Unlocking the dual impact: Human capital's influence on mean and variability in new venture performance

Existing studies of new venture founders’ human capital (e.g. industry work experience, past venture experience, and education) reveal its impact on the expected mean of firm performance, largely neglecting its possible nontrivial effect on performance variability. This study is an attempt to fill this gap. By drawing on the insights of the behavioral theory of the firm, we argue that the aspirations bred by the founders’ human capital are associated with new venture performance variability. Using a multiplicative heteroscedasticity regression model, we find that work experience increases performance variability without increasing the performance mean. In contrast, past venture experience positively affects the firm's mean performance without affecting variability. Education increases performance variability while decreasing the performance mean. We also find that having patents and venture capital funding affects both the mean and the performance variability, albeit in opposite directions.