Mortality of firms: the impact of human capital, social capital, managerial practices and gender of the entrepreneur

Produced by: 
INSPER - Instituto de Ensino e Pesquisa
Available from: 
May 2014
Paper author(s): 
Mariana Carvalho e Silva Bertolami
Sérgio Giovanetti Lazzarini
Rinaldo Artes
Marcos Hashimoto
Pedro João Gonçalves
Microeconomics - Competition - Productivity

The mortality rate of new companies is very high. As a consequence, many new companies do not survive for a long time in their initial stages of life. This phenomenon is known as “liability of newness”, and it can be consequence of problems in business management, lack of market knowledge and lack of experience. Based on previous studies this article analyses the main determinants of these companies success as: human capital, social capital and management practices. Using a database of registered companies on JUCESP, between 2003 and 2007, the current study econometrically evaluates the effect of various human and social capital variables and management practices on the survival of newly formed companies. Furthermore, the effects of those three factors are analyzed separately, based on the gender of the entrepreneur. The results suggest that some management practices and some aspects related to human capital enterprising can increase companies’ survival rate. Moreover, it is found that the effect of these factors vary according to the entrepreneur’s gender, because the different individual motivations, the different behaviors and the roles that men and women play in the society. Thus, human capital has more impact on the survival of firms that are managed by women, compared to the ones that are managed by men. The study contributes to the understanding of the determinants of “liability of newness”, specifically showing that the gender of the entrepreneur may have particular importance.

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