SSE/EFI Working Paper Series in Business Administration
No 2009:10:
Reconceptualizing Entrepreneurial Exit: Divergent Exit Routes and Their Drivers
Karl Wennberg ()
, Johan Wiklund ()
, Dawn DeTienne ()
and Melissa Cardon ()
Abstract: 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
Keywords: Entrepreneurial Exit; Prospect Theory; Human Capital; (follow links to similar papers)
41 pages, February 10, 2009
Forthcoming, Journal of Business Venturing
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- This paper is forthcoming as:
-
Wennberg, Karl, Johan Wiklund, Dawn DeTienne and Melissa Cardon, 'Reconceptualizing Entrepreneurial Exit: Divergent Exit Routes and Their Drivers', Journal of Business Venturing.
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