Wennberg, Karl () (Dept. of Business Administration, Stockholm School of Economics) Wiklund, Johan () (Whitman School of Management) DeTienne, Dawn () (Colorado State University) Cardon, Melissa () (Pace University)
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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
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Length: 41 pages Date of creation: 10 Feb 2009 Date of revision: Publication status: Forthcoming in Journal of Business Venturing, 2009. Handle: RePEc:hhb:hastba:2009_010
Note: Forthcoming, Journal of Business Venturing Contact details of provider: Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, SE 113 83 Stockholm, Sweden Phone: +46-(0)8-736 90 00 Fax: +46-(0)8-31 01 57 Email: Web page: http://www.hhs.se/ More information through EDIRC
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