Survival of Contractors with Previous Subcontracting Experience  Dakshina G. De Silva Texas Tech University Georgia Kosmopoulou y University of Oklahoma Carlos Lamarche University of Oklahoma October 24, 2011 Abstract We examine the impact of the type of past experience for de novo contractors on business duration. Our results show that early involvement as subcontractor in government procurement projects increases the chance of survival. JEL Classication: D44, H57, L74. Keywords: Government procurement, subcontracting, survival. 1 Introduction In this paper, we examine new rm survival in the road construction industry and the role of subcontracting experience. Entrants bidding in procurement auctions face signicant un- certainty in developing bids. This uncertainty originates in the lack of relevant information and production experience. As a result, entrants win with signicantly lower bids relative to incumbents (see De Silva, Dunne and Kosmopoulou (2003)) diminishing their prospect of survival in the market. De Silva, Kosmopoulou, and Lamarche (2009) evaluate the impact of a policy that led to the release of detailed project information on market survival. De Silva, Kosmopoulou and Lamarche (2010) explore how business opportunities outside road construction at the time of entry and risk sharing a/ects new businesses. A number of pa- pers consider pre-entry experience and age related e/ects on survival to study the patterns of  The authors would like to thank the sta/ at the Texas Department of Transportation and Texas Work- force Commission for providing useful information. The authors obtained these data under an agreement of condentiality and disclosure of the actual data is subject to certain restrictions. y Corresponding author: Georgia Kosmopoulou, 203 Hester Hall, 729 Elm Av, Norman, OK 73019. Tel:1- 405-325-3083, Email: georgiak@ou.edu. 1