Cutting Your Teeth: Learning from Rare (One or More) Experiences

In this paper, we explore learning-by-doing in a unique and important setting not previously exploredthe context of one or more complex experiences encountered in novel circumstances. We explore characteristics that lead to learning from small sets of prior experiences. We use data from survey responses of 2,111 entrepreneurs to examine performance of startup firms as a measure of outcomes produced by learning-by-doing from prior founding experience. Results indicate substantial productivity benefits accruing from prior entrepreneurial experience. The paper is the first to exploit panel data on the entire individual history of firm founding to control for individual fixed effects. The paper indicates areas where entrepreneurs show possible learning effects, such as the inclination and/or ability to more quickly go through the process of recognizing an opportunity, developing it, and executing the exit strategy.