The Age Effect In Entrepreneurship: Founder's Tenure, Firm Performance And The Economic Environment
This paper tests the effect of founder's tenure on firm performance by taking into account the impact of the changes occurring in the economic environment. The authors use a large dataset of founder-run firms that includes, in addition to financial data, company data directly collected through a survey of about 2,000 Italian firms. Unlike the negative relationship reported in most empirical papers, they found an inverted U-shaped relationship between founder-CEO tenure and firm performance. This relationship is strongly influenced by the characteristics of the environment in which the company competes: while experience plays a key role in fostering performance in less innovative and less competitive sectors, a dynamic environment makes the performance of the firm less responsive to the benefits of founder tenure.