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.
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