1 / 15

Reconceptualizing Entrepreneurial Exit

Reconceptualizing Entrepreneurial Exit. Karl Wennberg Stockholm School of Economics Johan Wiklund Syracuse University Dawn R. DeTienne Colorado State University Melissa S. Cardon Pace University. Entrepreneurial Exit. Exit: Confusing evidence to date?. Entrepreneurial Exit.

ananda
Télécharger la présentation

Reconceptualizing Entrepreneurial Exit

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Reconceptualizing Entrepreneurial Exit Karl Wennberg Stockholm School of Economics Johan Wiklund Syracuse University Dawn R. DeTienne Colorado State University Melissa S. Cardon Pace University Entrepreneurial Exit

  2. Exit: Confusing evidence to date? Entrepreneurial Exit

  3. Problems in Prior Research • 1. Theoretical frameworks? • Expected Utility (EU) – most empirical work • - Sociology – disconnect between theories of class vs. theories of network/homphily • -Psychology (e.g. Prospect theory, Theory of Planned Behavior) -high internal validity but reliance on experiments 2.Underspecification problem - Need to distinguish different exit choices/routes from each other 3. Role of economic performance? - Low correlation performance – exit - “Irrational” entreprenuerial career choices(Hamilton, 2000) - Entrepreneurs as “skewness lowers” (Åsterbro, 2003) or “Hubris” (Griffith et al. 2006) Entrepreneurial Exit

  4. This paper Definition Entrepreneurial Exit: Whenever individuals exit the firm they started Theretical/Conceptual framework We view entrepreneurial exit as liquidation of a financial investment. (individual heterogeneity in intended longevity, emotional attachment ,etc.). • Empirical approach: • 1.Expected Utility (EU) vs. Prospect theory (PT) • -PT higher internal validity but sometimes difficult to distinguish from EU • -Relative explanatory power of EU / PT vary with domain and demographics (e.g. Harrison & Ruthström, 2007) • 2. Underspecification problem: • Need to distinguish the different choice sets from each other (i.e. by specification tests or computing marginal effects/competing models) • 3. Performance designed away (incorporated in outcome variable) Entrepreneurial Exit

  5. Methods Matched individual-firm data: Owner-managed firms in high-tech and knowledge-intensive services 1,735 new ventures followed for eight years (full population – no sample) Career history of owners: Human capital, demographics, class background Firm data: age, size, industry controls, performance measures allows us to differentiate three exit routes: Dissolution, harvest sale, and distress sale (first research to prove distinctiveness of various sales routes (Storey, Parker & Van Wittelstoltjin, 2005) Multinomial logit model with marginal effects of individual-level predictors Hypotheses tested by binary logit models testing each outcome against alternatives Entrepreneurial Exit

  6. Hypotheses: Entrepreneurial Experience Continuation Complementary Individual factors: * Entrepreneurial learning * Habitual entrepreneurship Dissolution Harvest Sale Distress Sale Entrepreneurial Exit

  7. Hypotheses: Education Continuation Competing Individual factors: * Higher performance (Bates, 1990) * More outside options (Gimeno et al., 1997) Harvest Sale Distress Sale Dissolution Entrepreneurial Exit

  8. Hypotheses: Industry Experience Continuation Competing Individual factors: Utility-maximizing arguments: * Experienceperformance (Cooper et al., 1994) Harvest Sale Distress Sale Dissolution Behavioral arguments: inexperience positively related to overconfident entry (Delmar & Shane, 2004; Hayward, Shepherd, & Griffin, 2006) and unwillingess to dissolve unsuccessful exploration (Lowe & Ziedonis, 2006) Entrepreneurial Exit

  9. Hypotheses: Age Continuation Complementary Individual factors: * $1 today more valuable than $2 tomorrow * Value of discounted future cash flow decreases with age, relative to selling (Becker, 1965; Lévesque & Minniti, 2006) Harvest Sale Distress Sale Dissolution Entrepreneurial Exit

  10. Results Specification tests: 1. Akike / Bayesian information criterion (AIC/ BIC) lowest value for the trinomial exit specification Dissolution, Harvest sale, andDistress sale 2. Independence of irrelevant alternatives (IIA)test was insignificant prior work with exit as a binary outcome has pooled conceptually as well as mathematically distinct events. Competing Cramer-Ridder tests rejected pooling the 3 alternatives -Valid model, but what about the appropriateness of utility theory and prospect theory to explain the different exit routes? Entrepreneurial Exit

  11. 1.86% 4.72% 1.81% Results : EntrepreneurialExperience -fullysupported! Continuation Dissolution Harvest Sale Distress Sale Entrepreneurial Exit

  12. 1.38% 0.61% Results : Education -not supported. Continuation Dissolution Harvest Sale Distress Sale Entrepreneurial Exit

  13. 2.05% 1.37% Results : Industry Experience -mixed supported! Continuation 3.10% Dissolution Harvest Sale Distress Sale Entrepreneurial Exit

  14. 1.29% 1.93% 1.40% 1.37% Results : Age -fullysupported! Continuation Dissolution Harvest Sale Distress Sale Entrepreneurial Exit

  15. Conclusions and future research: - Research on exit needs theoretical frameworkthat motivates distinct exit routes and what leads entrepreneurs to seek (or end up in) one or the other - Relative explanatory power of EU / PT vary between demographics, hence both are valuable for studies of entrepreneurial exit (e.g. Harrison & Ruthström, 2007) - Prior research has tended to treat exit as an underspecified event – e.g. Entrepreneurial Experience Further research --Failure-reducing strategies: -Income substitution :decreases probability of dissolution and distress sale, but no effect on the harvest sale -Reinvestment: Decrease all types of exit Related research: -Emotional investment  exit decision (Shepherd, Wiklund & Haynie, 2008) -Team decision  exit decision (Hellerstedt, Aldrich, Wiklund, ) Monday 14:30! Entrepreneurial Exit

More Related