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"Knowledge Acquisition Activities, Prior Knowledge and Experience & The Survival of New Firms"

John C. Dencker, Marc Gruber, and Sonali Shah

 

First Author :

John C. Dencker
University of Illinois at Urbana-Champaign, College of Business
504 E. Armory Avenue, 215 LIR Bldg
Champaign, IL 61820
USA

dencker@uiuc.edu

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Second Author :

Marc Gruber
Ecole Polytechnique Federale de Lausanne
Odyssea 2.02, Station 5, CH-1015 Lausanne
Switzerland

marc.gruber@epfl.ch


Third Author :

Sonali Shah
Business Administration
University of Illiniois at Urbana-Champaign, College of Business
1206 S. Sixth Street, 350 Wohlers Hall, M/C 706
Champaign, IL 61820
USA

217-244-1728

sonali@alum.mit.edu

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Abstract :
 
Knowledge acquisition activities occurring after entry may be just as critical to firm survival as pre-existing knowledge and experience, because knowledge acquisition activities enable the augmentation of existing knowledge and the exploration and pursuit of new strategic directions. Drawing from organization theory and entrepreneurship theory, we examine two important sets of knowledge acquisition activities: knowledge acquired through planning and knowledge acquired through learning by doing. We examine the direct impact of these activities on the survival of new firms and examine the extent to which planning and learning by doing can compensate for low prior knowledge and/or management experience. We find that while learning by doing promotes firm survival and can compensate, planning deters firm survival and can not compensate.
 
 
Keywords :
 
Entrepreneurship, Experience, Firm Survival, Human Capital, Knowledge, Unemployment
 
 
Footnotes & Acknowledgements :
 
We wish to thank the staff of the Office of Firm Creation at the Employment Agency of Munich for their support of this project and their assistance in data collection. Alexander Blume provided excellent research assistance.
 
 
Manuscript Received : 2006
Manuscript Published : September, 2006
 
 
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