Survival Of New Ventures Research Articles

A contingency study of the performance of new venture logistics firms in Nigeria

Purpose High failure rates characterise the experience of new entrepreneurial ventures in Nigeria and other emerging economies. Reliance on strategic tools such as entrepreneurial orientation (EO) is critical to the growth and survival of new ventures. This empirical study aims to deepen the understanding of the relationship between EO and performance of new venture logistics firms in Nigeria. It further explores the contingent effects of social capital and marketing capabilities on the hypothesised direct relationships from a transport industry perspective. Design/methodology/approach Managers of 650 new venture logistics service providers in selected Nigerian cities were Web-surveyed. Exploratory and confirmatory factor analyses were performed. Regression analysis was further performed. Common method variance and other validity checks were assessed. Findings The 469 valid responses showed a positive relationship between EO and new venture performance (NVP). Social capital and marketing capabilities positively moderate the direct relationship between EO and NVP. Managerial implications suggest that context-specific dynamics must be considered when making strategic EO decisions to aid firm growth and survival. Originality/value This study directly responds to the contingency approach recommendation of past studies (Anwar et al., 2022; Van Stel et al., 2021; Covin and Wales, 2019) using the logistics service and emerging economy context. It also introduces social capital and marketing capabilities as moderators.

Front-end Innovation and Top Income Inequality: Evidence from Emerging Markets

We contribute to the literature on income inequality, by extending existing models to examine the effect of front-end innovation (FEI) on top income inequality. We use a fixed effect panel regression, on annual country-level data for twenty-four emerging markets, over twenty-four (1995–2018) years, and find an insignificant correlation between income inequality and FEI. The instrumental variable estimates, however, show a significant association between measures of FEI and top income shares. Furthermore, we confirm that FEI is weakly related to broad measures of income inequality. Our instrumentation strategy and robustness checks suggest that this correlation partly reflects a causality, from FEI to top income inequality. Finally, we reveal that FEI is necessary for the survival of new ventures, in the crucial early years. Overall, our findings confirm that that; a) sectors that scale slowly because institutions are a substantial barrier for FEI and, b) sectors that rely solely on the most skilled front-end innovators to access credit, significantly expand top entrepreneurial income share across emerging markets.

Founding Team Human and Social Capital and Strategic Reorientation

Strategic reorientation has long been considered pivotal for the long-term survival of new ventures. However, despite prescriptions regarding the usefulness of strategic reorientation, very few ventures, in fact, reorient. In this paper, we illustrate the antecedent conditions of strategic reorientation. Using the mechanism of problemistic search and screening theory, we hypothesize that a venture's human and financial capital have different effects regarding strategic orientation. We test our theory using a sample of firms who had applied to be a part of an accelerator program and find support for our assertions.

Gender Impact on Entrepreneurial Success: A Meta-Analytical Structural Equations Analysis

Drawing on the social feminism theory and liberal feminism theory, this meta-analysis studied the effects of gender on different performance measures (financial performance, growth, survival, and satisfaction) for new ventures through the mediatory effect of hours worked, human capital levels (education level and experience level), social capital, and debt. The results, based on a meta-analysis of 69 studies with a total sample size of 51,985 new ventures, show that male entrepreneurs invest more hours in their business and have higher level of experience. Moreover, male gender was positively related to financial performance and growth directly and indirectly by influencing hours worked and experience level. Results show that female entrepreneurs are more satisfied with their businesses than male entrepreneurs, and finally our results could not establish an effect for gender on the survival of new ventures.

The impact of entrepreneurs' full-time versus hybrid employment and social connections on new venture survival: a USA–India comparison

Purpose The purpose of this paper is to explore how the entrepreneurs' social connections and types of employment differentially affect the survival of startup firms in the USA and India. Further, the authors analyze the differences during both the early stage and the later stages of new ventures. Design/methodology/approach The authors use data from the Global Entrepreneurship Monitor (GEM) database between 2012 and 2014 and examine the hypothesized effects with logistic regression analyses. Findings The analysis reveals that an entrepreneur's social connections with other entrepreneurs favor the survival of the focal entrepreneur's early-stage business in the USA. However, social connections are more critical for later-stage ventures in India. During the early stage, new ventures of full-time entrepreneurs are more likely to survive in India, whereas those by hybrid entrepreneurs are more likely to survive in the USA. The differences between the importance of full-time and hybrid entrepreneurs across geographies are less discernible during the later stages of new ventures. Originality/value The novelty of this paper is that it demonstrates the significant differences in the way social connections and types of employment (hybrid versus full-time) affect the survival of entrepreneurial firms in the early and later stages. The study also expands the international business literature by shedding new light on country-level differences that affect the survival of new ventures.

