Reconceptualizing Entrepreneurial Exit: Divergent Exit Routes and Their Drivers

Karl Jonas Wennberg (), Johan Wiklund (), Dawn DeTienne () and Melissa Cardon ()
Additional contact information
Johan Wiklund: Whitman School of Management, Postal: Whitman School of Management, Syracuse University, E-mail: jwiklund@syr.edu,
Dawn DeTienne: Colorado State University, Postal: 207 Rockwell Hall, Fort Collins, CO 80523, USA
Melissa Cardon: Pace University, Postal: Goldstein 227, Pleasantville NY 10570, USA

No 2009:10, Working Paper Series in Business Administration from Stockholm School of Economics

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 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-ent and nep-hrm
Date: 2009-02-10
Note: Forthcoming, Journal of Business Venturing
View list of references View citations in EconPapers

Forthcoming in Journal of Business Venturing, 2009.

Downloads: (external link)
http://swoba.hhs.se/hastba/papers/hastba2009_010.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:hhb:hastba:2009_010

Access Statistics for this paper

More papers in Working Paper Series in Business Administration from Stockholm School of Economics
Address: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, SE 113 83 Stockholm, Sweden
Contact information at EDIRC.
Series data maintained by Helena Lundin ().