Working Paper: NBER ID: w28417
Authors: Joonkyu Choi; Nathan Goldschlag; John C. Haltiwanger; J. Daniel Kim
Abstract: We show that early joiners—non-founder employees in the first year—of a startup play a critical role in explaining firm performance. We use administrative employer- employee matched data on all US startups and utilize the premature death of workers as a natural experiment exogenously separating talent from young firms. We find that losing an early joiner has a large negative effect on firm size that persists for at least ten years. When compared to that of a founder, losing an early joiner has a smaller effect on firm death but intensive margin effects on firm size are similar in magnitude. In contrast, losing a later joiner yields only a small and temporary decline in firm performance. We provide evidence that is consistent with the idea that organizational capital, an important driver of startup success, is embodied in early joiners.
Keywords: No keywords provided
JEL Codes: J24; L23; L26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| losing an early joiner (J63) | firm size (L25) |
| losing an early joiner (J63) | employment (J68) |
| losing an early joiner (J63) | revenue (H27) |
| losing a founder (M13) | firm survival (L21) |
| losing an early joiner (J63) | intensive margin of firm survival (D25) |
| losing an initial team member (J63) | firm performance in B2B firms (L25) |
| losing a second-year joiner (J63) | performance (D29) |
| losing an early joiner (J63) | long-term firm performance (L25) |