The Role of Failure in the Entrepreneurial Process: A Systematic Literature Review

Failure is a crucial event that can occur at any time during the entrepreneurial/start-up process. Understanding what influences the failure or survival of new ventures is increasingly attracting the interest of scholars, practitioners, and policymakers, mainly because of the role that startups play in innovation. Studying failure events presents a series of challenges that scholars should bear in mind when approaching this topic, starting from the definition of terms to the lack of data to analyze such events. The literature on business failures is scattered among different fields of research and lacks a comprehensive framework. We address this gap performing a systematic literature review. 74 papers focusing on new ventures’ failure have been reviewed and analyzed to identify the main causes of failure. In doing so, we identify four main categories of causes of new venture failure. Namely, I) resources, with a specific focus on human and financial capital; II) strategic/managerial decisions; III) product-related aspects; and IV) contextual/environmental-related issues. By providing an up-to-date systematization of recently published contributions on the topic, we aim to provide practical implications for entrepreneurs/practitioners and future research directions to researchers in the field.

Entrepreneurial finance and new venture success ‐ the moderating role of government support

AbstractThe high failure ratio in newly born ventures across the globe has been raised a challenging question. Numerous strategies have been introduced to enhance the survival of new ventures in the long run, but the results are fragmented. The research model examined the influence of entrepreneurial finance on new venture success. The model also considered a moderating role of government support while predicting ventures success. This area is under‐researched particularly in the context of Pakistan; therefore, this research may contribute to the existing body of knowledge to appraise the industry in Pakistan. Data were collected from 182 new ventures operating in an emerging economy in Pakistan and analyzed by SmartPLS. The results indicate that entrepreneurial finance and government support have a significant influence on new venture success. Moderation analysis demonstrates that government support strengthens the relationship between entrepreneurial finance and new venture success. The findings suggest implications for policymakers to initiate effective policies and programs for newly started ventures regarding financial and nonfinancial support; in this backdrop, the incubation services are important.

Does ethics really matter to the sustainability of new ventures? The relationship between entrepreneurial ethics, firm visibility and entrepreneurial performance.

This paper aims to explore whether entrepreneurial ethics can improve entrepreneurial performance in new ventures. The dynamic impact of entrepreneurial ethics on entrepreneurial performance (survival and sustainable growth) is investigated from an institutional perspective, and the moderating role of firm visibility between them is explored. From different regions of China, 296 valid questionnaires are obtained and analyzed. We find that entrepreneurial ethics is adverse to the survival of new ventures but conducive to their sustainable growth of new ventures. We also find that high firm visibility can help entrepreneurial ethics be more effective in improving entrepreneurial performance. This study provides a new insight to explain the theoretical controversy of entrepreneurial ethics and provides guidance for the establishment of the internal ethical structures of new ventures. Suggestions for government and industry regulators on the management of entrepreneurial ethics are also provided.

Organizational sponsorship and the economics of place: How regional urbanization and localization shape incubator outcomes

