of these findings. However, the evidence is still very preliminary. We investigate this further using a detailed dataset covering the entire Danish economy by introducing a proxy for knowledge accumulation of founders, i.e. their previous employer tenure, in a study of the performance of 8,000 new firms across various industries. We find that both proxies significantly influences the performance of spin-offs, which supports that argument that knowledge accumulation could be the explanation for the superior performance of spin-offs.