Effect of Spouse Tie On Its Entrepreneurial Performance

• In Event: 058 - Regular Session. Organizations: Networks and Innovation

Abstract

What happens if business gets in the way of "I do" and happily ever after? The objective of this paper starts from the contrast that is well known in realities; Some say that having a deeply embedded relationship, such as a spousal tie, make it too risky to go into business together, while others believe the opposite. These confronting approaches align with important questions of both sociology and economics, as they include the problems of social relations, trust, and transaction cost which are the focal theme in the pursuit of economic actions. We explain the distinctiveness of the spouse relationship as well as the role of trust at the risk of opportunism, by looking to existing theories. We then statistically examine the spouse team and the entrepreneurial success (maintaining the business after 5 years) with discrete time event history and Kaplan-Meier survival analysis, using national data on entrepreneurial dynamics from 2005 to 2011 (Panel Study of Entrepreneurial Dynamics). Our main finding is that the spouse team is 2.2 times more likely to survive over other mixed teams. This could suggest that having trust between team members is crucial point related to survival. Spanning from the individual level to the organization level, this study can further contribute to finding the direct factor impacting a small, new organization's survival.

Author

• Arum Yang, Yonsei University