SURVIVAL CHANCES OF NEWLY FOUNDED BUSINESS ORGANIZATIONS

Human capital theory and organizational ecology offer a comprehensive set of factors that influence the mortality of newly formed business organizations. Human capital theory identifies individual characteristics of the founder as important prerequisites for survival. Organizational ecology emphasizes organizational characteristics and environmental conditions. We test basis hypotheses derived from both theories using retrospective data from a survey of 1,849 business founders in Germany. Organizational characteristics, especially number of employees and amount of capital invested, and organizational strategies, especially businesses aiming at a national market, are the most important determinants of business survival. The human capital characteristics of the founder, especially years of schooling and work experience and industry-specific experience, show strong direct and indirect effects as well.