The relationship between an entrepreneur's background and performance in a new venture

Abstract This paper examines how an entrepreneur's background relates to the performance of a new venture during the early stages, which has been a controversial issue in entrepreneurship research. This research is based on the data collected from 48 new start-up firms in Korea. The results of the analysis show that the relative profit tends to be high when an entrepreneur has more education and experience in the line of business. On the other hand, the profitability tends to be low when the entrepreneur has only start-up, managerial and high-growth experience without an educational background. A similar effect is shown in the growth of the firm. The positive effect is on growth if an entrepreneur has a professional knowledge of the product, which is gained through previous work experience related to that product. If the entrepreneur has start-up, managerial and high-growth experience, but lacks a knowledge of business, this results in a rather negative effect on the growth. The implications are that a good understanding of the product is essential to the success of the venture, whereas starting a new business with only limited previous experience related to the management dimension can be dangerous and may lead a firm to be unsuccessful.

[1]  Albert V. Bruno,et al.  Success among high-technology firms , 1977 .

[2]  Darab B. Unwalla,et al.  The enterprising man , 1964 .

[3]  Robert H. Keeley,et al.  Management, strategy, and industry structure as influences on the success of new firms: a structural model , 1990 .

[4]  Howard E. Aldrich,et al.  Personal and Extended Networks Are Central to the Entrepreneurial Process , 1991 .

[5]  Raymond W. Smilor,et al.  The Art and Science of Entrepreneurship , 1986 .

[6]  Raymond W. Smilor,et al.  Chaos and the entrepreneurial process: Patterns and policy implications for technology entrepreneurship , 1991 .

[7]  Tyzoon T. Tyebjee,et al.  Venture capital: Investor and investee perspectives , 1984 .

[8]  Robert H. Keeley,et al.  Predictors of success in new technology based ventures , 1990 .

[9]  Peter Rosko,et al.  Management factors contributing to the success or failure of new small manufacturers , 1967 .

[10]  Ken G. Smith,et al.  Selecting Methodologies for Entrepreneurial Research: Trade-offs and Guidelines , 1989 .

[11]  Juan B. Roure,et al.  Linking Prefunding Factors and High-Technology Venture Success: An Exploratory Study , 1986 .

[12]  Carolyn Y. Woo,et al.  Entrepreneurs' perceived chances for success , 1988 .

[13]  Ian C. MacMillan,et al.  Criteria distinguishing successful from unsuccessful ventures in the venture screening process , 1987 .

[14]  W. Gartner.  Some Suggestions for Research on Entrepreneurial Traits and Characteristics , 1989 .

[15]  Ian C. MacMillan,et al.  Effects of strategy and environment on corporate venture success in industrial markets , 1991 .

[16]  P. A. Abetti,et al.  Impact of entrepreneurial and management experience on early performance , 1990 .

[17]  Charles W. Hofer,et al.  Improving New Venture Performance: The Role of Strategy, Industry Structure, and the Entrepreneur , 1987 .

[18]  John E. Ettlie,et al.  Firm size and product innovation , 1987 .

[19]  William B. Gartner,et al.  A profile of new venture success and failure in an emerging industry , 1990 .

[20]  Tyzoon T. Tyebjee,et al.  A Model of Venture Capitalist Investment Activity , 1984 .

[21]  David J. Miller,et al.  The Correlates of Entrepreneurship in Three Types of Firms , 1983 .

[22]  Roger Hudson,et al.  Designing New Business Startups: Entrepreneurial, Organizational, and Ecological Considerations , 1984 .

[23]  W. Gartner.  “Who Is an Entrepreneur?” Is the Wrong Question , 1988 .

[24]  K. Vesper,et al.  Encyclopedia of Entrepreneurship , 1982 .

[25]  Ian C. MacMillan,et al.  Criteria Used by Venture Capitalists to Evaluate New Venture Proposals , 1985 .

[26]  K. Vesper.  New venture strategies , 1979 .

[27]  Angelo S. DeNisi,et al.  Modeling new venture performance: An analysis of new venture strategy, industry structure, and venture origin☆ , 1992 .

[28]  Pier A. Abetti,et al.  Start-up ventures: Towards the prediction of initial success , 1987 .

[29]  R. Brockhaus.  The Psychology of the Entrepreneur , 1982 .

[30]  Edward B. Roberts,et al.  Entrepreneurship and Technology: A basic study of innovators; how to keep and capitalize on their talents , 1968 .