Department of Management


Date of this Version



Published in International Small Business Journal: Researching Entrepreneurship 36:1 (2018), pp 104–125.

DOI: 10.1177/0266242617717595


Copyright © 2017 Jake G. Messersmith, Pankaj C. Patel, & Christopher Crawford. Published by SAGE Publications. Used by permission.


Providing employee benefits is costly for new ventures, yet offering such inducements is often essential to developing human capital. While a broad combination of employee benefits could yield synergistic effects, adopting a large number of benefits may not be feasible for resource constrained ventures. To ensure survival, while limiting misallocation of scarce resources towards benefits that have lower returns, entrepreneurs must be selective in choosing the benefits that generate the most ‘bang for the buck’. Our study assesses the effects of employee benefit offerings on venture survival odds. Based on a longitudinal sample of 1012 US-based ventures from the Kauffman Firm Survey and leveraging, signaling and motivation theories, we find that offering health insurance, flexible work schedules, paid vacation, or paid sick leave increase the odds of survival. However, offering employee stock ownership plans or tuition reimbursement has no significant influence on the odds of survival.