DOES EXPERIENCE DICTATE ENTREPRENEURIAL FIRM PERFORMANCE? A Meta-Analysis on the Experience-Performance Relationship

(ProQuest: . denotes formulae omitted.)IntroductionInterest in the determinants and antecedents of entrepreneurial performance has increased over the past several decades. A great deal of research has explored human, financial, and social capital factors, which have been widely believed to influence firm performance (Gimeno-Gascon, Folta, Cooper, & Woo, 1997; Goetz & Freshwater, 2001; Bosma, van Praag, Thurik, & de Wit., 2004; Montgomery, Johnson, & Faisal, 2005). Many authors have concluded that investments in human capital augment performance and have attempted to use such results to explain variation in performance across entrepreneurial firms (Cooper, Gimeno-Gascon, & Woo, 1994; Bruderl & Preisendorfer, 1998; van Praag & Cramer, 2001). Mincer (1974) argued that experience is a primary determinant of individual earnings for wage employees. Empirical support for this theory in the case of entrepreneurs has also been established by a number of researchers (de Wit & van Winden, 1989; Cooper et al., 1994; Taylor, 2001; van Praag & Cramer, 2001; Bosma et al., 2004). Empirical results related to the experience-performance relationship, however, have been varied. A large number of insignificant effects (e.g., Astebro & Thompson, 2007; Bosma et al., 2004; Dyke , Fischer, & Reuber, 1992; Gimeno-Gascon et al., 1997; Shrader & Siegel, 2007), and some negative effects (e.g., Bruderl & Preisendorfer, 1998; Dyke et al., 1992; Shrader & Siegel, 2007; van de Ven , Hudson, & Schroeder, 1984) have been obtained. Such mixed results arguably stem from variations in the specification of both experience and performance (Cooper & Gimeno-Gascon, 1992); thus, making comparisons across studies difficult.In their study of the effect of experience on performance for technology firms, Reuber and Fischer (1994) argued that determining the types of experience predictive of firm performance may provide practitioners with improved tools to assess business plans and/or loan applications. Reuber and Fischer (1994) contended that authors determining an insignificant or negative relationship between entrepreneurial experience and performance have been cautious to conclude that experience does not substantially impact performance. Aligned with the argument by Cooper and Gimeno-Gascon (1992), the authors contended that the mixed findings for the experience-performance relationship are likely the result of varying specifications for experience and performance across the literature.Previous overviews of the experience -performance literature suggest no direct relationship can be established between prior experience and performance. The lack of relationship is due to variations in the specification of experience and performance variables across studies. To gain more insight into the variability occurring in the literature, the twofold objective of this study is (1) to analyze and summarize the data across the relevant literature and (2) to determine study-specific factors which may likewise contribute to the variance in results.The remainder of the paper is organized as follows. In the following section, a brief background on the literature is provided. In the data and methods section, data collection methods and justification are provided, along with support of the ordered probit model. A two-part meta-analysis is then undertaken. The first portion describes the primary trends and effects found in the experience-performance literature via an exploratory analysis. In the second portion, moderator variables representing studyspecific characteristics are tested for their impact on the direction of estimated effects via an ordered probit model. Once the set of current research has been segmented and analyzed according to the specific moderator variables, conclusions and implications are drawn, and suggestions for further research are provided.BackgroundA number of economists have explored experience as a determinant of selfemployment earnings (e. …