Reconceptualizing Entrepreneurial Exit: Divergent Exit Routes and Their Drivers

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 studiesEntrepreneurial Exit; Prospect Theory; Human Capital

The persistence of family firms : how does performance threshold affect family firm exit?

Research on family firms provides mixed evidence of the effect of family ownership on firm performance and exit outcomes. Drawing on threshold theory and the socioemotional wealth perspective, we argue that family firms have lower performance thresholds than non-family firms, reducing the likelihood of firm exit. Using a longitudinal dataset of 1191 firms over the period 2008–2011, we find support for this contention, suggesting that performance threshold is an important, yet poorly studied, construct for understanding exits of family versus non-family firms

Small and mighty: adaptation of superphylum Patescibacteria to groundwater environment drives their genome simplicity.

BackgroundThe newly defined superphylum Patescibacteria such as Parcubacteria (OD1) and Microgenomates (OP11) has been found to be prevalent in groundwater, sediment, lake, and other aquifer environments. Recently increasing attention has been paid to this diverse superphylum including > 20 candidate phyla (a large part of the candidate phylum radiation, CPR) because it refreshed our view of the tree of life. However, adaptive traits contributing to its prevalence are still not well known.ResultsHere, we investigated the genomic features and metabolic pathways of Patescibacteria in groundwater through genome-resolved metagenomics analysis of > 600 Gbp sequence data. We observed that, while the members of Patescibacteria have reduced genomes (~ 1 Mbp) exclusively, functions essential to growth and reproduction such as genetic information processing were retained. Surprisingly, they have sharply reduced redundant and nonessential functions, including specific metabolic activities and stress response systems. The Patescibacteria have ultra-small cells and simplified membrane structures, including flagellar assembly, transporters, and two-component systems. Despite the lack of CRISPR viral defense, the bacteria may evade predation through deletion of common membrane phage receptors and other alternative strategies, which may explain the low representation of prophage proteins in their genomes and lack of CRISPR. By establishing the linkages between bacterial features and the groundwater environmental conditions, our results provide important insights into the functions and evolution of this CPR group.ConclusionsWe found that Patescibacteria has streamlined many functions while acquiring advantages such as avoiding phage invasion, to adapt to the groundwater environment. The unique features of small genome size, ultra-small cell size, and lacking CRISPR of this large lineage are bringing new understandings on life of Bacteria. Our results provide important insights into the mechanisms for adaptation of the superphylum in the groundwater environments, and demonstrate a case where less is more, and small is mighty

The Stock Market Evaluation of IPO-Firm Takeovers

We conduct an event study to assess the stock market evaluation of public takeover announcements. Unlike the majority of previous research, we specifically focus on acquisitions targeted at newly public IPO-firms and show that the stock market positively evaluates these M&As as R&D. However, bidders' abnormal announcement returns are significantly lower for takeovers directed at targets with critical intangible assets and innovative capabilities inalienably bound to their initial owners than for those that have internally accumulated respective resources and capabilities. We explain these findings with the acquirer's post-acquisition dependence on continued access to the IPO-firm founders' target-specific human capital. Our results contribute to literature in that they show that the stock market perceives these potential impediments to successful exploitation of acquired strategic resources and thus identify a potential cause for heretofore mostly inconsistent evidence on bidder abnormal returns in corporate takeovers found in previous research

Dawn DeTienne's Quick Files

The Quick Files feature was discontinued and it’s files were migrated into this Project on March 11, 2022. The file URL’s will still resolve properly, and the Quick Files logs are available in the Project’s Recent Activity

Entrepreneurial exit as a critical component of the entrepreneurial process: Theoretical development

By demonstrating the importance of entrepreneurial exit to the entrepreneur, the firm, the industry, and the economy I contend that our understanding of the entrepreneurial process is incomplete without the inclusion of entrepreneurial exit. I define entrepreneurial exit and demonstrate how this conceptualization provides concepts that are unique from those addressed by researchers in other domains; thus outlining a space for it within the literature. In each phase of the entrepreneurial process I explore the development of an exit strategy, reasons for exit and options for exit.Entrepreneurial exit Entrepreneurial process Psychological ownership

Studying exit from entrepreneurship: New directions and insights

Research on entrepreneurial exit has established itself as a more recognized component of the entrepreneurial process and a distinctive domain of entrepreneurship research. Despite the progress made, there still exists important topics within entrepreneurial exit where scholarly understanding is scant. This special issue discusses new and open topics of research on entrepreneurial exit. Three papers examine three such topics including pricing intentions of exiting entrepreneurs, exit considerations among angel investors, and the relationship between exit and failure in new ventures.Funding Agencies|Marcus Wallenberg foundation for International Scientific Cooperation</p

Studying exit from entrepreneurship: New directions and insights

Research on entrepreneurial exit has established itself as a more recognized component of the entrepreneurial process and a distinctive domain of entrepreneurship research. Despite the progress made, there still exists important topics within entrepreneurial exit where scholarly understanding is scant. This special issue discusses new and open topics of research on entrepreneurial exit. Three papers examine three such topics including pricing intentions of exiting entrepreneurs, exit considerations among angel investors, and the relationship between exit and failure in new ventures.Funding Agencies|Marcus Wallenberg foundation for International Scientific Cooperation</p

Maintaining life satisfaction when faced with multiple crisis episodes : the role of entrepreneurs' goal orientation

PurposeThe aim is to understand how goal orientation may help entrepreneurs maintain life satisfaction when faced with multiple crisis episodes. To do so, the authors study the early impact of COVID-19 on the life satisfaction of entrepreneurs who were previously faced with venture distress.Design/methodology/approachData on 164 Belgian entrepreneurs, who were faced with previous venture distress, are used. The analysis is quantitative, and uses survey data, in combination with databases. The survey was administered in the beginning of the COVID-19 pandemic (June 2020).FindingsEntrepreneurs high in learning goal orientation are less likely, and those high in performance-avoidance orientation are more likely to experience a decline in life satisfaction. Additionally, the time span between the two crises moderates the relationship between learning goal orientation and life satisfaction. Particularly, entrepreneurs high in learning goal orientation are less likely to experience a decline in life satisfaction if more time has passed between venture distress and the COVID-19 crisis.Practical implicationsOften, entrepreneurs are faced with multiple episodes of distress. The authors study entrepreneurs who have been in venture distress before and are then confronted with the COVID-19 crisis. The study shows that goal orientation, which is a type of self-regulation, plays an important role in how entrepreneurs' life satisfaction is affected. Also, the authors find that the time between distress events matters. These are important insights for practitioners, including entrepreneurs and support providers.Originality/valueThe study adds to the emerging discussion on the impact of crises on entrepreneurs. It studies life satisfaction (a measure of well-being) and complements studies that examine the impact of crises, on entrepreneurs' actions and firm performance

Entrepreneurial opportunity identification and new firm development processes : a comparison of family and non-family new ventures

This research examines differences between family and non-family firms with respect to new venture creation processes. We invoke a social embeddedness explanation of differences between family and non-family firms with respect to opportunity identification processes and outcomes and new venture development processes. In a sample of 183 family and non-family firms, we find that family firms are less likely to report an opportunity identification process that is sudden, spontaneous and creative. The new opportunities thus identified are less innovative than those identified by non-family firms. Finally, family firms are somewhat more likely to follow effectuation processes and significantly less likely to follow causation processes during new venture creation. Implications for research and practice are discussed