New venture creation is an important driver of both job growth and innovation in the U.S. economy (Birch, 1979; Acs and Audretsch, 1988). Yet, among those firms that become up-and-running business, many never grow beyond the founder’s intention to supplement other income or live a certain life-style (Reynolds and Curtin, 2007). Taken individually, it is unlikely that these types of ventures will significantly impact the greater economy.
Recent attention has therefore focused on the importance of “high impact” firms (Acs, 2008). These firms are few in number, yet they create a disproportionately greater number of jobs and make greater contributions to GDP. Investigations into firm sizes in the U.S. reveal that their distribution follows a power, or scaling law – as firm size increases, their number decreases exponentially (Axtell, 2001; 2006). These high impact firms reside in the “fat tail” of highly skewed distribution curves where “inequalities are such that one single observation can disproportionately affect the aggregate” (Taleb, 2007).
This study attempts to identify high performing new ventures in the United States, determine whether these firms qualify as “extreme events,” and investigates differences among the high-performers and other start-up attempts.
Frid, Casey J. and Wyman, David M.
"FAT-TAILED DISTRIBUTIONS: A LOOK AT HIGH PERFORMING NEW VENTURES (SUMMARY),"
Frontiers of Entrepreneurship Research: Vol. 30
, Article 3.
Available at: http://digitalknowledge.babson.edu/fer/vol30/iss14/3