CEO Experience. Company leaders have substantial influence on the performance of young, small firms (Xxxxxxxxxx and Schoonhoven 1990). Leadership is highly important for the creation of knowledge in organisations. Capable leaders have a positive influence on the knowledge conversion rate. They formulate a knowledge vision and facilitate the organisational culture to continuously enhance the knowledge base of the firm (Nonaka, Toyama, and Nagata 2000). In order to gain expertise, firms need to acquire external knowledge. However, a firm's ability to evaluate and use outside information depends on prior related knowledge (Xxxxx and Xxxxxxxxx 1990). In fact, “entrepreneurs learn by updating a subjective stock of knowledge accumulated on the basis of past experiences” (Xxxxxxx and Bygrave 2001, p. 5). In general, prior experiences of founding teams turned out to be beneficial to start-up firms in high-technology industries (van de Ven, Hudson, and Xxxxxxxxx 1984; Schoonhoven, Xxxxxxxxxx, and Lyman 1990; Xxxxxx, Xxxxxx-Xxxxxx, and Xxx 1991; Xxxxxxxxx and Gerpott 2000). While younger managers need to try out different options until they find a beneficial and thus repeatable practice, experienced top managers could have already gained this knowledge, which is an important asset for a start-up firm (Xxxxxx and Xxxxx 1977). This could hold especially true for basic managerial abilities. With respect to financial tasks such as budgeting or financial forecasting, experienced managers could provide valuable knowledge for an entrepreneurial firm (Davila 2005). In addition, if the CEO is an expert with respect to the foundational technology, this could imply additional benefits for a technology-based new venture (Schoonhoven, Xxxxxxxxxx, and Lyman 1990). Consequently, I formulate the following hypothesis.
