TY - JOUR
T1 - Reconceptualizing entrepreneurial exit
T2 - Divergent exit routes and their drivers
AU - Wennberg, Karl
AU - Wiklund, Johan
AU - DeTienne, Dawn R.
AU - Cardon, Melissa S.
N1 - Funding Information:
A prior version of this paper received the Michael H. Mescon/Coles College of Business Best Empirical Paper Award and the IDEA award for Research Promise at the 2008 Academy of Management Meeting and appeared in the annual proceedings. We are grateful to the associate editor Phil Phan and two anonymous referees that challenged us to develop this paper further, and to Arjen van Witteloostuijn, Steve Bradley, Miguel Amaral, Anna Söderblom and Rasmus Jørgensen for helpful comments. Financial supported was provided by Handelsbanken Research Foundations, the Swedish Agency for Innovation Systems (Vinnova), the Swedish Foundation for Small Business Research (FSF), and the Swedish National Board for Industrial and Technological Development (NUTEK). The usual caveats apply.
PY - 2010/7
Y1 - 2010/7
N2 - We develop a conceptual model of entrepreneurial exit which includes exit through liquidation and firm sale for both firms in financial distress and firms performing well. This represents four distinct exit routes. In developing the model, we complement the prevailing theoretical framework of exit as a utility-maximizing problem among entrepreneurs with prospect theory and its recent applications in liquidation of investment decisions. We empirically test the model using two Swedish databases which follow 1,735 new ventures and their founders over eight years. We find that entrepreneurs exit from both firms in financial distress and firms performing well. In addition, commonly examined human capital factors (entrepreneurial experience, age, education) and failure-avoidance strategies (outside job, reinvestment) differ substantially across the four exit routes, explaining some of the discrepancies in earlier studies.
AB - We develop a conceptual model of entrepreneurial exit which includes exit through liquidation and firm sale for both firms in financial distress and firms performing well. This represents four distinct exit routes. In developing the model, we complement the prevailing theoretical framework of exit as a utility-maximizing problem among entrepreneurs with prospect theory and its recent applications in liquidation of investment decisions. We empirically test the model using two Swedish databases which follow 1,735 new ventures and their founders over eight years. We find that entrepreneurs exit from both firms in financial distress and firms performing well. In addition, commonly examined human capital factors (entrepreneurial experience, age, education) and failure-avoidance strategies (outside job, reinvestment) differ substantially across the four exit routes, explaining some of the discrepancies in earlier studies.
KW - Entrepreneurial exit
KW - Human capital
KW - Prospect theory
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U2 - 10.1016/j.jbusvent.2009.01.001
DO - 10.1016/j.jbusvent.2009.01.001
M3 - Article
AN - SCOPUS:77952889565
SN - 0883-9026
VL - 25
SP - 361
EP - 375
JO - Journal of Business Venturing
JF - Journal of Business Venturing
IS - 4
ER -