Article title: The Benefits of Benefits – A Dynamic Approach to Motivation-Enhancing Human Resource Practices and Entrepreneurial Survival
Each year between 750,000 and 800,000 new firms enter the U.S. market, and half of these ventures will fail in their first 5 years. This article explores new venture failure and seeks to answer questions about how motivation-enhancing human resource (MHR) practices affect new ventures and at what point does implementation of HR practices increase the odds of survival. It recognizes that MHR practices matter to firm survival. As firms age, these practices appear to play an increasingly important role in survival. In addition, resources of a new venture determine its strategic decision-making process. The results of this study have theoretical and practical implications for research in entrepreneurship as well as more generally in strategic management. This research provides benefits in understanding how a new venture’s survival is not a static state of survival but a dynamic process that unfolds over time.
A pressing but understudied issue is the high incidence of new venture failure. We propose a model of how motivation-enhancing human resource (MHR) practices mediate the effects of initial human and financial resources of a founding team on firms’ decisions to remain in operation. In this model, we also propose that MHR practices have effects on firm survival that change over time. We test our model with a sample of 1,100 firms tracked for 7 years. We found support for a model where MHR practices partially mediate the effects of initial firm resources and human capital on firm survival. we found that the effects of MHR practices change over time such that their positive effects on survival become stronger. We conclude with a research agenda and recommendations for how nascent firms can promote survival.
David S. DeGeest, Elizabeth H. Follmer, Sheryl L. Walter, and Ernest H. O’Boyle
The Benefits of Benefits: A Dynamic Approach to Motivation-Enhancing Human Resource Practices and Entrepreneurial Survival
Journal of Management 0149206315569313, first published on January 29, 2015 doi:10.1177/0149206315569313