Abstract
This paper uses social comparison theory to explore the effect that the average size of established businesses at the regional (provincial) level may have on start-up size. It is argued that established entrepreneurs at the regional level become referents of new entrepreneurs, influencing not only the decision to become entrepreneurs but also the characteristics of the new venture, such as its initial size. Specifically, the greater the average size of established businesses at the provincial level, the bigger the start-up size of new ventures. This paper further considers how this effect is moderated by two key individual level variables: knowing an entrepreneur personally (i.e., close social referent), and being the owner and manager of an existing business (i.e., past entrepreneurial and managerial experience). Predictions are tested using data that combine individual- and provincial-level information in Spain over the period 2008–2014. The results show the positive relationship of the average size of established businesses on new venture start-up size, and that this effect decreases when the entrepreneurs have previous entrepreneurial experience.
Highlights
Despite the importance of the size of new ventures for employment figures at the regional and national levels (Dencker et al 2009; Osterman et al 2002), over the last few years, scholars paid little attention to the study of factors determining the start-up size of new ventures (Colombo et al 2004)
While the start-up size of new ventures has a significant impact on employment figures at the regional and national level (Dencker et al 2009), scholars have paid little attention to the study of factors determining the start-up size of new ventures
This study explores this issue from a perspective never previously considered in the study of the determinants of new venture start-up size: social comparison theory
Summary
Despite the importance of the size of new ventures for employment figures at the regional and national levels (Dencker et al 2009; Osterman et al 2002), over the last few years, scholars paid little attention to the study of factors determining the start-up size of new ventures (Colombo et al 2004). This relative lack of attention is even more salient if we take into consideration the fact that previous studies have reported the existence of a positive relationship between start-up size and key outcomes of new ventures, such as the survival of the firm (Colombo et al 2004) or its subsequent growth (Capelleras et al 2008). No study has previously looked at this issue from a social comparison perspective
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