DATA AND ANALYSIS

 

Data on the first entrepreneurial group, the firms whose founders had experience with previous startups, is presented in Table 1. Fourteen of the founders had prior experience starting a firm. From Table 1, we see that six of the fourteen firms whose founders had startup experience, (43%), experienced success, while eight of nineteen firms whose founders did not have startup experience, (42%), experienced success. It is important to remember that founders with startup experience may also have a background in materials or have industry experience.

 

Table 1
Longevity Measures of Entrepreneurial Firms as Proxies for Success
by Founder Experience with Startups

 

Success Categories Startup Experience No Startup Unable to classify Total
Total 14 19   35
Survivor   4 2 6
Firm did not survive but was viable for at least ten years 2 1 0 3
Firm was purchased 2 3 0 5
Cumulative Successes 6 8 0 14

 

Data on the second entrepreneurial group, the firms whose founders had experience in the semiconductor silicon industry (SSI) is presented in Table 2. We see that thirteen of the thirty firms whose founders had industry experience, (43%), met with success, while one of the three firms whose founders did not have industry experience, (33%), met with success. Again remember that these groups are not mutually exclusive. Founders without industry experience may have had a background in materials or may have startup experience.

 

Table 2
Longevity Measures of Entrepreneurial Firms as Proxies for Success
by Founder Industry Experience

Success Categories SSI Experience No SSI Experience Unable to Classify Total
Total 30 3 2 35
Survivor 5 1 0 6
Firm did not survive but was viable for at least ten years 3 0 0 3
Firm was purchased 5 0 0 5
Cumulative Successes 13 1 0 14

 

Data on the third entrepreneurial group, the firms whose founders had a background in materials is presented in Table 3. We see that thirteen of the twenty-three firms whose founders had a background in materials, (57%), experiences success, while one of the six firms whose founders had experience in fabrication and assembly, (17%), met with success, and none of the other firms met with success.

 

Table 3
Longevity Measures of Entrepreneurial Firms as Proxies for Success
by Founders Technical Core Competence

 

Success Categories Materials Competence F&A Competence Other or Unable to Classify Total
Total 23 6 6 35
Survivor 5 1 0 6
Firm did not survive but was viable for at least ten years 3 0 0 3
Firm was purchased 5 0 0 5
Cumulative Successes 13 1 0 14

 

While Tables 1 and 2 show no great difference between the classification variables, Table 3 leads the obvious conclusion that founders with material core competence have significantly greater success than those with fabrication and assemble as their core competence. Further analysis is necessary before this conclusion can be made because the three classifications are not mutually exclusive. For example, founders with materials experience may also have had startup or industry experience. All that can be said is that having capabilities in the materials area appears to be important for success.

In Table 4 we try to isolate the individual impact of the three types of background experience by creating mutually exclusive classifications. There are twelve possible unique combinations of the four classifications so this table may initially be difficult to interpret. Explanations are in order. Column two, labeled "S", represents firms whose founders had only startup experience and did not have industry experience, a background in materials or fabrication and assembly experience. The "zero" in the total row of this column indicates that none of the founders fit that description. Column three, labeled "I", represents founders who had only industry experience, and did not have experience in startups or a background in materials. Column four, labeled "M," represents founders who had only materials experience. Column five labeled "F" presents founders who had a background of fabrication and assembly only. The other columns represent mixes of these backgrounds. For example, column seven, labeled "I, M," represents founders who had a background in industry and materials but did not have experience in startups. The "u" in column 14 means "unknown."

The information in Table 4 shows that the core capabilities of founders has a significant impact on the eventual success of the enterprise. The first clue is to compare the success of founders with only one of the four background attributes. When columns two, through five are reviewed, we find that the only success was the founder with a materials background. However, the majority of the founders had more than one of the background attributes and are found in columns six through ten. Examining these columns shows that the only successes are found in the "S,I,M" and "F,S,I,M" columns. These founders share a major common attribute none of the

Table 4
Longevity Measures of Entrepreneurial Firms as Proxies for
Success by Different Combinations of Founder Experience

Success Categories S

only

I

only

M

only

F

only

S, I I, M S,M F, I F, S F,I,S S,I,M F,S,I,M U Total
Total 0 3* 2 1 1 11 0 2 0 2 10 1 2 35
Survivor 0 0 1 0 0 2 0 0 0 0 2 1 0 6
Firm did not survive but was viable for at least ten years 0 0 0 0 0 1 0 0 0 0 2 0 0 3
Firm was purchased 0 0 0 0 0 3 0 0 0 0 2 0 0 5
Cumulative Successes 0 0 1 0 0 6 0 0 0 0 6 1 0 14

*One company survived, but not in the production of silicon

Note: S = Startup experience; I = Industry experience; M = Materials background;

F = Fabrication and assembly experience other combination columns have -- that is a background in silicon materials. The most glaring evidence is in column seven. Founders with startup and industry experience and a materials background garnered six successes out of ten start up firms. That is a 60 percent success rate.

Overall survival of 10 years or more for this group of 35 firms is 14, or 40 percent. This compares favorably to the eight year survival rate of 54 percent estimated by Kirchhoff [1994] for all U.S. firms. However, the 60 percent ten year survival rate of firms with founders who have start up experience, industry experience and materials background substantially exceeds Kirchhoff’s estimate.

 

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1997 Babson College All Rights Reserved
Last Updated 4/27/97 by Germaine Wong

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