Abstract

Business start-ups typically lack prior history and reputation, generate low internal cash flows and are often unable or unwilling to attract sufficient external financing. These characteristics make it difficult for new ventures to acquire the necessary resources for their development and growth. We propose that initial resource endowments may help to overcome these difficulties by imprinting their mark on a firm’s strategy and ultimately on firm development. This study examines the extent to which initial financial, human and social capital predicts the probabilities of firm survival and, conditional on surviving, firm growth. We expand the existing stream of research that explores the effect of entrepreneur characteristics on start-up performance (e.g. Burke et al., 2001; Taylor, 2001; Colombo et al., 2004; Astebro and Bernhardt, 2005) by integrating financial capital, generic and specific human capital and bridging and bonding social capital in one model.

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