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The Causes of Early-Stage Entrepreneurial Discontinuance

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  • Martin Lukeš
  • Jan Zouhar

Abstract

A high proportion of nascent entrepreneurs do not make it to an operational venture. Even though entrepreneurial exit decisions occur more frequently than many think, the literature on entrepreneurial discontinuance is not much developed. The paper first examines whether factors influencing early-stage discontinuance differ in the Czech Republic in comparison with Western countries. Second, it contributes to existing theories on nascent entrepreneurial activity of ""modest majority"" low-growth businesses by focusing on the role of expectations in discontinuance decisions. A sample of nascent entrepreneurs was interviewed in 2011 and then in two follow-up waves in 2012 and 2013. Building on hubris theory of entrepreneurship and theory of performance thresholds, the paper discusses subjective decision-making about entrepreneurial launch and exit. The results show that people with higher industry experience are more likely to discontinue from nascent entrepreneurship, a finding contrasting most research in Western countries. The paper also provides added value in relating growth aspirations to solo vs. team entrepreneurship. Solo entrepreneurs with high initial expectations were found more likely to discontinue from their efforts, whereas teams disbanded more often in case of low-ambition plans on new venture.

Suggested Citation

  • Martin Lukeš & Jan Zouhar, 2016. "The Causes of Early-Stage Entrepreneurial Discontinuance," Prague Economic Papers, Prague University of Economics and Business, vol. 2016(1), pages 19-36.
    • Handle: RePEc:prg:jnlpep:v:2016:y:2016:i:1:id:534:p:19-36
    DOI: 10.18267/j.pep.534
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    References listed on IDEAS

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    3. Ondřej Dvouletý, 2017. "Relationship Between Unemployment and Entrepreneurship Dynamics in the Czech Regions: a Panel VAR Approach," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 65(3), pages 987-995.
    4. Shahid, Pirzada Syed Rizwan, 2023. "Founder's Human Capital and the Entrepreneurial Process Duration," OSF Preprints yf6mg, Center for Open Science.
    5. Manuel Octavio Del Campo Villares & Vanessa Miguéns-Refojo & Francisco Jesús Ferreiro-Seoane, 2020. "Business Survival and the Influence of Innovation on Entrepreneurs in Business Incubators," Sustainability, MDPI, vol. 12(15), pages 1-20, July.
    6. Elena-Loreni Baciu & Delia Vîrgă & Theofild-Andrei Lazăr, 2020. "What Characteristics Help Entrepreneurs ‘Make It’ Early on in Their Entrepreneurial Careers? Findings of a Regional Study from Romania," Sustainability, MDPI, vol. 12(12), pages 1-27, June.
    7. Sarra Kouada & Bénédicte Aldebert & Serge Amabile, 2018. "L’hypercroissance des start-up n’est pas un long fleuve tranquille : rôle et place des structures d’accompagnement ?," Post-Print halshs-01943501, HAL.
    8. Manuel Feldmann & Martin Lukes & Lorraine Uhlaner, 2022. "Disentangling succession and entrepreneurship gender gaps: gender norms, culture, and family," Small Business Economics, Springer, vol. 58(2), pages 997-1013, February.

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    More about this item

    Keywords

    start-ups; opportunity costs; nascent entrepreneurs; longitudinal study; event history models; entrepreneurial exit; discontinuance; Czech Republic;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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