The Role of Innovation in the Post-Entry Performance of New Small Firms

The aim of this paper is to relate the start-up decision to the postentry performance of new small firms . Hence this paper will adress questions such as: does an innovative enterpreneur have the same chances of postentry profitability as a conservative one? Does a former blue collar worker have the same chances as a former manager? Does a defensive motivation for the start-up of a new firm, such as the avoidance of unemployment, tend to be related to an inferior postentry performance? We relate those factors that are decisive in leading an economic agent to leave a mother company to start a new firm to the postentry performance of the new-born enterprise. This enables us to distinguish between the types of motivation leading to the better or poorer potentry performance. The results of the analysis may be of some help in designing national and lovìcal industrial policies. In the second section of this paper a survey of the previous studies on entry and postentry performance will be presented. The dataset which consists of a sample of 147 Italian spin-offs, is described in the third section. In the fourth section the hypothesis that different factors inducing new-firm start-upshave a disparate effect on thepostentry performance is tested. Finally the main findings are summarized.