Abstract

Whereas the creation and emergence of high-growth firms are central topics in entrepreneurship research, senior scholars lament the absence of a comprehensive theory to explain and predict this rare phenomenon. Counter to the assumptions of normal distributions and independent observations, we develop hypotheses that entrepreneurial outcomes are distributed according to a powerlaw, where interdependence and extreme outliers have a disproportionate and co-evolutionary effect on the environment. Tests on six different outcome measures within the Panel Study of Entrepreneurial Dynamics II, Kauffman Firm Survey, and Inc. 5000 find that power-law distributions pervade the domain. We use a complexity science perspective to explain these results, which provide an empirically validated foundation for future theory-building efforts.

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