*The authors wish to thank the JPIM Editor, C. Anthony Di Benedetto, for his valuable comments. This research was funded in part by Institute for Entrepreneurship and Innovation at University of Missouri-Kansas City, the Ewing Marion Kauffman Foundation, and the China Natural Science Foundation (Award #: 70528002). The contents of this publication are solely the responsibility of the authors.
Perspective: Economic Conditions, Entrepreneurship, First-Product Development, and New Venture Success*
Article first published online: 8 DEC 2009
© 2009 Product Development & Management Association
Journal of Product Innovation Management
Volume 27, Issue 1, pages 130–135, January 2010
How to Cite
Song, L. Z., Song, M. and Parry, M. E. (2010), Perspective: Economic Conditions, Entrepreneurship, First-Product Development, and New Venture Success. Journal of Product Innovation Management, 27: 130–135. doi: 10.1111/j.1540-5885.2009.00704.x
- Issue published online: 8 DEC 2009
- Article first published online: 8 DEC 2009
Entrepreneurial ventures have a significant impact on new job creation and economic growth, but existing evidence indicates that most entrepreneurial ventures fail. This paper reports key insights from VENSURV, a new database that tracks the success and failure of ventures founded since 1998. Based on an analysis of 539 new ventures founded during the years 1991–2001, the following conclusions are reached. First, consistent with prior research, less than half of the 539 ventures survived more than two years. Second, economic downturns lead to higher failure rates for new ventures. Third, new venture success is highly correlated with first-product success. Fourth, first-product success is enhanced when those products are introduced into markets with emerging market needs but with established industry standards. Finally, first-product and venture performance are significantly higher for products based on ideas that came from the founders. In addition, the most successful first products are based on ideas that reflect both technology development and an analysis of customer needs.