Aged to perfection? Unpacking the curvilinear relationship between founder age and new venture performance

Abstract

This study contributes to the growing body of research on the relationship between founders' age and new venture performance, addressing existing gaps regarding founders approaching or surpassing retirement age. By analyzing comprehensive Swedish administrative data covering all newly incorporated firms and their founders, we first document an inverse U-shaped relationship between founders' age at founding and firm survival, as well as between founders' aging and employment growth. However, our findings reveal significant disruptions in these patterns between ages 60 and 70. Specifically, the relationship between founders' age at founding and firm survival temporarily improves at the conventional retirement age of 65, transitioning into a more nuanced, bimodal M-shaped pattern. In contrast, the relationship between founders' aging and employment growth plateaus around age 65. Using abductive analysis and a regression discontinuity design, we show that the increased firm survival observed after age 65 is influenced by a different selection of entrepreneurs, as individuals with enhanced financial security from pension access, along with previous industry experience and high levels of education, are more likely to start businesses at this stage.