Organizational Mortality of Small Firms: The Effects of Entrepreneurial Age and Human Capital

Abstract

This paper addresses the issue of internal determination of organizational outcomes. It is argued that in small and simply structured organizations a considerable proportion of the variance in organizational activities and outcomes is associated with individuals. In particular, the paper uses human capital theory to derive hypotheses about individual determinants of organizational mortality. These hypotheses are tested with event-history data of firm registrations and de-registrations in a West German region. The hypotheses are corroborated by the data, but the effects may nonetheless be due to processes linking individual characteristics with organizational performance other than those suggested by the human capital approach.