Abstract

Young venture survival is a subject that has attracted the attention of many scholars in recent decades. This topic has been studied from multiple disciplines, with a clear proliferation of studies in the fields of management and economics. According to well known sociologists, not only, industry specific factors (Audretch,1991), location patterns (Fotopulus and Louri, 2000) or firm strategies (Nichols-Nixon et al., 2000) determine venture performance, but also, the social legitimacy of organizations matter to explain why some young ventures survive longer than others.

The choice of a particular legal form at firm inception (i.e. limited liability company, public owned company, or a worker cooperative organization) has important legal implications (Malach et al, 2006), which presumably can influence the odds for survival of a young venture. The extant literature lacks studies that examine the relationship between the choice of a particular legal form at firm start-up and venture survival. The purpose of our study is twofold: firstly, to test the extent to which the choice of a particular legal form at firm inception influences venture survival, and secondly, to conduct a comparative study among firms with different social legitimacy arrangements.

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