A Comparison of New Businesses Established by 'Novice' and 'Habitual' Founders in Great Britain

Abstract

Professor sue Birley is with the managment school, imperical college, London, and Dr Paul Westhead with the center for small and medium-sized Enterprise, warwick univerisity, England. This paper identifies statistically significant difference between new independent owner-managed business established by two types of founders: 'novice' and 'habitual 'enterpreneurs. Novice founders were defined as those individuals with no previous experience of founding a business while habitual fouonders are those who had established at least one other businessjprior to the start up of the current new venture. Results from the final discriminant analysiss model indicate that habitual fouonders are yonger than theri counterparts when starting theri first business, they are likely to be continuing a tradition (i.e. the incubator prior to start up was also more likely to be theri own business), they emphasissed the 'fellow role models' reasons rather than 'welfare consideration' leading to the start up of the current busines and they used personal savings at the launch of the business, which suggest that previous business foundingexperience canbe anasset rather than a liability. from this the autors conclude that there is no empirical evidence to suggest from this study that those new busiens established by novice founders withno prior buisness founding experience are at a competitive disadvantage in relation to their counterparts. Moreover, a small firms policy of targettingscarce ecomomic resources to habitual founders with an established track record is questioned.