Discussion paper

DP5224 What are Firms? Evolution from Birth to Public Companies

We study how firm characteristics evolve from early business plan, to initial public offering, to public company for 49 venture capital financed companies. The average time elapsed is almost six years. We describe the financial performance, business idea, point(s) of differentiation, non-human capital assets, growth strategy, customers, competitors, alliances, top management, ownership structure, and the board of directors. Our analysis focuses on the nature and stability of those firm attributes. Firm business lines remain remarkably stable from business plan through public company. Within those business lines, non-human capital aspects of the businesses appear more stable than human capital aspects. In the cross-section, firms with more alienable assets have substantially more human capital turnover.


Kaplan, S, P Strömberg and B Sensoy (2005), ‘DP5224 What are Firms? Evolution from Birth to Public Companies‘, CEPR Discussion Paper No. 5224. CEPR Press, Paris & London. https://cepr.org/publications/dp5224