Organizational sponsorship impacts new venture emergence and survival prospects by shaping the relationship between new ventures and their surrounding environment. While extant literature offers an explanation as to why heterogeneity in the effectiveness of sponsorship emerges based on the sponsor's characteristics, current theorizing largely overlooks how sponsorship interacts with local economic conditions. This study introduces insights from urban economics to extend organizational sponsorship theory by showing how different types of agglomeration economies affect the effectiveness of organizational sponsorship. We test our hypotheses with a comprehensive database that includes over 46,000 sponsored and non-sponsored firms in the years 1997–2007. Our results reveal organizational sponsorship delays new venture exit when urbanization levels are low, localization is low, and both urbanization and localization are high.Executive Summary.Organizational sponsorship (OS) is an institutional arrangement whereby private or public entities provide assistance to new firm ventures. Since young firms face low survival chances at birth, it is assumed that any assistance such firms receive is to their advantage. However, very little research supports this assumption (Clayton et al., 2018; Dutt et al., 2016). It is in this context that we examine the impact of OS in different regional environments. Specifically, we look at the interplay between business incubation, a ubiquitous form of OS, urbanization, the city-scale of the region in which the firm is founded, and localization, the presence of same-industry firms in the region, in determining new venture survival. By exploring this interaction, we identify how the efficacy of OS varies in differing environmental circumstances. Additionally, it provides a better understanding of the specific OS mechanisms that are most likely to promote new venture survival depending on regional characteristics.For the purposes of our study, we combine insights from OS and agglomeration literatures. Specifically, we look at the interplay between the bridging, buffering and curating functions of OS with the externalities that arise from urbanization and localization. We consider the regional characteristics that provide new ventures with positive agglomeration externalities of input sharing, quick and quality matching with resource providers, and knowledge spillovers. Similarly, we also consider regional characteristics that give rise to negative externalities of rising costs and congestion. Thus, we identify urbanization and localization scenarios in which new ventures are most in need of buffering from competition, in the form of financial aid and subsidies, and scenarios where new ventures need to be bridged or curated with non-monetary resources such as accountants, lawyers, or industry-specific suppliers and investors. That is, we identify founding environments in which OS functions are most valuable.We test our hypothesis on a population of US business incubators operating between 1997 and 2007. To study the impact of OS at different levels of urbanization and localization, we compare the probability of exit by incubated new ventures with that of a control group of non-incubated new ventures in the same county. We find that incubators are most effective in improving the survival of new ventures when both localization and urbanization in the founding environment are low or when both are high.By linking OS literature with agglomeration literature our study identifies the conditions under which OS is most effective and finds that it is most effective when mitigating the lows of resource-deprived environments or the highs of a hyper-competitive landscape. We also extend the theoretical link between these two streams of literature by identifying the critical role of the OS function of curating in a highly localized and urbanized environment.Our study sheds new light on why OS is often met with varying levels of success in promoting new venture survival. We see that specific regional characteristics determine the type of OS mechanisms that are most beneficial. Thus, for instance, simply mimicking successful incubators in one region may not lead to success for incubators in other regions. Furthermore, we see that OS is counterproductive in regions with low urbanization and high localization. Together, these findings suggest that policy-makers need to consider the specific constraints faced by entrepreneurs in different regions before they seek to promote entrepreneurship through OS. It also stresses the need for entrepreneurs to do due diligence prior to joining an incubator.

The performance of angel-backed companies

Abstract We provide empirical evidence of the post-investment performance and survivorship profile of angel-backed companies, filling a long-standing gap within the entrepreneurial finance literature. Using a unique database of 111 angel-backed companies that received angel investments between 2008 and 2012 and at least 3 years of post-investment financial data, we develop an innovative performance metric and show that the performance and the probability of survival of investee companies are positively affected by the presence of angel syndicates and the hands-on involvement of business angels, while they are negatively related to the intensity of angel monitoring and the time structure of equity provision. Our results are robust to several endogeneity tests and provide insights on the multifaceted contributions of angel investors to the performance and survival of new ventures.

Uncovering new value frontiers: the role of the entrepreneurial ecosystem in nurturing born globals

The concept of the entrepreneurial ecosystem has recently gained renewed attention in the international business and entrepreneurship fields, focusing specifically on investigating the role of entrepreneurial environments in driving growth and internationalisation of new firms. This is an important theme to address, as the strengths and weaknesses of the local entrepreneurial ecosystem directly affect the international success and survival of new ventures. In this exploratory study, we assess the entrepreneurial ecosystems from the point of view of born globals and do so comparatively across two countries: Finland and Estonia. Through a survey method and data analysis with STATA and t tests, this study contributes to the literature on international entrepreneurship by 1) outlining the entrepreneurial ecosystem elements that are the most and least critical for the development of born globals and 2) comparing the performance of ecosystems between different countries as seen by born global firms. Therefore, the study helps in applying a neglected concept and level of analysis to the international entrepreneurship research arena.

Uncovering new value frontiers: the role of the entrepreneurial ecosystem in nurturing born globals

The concept of the entrepreneurial ecosystem has recently gained renewed attention in the international business and entrepreneurship fields, focusing specifically on investigating the role of entrepreneurial environments in driving growth and internationalisation of new firms. This is an important theme to address, as the strengths and weaknesses of the local entrepreneurial ecosystem directly affect the international success and survival of new ventures. In this exploratory study, we assess the entrepreneurial ecosystems from the point of view of born globals and do so comparatively across two countries: Finland and Estonia. Through a survey method and data analysis with STATA and t tests, this study contributes to the literature on international entrepreneurship by 1) outlining the entrepreneurial ecosystem elements that are the most and least critical for the development of born globals and 2) comparing the performance of ecosystems between different countries as seen by born global firms. Therefore, the study helps in applying a neglected concept and level of analysis to the international entrepreneurship research arena.

