Ratio Working Paper No. 205: Untangling the relationships among growth, profitability and survival in new firms

PublicationWorking paper

Alexander McKelvie, Företagandets villkor, Företagsöverlevnad, Frédéric Delmar, Karl Wennberg, Lönsamhet, Nya företag, Tillväxt

Ratio Working Paper No. 205

Download

Abstract

The performance of new firms is important for economic development but research has produced limited knowledge about the key relationships among growth, profitability, and survival for new firms. Based on evolutionary theory, we develop a model about how new firms resolve uncertainty about their ability to prosper in a market by monitoring changes in profitability. Our model predicts selection pressures to weed out underperforming firms and learning to allow survivors to improve performance and grow. We test our theory using a unique panel of knowledge-intensive new firms in Sweden. We find strong support for the notion that profitability enhances both survival and growth, and growth helps profitability but has a negative effect on survival. Implications are discussed.

Related content: Untangling the relationships among growth, profitability and survival in new firms

Delmar, F., McKelvie, A. & Wennberg, K. (2013). Untangling the relationships among growth, profitability and survival in new firms. Ratio Working Paper No. 205.

Absolute income mobility and the effect of parent generation inequality: An extended decomposition approach

Article (with peer review)Publication

Liss, E., Korpi, M., & Wennberg, K.

Publication year

2023

Published in

European Economic Review, 152, 104359.

Abstract

We use full-population data to study trends in intergenerational absolute income mobility, measured as the ratio of children earning more than their parents, for 11 Swedish cohorts born 1972-1983. Absolute mobility during this period increases from 72% to 84% for men and from 76% to 86% for women-higher figures than in most other countries studied. To explain these results, we outline a novel decomposition strategy that accounts for cohort variation in parent-generation income inequality. All else equal, if income inequality is higher in the parent generation, more economic growth is required to achieve any given level of absolute mobility. We discuss implications for comparative research in intergenerational income mobility.

The Entrepreneurial Story and its Implications for Research

Article (with peer review)Publication

Brattström, A., & Wennberg, K.

Publication year

2022

Published in

Entrepreneurship theory and practice, 46(6), 1443-1468.

Abstract

Research is not merely report-writing; it also involves elements of storytelling. In this essay, we reflect on two narrative archetypes in entrepreneurship research: the stories of entrepreneurship as a road to salvation and means to emancipation. We outline a framework to analyze research from a storytelling perspective, apply this framework to identify implicit assumptions and methodological biases in mainstream research, and discuss how a storytelling framework can be used to generate alternative stories. We argue for a more empirically grounded research agenda that continues the development of entrepreneurship research into a rich and diverse field.

Learning from Their Daughters: Family Exposure to Gender Disparity and Female Representation in Male-Led Ventures

Article (with peer review)Publication

Wennberg, K.

Publication year

2022

Published in

Management Science.

Abstract

Wu, Z., Naldi, L., Wennberg, K., & Uman, T. (2022). Learning from Their Daughters: Family Exposure to Gender Disparity and Female Representation in Male-Led Ventures. Management Science.

Ratio Working Paper No. 205

Abstract

Similar content