Leeds School of Business
University of Colorado, Boulder
995 Regent Drive Koelbel
Boulder, CO 80309-0419
Institutional Affiliation: University of Colorado, Boulder
NBER Working Papers and Publications
|August 2018||Choosing between Growth and Glory|
with Sharon Belenzon, Aaron Chatterji: w24901
Prior work has established that the financing environment can impact firm strategy. We argue that this influence can shape the earliest strategic choices of a new venture by creating a potential tradeoff between two objectives: rapid growth and reaping the benefits of a positive reputation (glory). We leverage a simple reputation-building strategic choice, naming the firm after the founder (eponymy), that is associated with superior profitability. Next, we argue via a formal model that the availability of/dependence on external financing can explain why high-growth firms are rarely eponymous. We find empirical support for the model's predictions using a large dataset of 1 million European firms. Eponymous firms grow considerably more slowly than similarly profitable firms. Moreover, eponym...
Published: Sharon Belenzon & Aaron K. Chatterji & Brendan Daley, 2020. "Choosing Between Growth and Glory," Management Science, vol 66(5), pages 2050-2074.