Organizational Legacy and Entrepreneurial Firm Performance

Researchers maintain that founders rely on their past experience in establishing start-up firms. Using a unique dataset on Swedish and Danish biotechnology start-ups, we find support for the proposition that founders ’ immediate prior experience affects the performance of their new venture. Distinguishing between produce development and financial performance allows us to make inferences about the performance of biotechnology start-ups given an upstream or downstream origin of a founder. We find that university researchers start firms that produce innovations that have greater product development potential while founders from the pharmaceutical industry start firms with better financial performance. We find that start-ups established by founders coming from prominent biotechnology firms tend to perform well in terms of invention and financial performance. Firms established by founders coming from downstream markets tend to do well in financial terms only