Failing firms and successful entrepreneurs: serial entrepreneurship as a temporal portfolio
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Entrepreneurial performance is almost always confounded with firm performance. In this paper we argue for an instrumental view of the firm by formally showing that entrepreneurs can amplify their expected success rates by designing their careers as temporal portfolios that exploit contagion processes embedded in serial entrepreneurship. The advantages to holding concurrent portfolios that exploit heterogeneity are well known. The same advantages may be achieved in the serial context through contagion. Our model exploits an observation due to William Feller on the near equivalence of the two, statistically speaking. It also leads to empirically plausible implications about the size distribution of firms in the economy and illustrates the relevance of considering firms and entrepreneurs as distinct loci of analysis.
KeywordsSerial entrepreneurship Firm performance Industrial organization Population ecology Labor economics Financial economics
JEL ClassificationsG11 G24 J24 L25 L26
We would like to thank Professor James G. March for taking the time to give us detailed comments on feedback on an earlier version of this paper and the Darden School Foundation and Batten Institute for funding.
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