Disentangling entrepreneurial firm exits and failures

Karen Murdock, Tamara Stucchi, Peiran Su

Research output: Contribution to conferencePaper

Abstract

The entry and exit of firms is indicative of a competitive dynamism which signals a positive economic structure. Relative ease of entry and exit is seen as necessary for economic growth. Entrepreneurship is a common means of entry and, despite the efforts and intentions of the entrepreneurs, some new firms will discontinue their activities either by choice or by necessity, due to misalignment of expectations and realized outcomes.

Reported high rates of entrepreneurial firms’ exit labeled as failure have created a stigma, which is believed to have negative impact on entrepreneurship activities. Despite the general tendency in entrepreneurship discourse to associate firm discontinuance with failure, not all discontinuances have the generally expected negative consequences.
The paper explores the phenomenon of entrepreneurial firm exit as a way to disentangle negative and non-negative consequences associated with such noted failure events as bankruptcy. Analyzing the activities leading up to the declaration of bankruptcy and following the process beyond that critical event helps to identify and explain non-negative outcomes and raises the question of when should an entrepreneurial exit be labeled as failure.
Original languageEnglish
Publication statusPublished - Jun 2014
Event2014 Babson College Entrepreneurship Research Conference - Western University, London, Ontario, Canada
Duration: 4 Jun 20147 Jun 2014
file:///C:/Users/77780198/Downloads/2014-BCERC-IVEY-Business-School-Conference-Summaries.pdf

Conference

Conference2014 Babson College Entrepreneurship Research Conference
CountryCanada
CityLondon, Ontario
Period4/06/147/06/14
Internet address

Fingerprint

Entrepreneurial firms
Firm exit
Entrepreneurship
Bankruptcy
Entry and exit
Entrepreneurs
Economic growth
New firms
Exit
Misalignment
Dynamism
Economic structure
Stigma
Discourse

Cite this

Murdock, K., Stucchi, T., & Su, P. (2014). Disentangling entrepreneurial firm exits and failures. Paper presented at 2014 Babson College Entrepreneurship Research Conference, London, Ontario, Canada.
Murdock, Karen ; Stucchi, Tamara ; Su, Peiran. / Disentangling entrepreneurial firm exits and failures. Paper presented at 2014 Babson College Entrepreneurship Research Conference, London, Ontario, Canada.
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Murdock, K, Stucchi, T & Su, P 2014, 'Disentangling entrepreneurial firm exits and failures' Paper presented at 2014 Babson College Entrepreneurship Research Conference, London, Ontario, Canada, 4/06/14 - 7/06/14, .

Disentangling entrepreneurial firm exits and failures. / Murdock, Karen; Stucchi, Tamara; Su, Peiran.

2014. Paper presented at 2014 Babson College Entrepreneurship Research Conference, London, Ontario, Canada.

Research output: Contribution to conferencePaper

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T1 - Disentangling entrepreneurial firm exits and failures

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AU - Stucchi, Tamara

AU - Su, Peiran

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AB - The entry and exit of firms is indicative of a competitive dynamism which signals a positive economic structure. Relative ease of entry and exit is seen as necessary for economic growth. Entrepreneurship is a common means of entry and, despite the efforts and intentions of the entrepreneurs, some new firms will discontinue their activities either by choice or by necessity, due to misalignment of expectations and realized outcomes.Reported high rates of entrepreneurial firms’ exit labeled as failure have created a stigma, which is believed to have negative impact on entrepreneurship activities. Despite the general tendency in entrepreneurship discourse to associate firm discontinuance with failure, not all discontinuances have the generally expected negative consequences.The paper explores the phenomenon of entrepreneurial firm exit as a way to disentangle negative and non-negative consequences associated with such noted failure events as bankruptcy. Analyzing the activities leading up to the declaration of bankruptcy and following the process beyond that critical event helps to identify and explain non-negative outcomes and raises the question of when should an entrepreneurial exit be labeled as failure.

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Murdock K, Stucchi T, Su P. Disentangling entrepreneurial firm exits and failures. 2014. Paper presented at 2014 Babson College Entrepreneurship Research Conference, London, Ontario, Canada.