EconPapers    
Economics at your fingertips  
 

Industry profitability matters: The value of sustainable growth rate and distance from bankruptcy as enablers of venture survival

Pankaj C. Patel, Maria João Guedes, Michael S. Pagano and Gerard T. Olson

Journal of Business Research, 2020, vol. 114, issue C, 80-92

Abstract: Industries with a higher return on invested capital (ROIC), or profit for each unit of assets invested, could be particularly appealing to entrepreneurs. Yet, why do some ventures in industries with high ROIC survive while others do not? Drawing on the strategic fit framework, we posit that ventures with a higher sustainable growth rate (i.e., matching internal growth with industry ROIC) or stability (i.e., lower chances of bankruptcy) are more likely to survive in industries with a higher ROIC. We find support for our hypotheses in a sample of 120,816 new ventures established between 2010 and 2016 (15,236 new ventures failed during the period of observation). The findings have implications for the entrepreneurship literature related to the role of industry in explaining venture survival under varying ROIC industry conditions.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148296320302216
Full text for ScienceDirect subscribers only

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: https://EconPapers.repec.org/RePEc:eee:jbrese:v:114:y:2020:i:c:p:80-92

DOI: 10.1016/j.jbusres.2020.04.004

Access Statistics for this article

Journal of Business Research is currently edited by A. G. Woodside

More articles in Journal of Business Research from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-10-03
Handle: RePEc:eee:jbrese:v:114:y:2020:i:c:p:80-92