When do ventures break path dependence? Evidence from financial and technological success of serial entrepreneurs

Abstract

This study examines ventures' path dependence and path breaking in the context of serial entrepreneurship. While prior entrepreneurial experience is known to cause ventures' path dependence, little is known about how different types of experience, especially financial versus technological, shape it. Specifically, we investigate how the financial and technological success of serial entrepreneurs' prior ventures influences their subsequent ventures' path-breaking behavior singly and jointly. We find that while the financial success of prior ventures facilitates subsequent ventures' path-dependent propensity, technological success leads subsequent ventures to break the path by entering new technology domains different from those of prior ventures. The relationship between prior ventures' financial success and subsequent ventures' path breaking is contingent on prior ventures' technological success. Under the condition of prior ventures' technological success, the negative effect of financial success on path breaking weakens. We corroborate our hypotheses using Crunchbase for entrepreneur and venture data worldwide from 1967 to 2018 and patent data from USPTO. Our findings have important implications for the source of ventures' path-breaking behaviors, highlighting the role of the entrepreneurs' technological success in prior ventures in disentangling their subsequent ventures from path dependence.