Not quite up to scratch: An examination of failure, persistence, and 'living dead' outcomes for wireless start-ups

This dissertation analyzes why some VC-funded high-tech firms do not generate harvesting events for investors through a lucrative sale, either to another company or on the stock exchange. In other words, I seek to understand two performance outcomes: failure and persistence. Building on the technology strategy and imprinting literatures, I investigate the effects of three signals of quality on failure and persistence. In the first essay, hypotheses are developed on the unintended consequences of patenting. Disclosure, through patents, exposes new firms to undesired spillovers that harm their survival chances. The second essay exploits asymmetric effects of factors on success and failure to expose start-up persistence. It analyzes another signal of quality---technology breadth, the applicability of inventions across domains---and suggests that the hazards of disclosure also varies with this breadth. Finally, in the third essay I hypothesize on the effects of signals of quality related to founding team on a third outcome, 'living dead'---a transitory state to which a start-up shifts when it persists beyond the norm without harvest or failure. I tested these hypotheses on a hand-collected longitudinal dataset on 428 US VC-backed wireless firms founded between 1990 and 2009 using event history analysis and matched case-control study.;I find that a start-up's failure rate increases as its inventions are cited at a higher rate by others; in addition the failure rate increases when the citing firms have a track record of litigiousness. I show that the effect of signaling a specific, rather than general, technology while experiencing high rate of knowledge diffusion diminishes both the likelihood of failure and success; uncovering persistence through negative effects on success and failure. Loss of members in founding teams comprised of entrepreneurs with prior founding experience is found to be a shock that increases the odds of marginal performance. Intriguingly, a team size of two increases the likelihood of 'living dead', signaling underlying coordination costs. Overall, this dissertation enriches our understanding of new venture performance by adding to existing theory, conceptualizing a third performance outcome, providing empirical evidence for persistence and unintended consequences of signaling, and indicating future research paths.