The Performance of Angel-Backed Companies

We provide empirical evidence of the post-investment performance and survivorship profile of angel-backed companies, filling a long-standing gap within the entrepreneurial finance literature. Using a unique database of 111 angel-backed companies that received angel investments between 2008 and 2012 and at least 3 years of post-investment financial data, we develop an innovative performance metric and show that the performance and the probability of survival of investee companies are positively affected by the presence of angel syndicates and the hands-on involvement of business angels, while they are negatively related to the intensity of angel monitoring and the structure of equity provision. Our results are robust to several endogeneity tests and provide insights on the multifaceted contributions of angel investors to the performance and survival of new ventures.

Internationalize to live: a study of the post-internationalization survival of new ventures

Despite a growing number of studies on the survival of new ventures who pursue an international entry strategy, research in this area is not yet conclusive. One line of argument tells a story of unprepared novices making a risky move, and thus predicts negative consequences. Another line of argument tells a story of prepared entrepreneurs making a strategic decision, and thus predicts positive consequences. The problem of estimating the true effect involves an important endogeneity problem that can only be overcome by accounting for the fact that new ventures self-select into internationalization. The goal of this research is to add to the post-internationalization survival literature by accounting for this self-selection using an endogenous switching model in a potential outcomes or counterfactual inference approach. Leveraging a panel of US new ventures from the Kauffman Firm Survey, our results paint a picture more in line with the preparedness logic of new venture internationalization. After controlling for this self-selection, we find a positive average treatment effect of internationalization on survival, and we find evidence that early internationalization is better for post-internationalization survival than late internationalization. We argue that these results suggest that the new theories of new venture internationalization needs to be further unchained from the process theories of internationalization.

Entrepreneurial Capabilities in the Founding and Survival of New Ventures

The founding and survival of new ventures are at the heart of entrepreneurship research. Building from dynamic capabilities, previous studies argue that entrepreneurial capabilities (1) is a micro-foundation for dynamic capabilities, and (2) includes firm-level abilities of opportunity identification and enacting in founding a business. However, these studies remain silent about the role of entrepreneurial capabilities in the process of new venture survival, and neglect the micro-foundation of entrepreneurial capabilities itself. Building from previous studies on individual entrepreneurs, we offer a model involving four distinct elements of individual entrepreneurial capabilities: passion and self-achievement, active learning and analysis, leadership and operation skills, and integrity and commitment. We then conduct multiple studies to develop and validate a 30-item entrepreneurial capabilities scale to capture these four dimensions. Results demonstrate strong dimensionality, reliability, and content, convergent, discriminant, and nomological validity. In doing so, the article contributes to identifying individual-level entrepreneurial capabilities that underpin the founding and survival process of new ventures and to the debate on the nature of such capabilities.

Internationalize to live: a study on post-internationalization survival of new ventures

Despite a growing number of studies on the survival of new ventures who pursue an international entry strategy, research in this area is not yet conclusive. One line of argument tells a story of un...

Influence of economic crisis on new SME survival: reality or fiction?

The aim of this research was to analyse the survival of new ventures during periods of economic crisis. The article compares survival probability during growth and crisis periods. An empirical study was used to analyse new venture survival probability. Results show that new firms have a greater likelihood of surviving during crisis periods than they do during growth periods. An additional aim of the study was to analyse the survival probability of opportunity and necessity entrepreneurs during crisis periods. Results show that gaps in survival likelihood between opportunity and necessity entrepreneurship are bigger during times of crisis than they are during growth periods.

Influence of human and physical capital on the survival of new ventures

The purpose of this study is to analyze the influence of physical and human capital on the survival of new ventures in different economic contexts. We conduct an empirical study by using a logit model to analyze new ventures’ probabilities of survival. The results show that both human and physical capital influence the survival of ventures in the short and long term, with human capital playing a particularly important role. The implications of the study hinge on two key findings. First, the government’s potential to promote more efficient forms of entrepreneurship is a prominent factor. Second, the motivations —necessity or opportunity—of the entrepreneurs embarking on business ventures, and the importance of certain types of capital also determine the venture’s prospects for survival.

Influencia del capital físico y humano en la supervivencia de nuevas empresas

El propósito de este estudio es analizar la influencia del capital físico y humano en la supervivencia de nuevas empresas en diferentes contextos económicos. Para ello, se lleva a cabo un estudio utilizando un modelo logit que analiza las probabilidades de supervivencia de las empresas de nueva creación. Los resultados muestran que tanto el capital humano como el físico influyen en la supervivencia de las empresas en el corto y largo plazo, siendo especialmente importante el papel que desempeña el capital humano. Las implicaciones del estudio giran en torno a dos hallazgos sustanciales. El primero es que destaca el potencial de los gobiernos en la promoción de formas más eficientes de emprendimiento. El segundo es que el tipo de motivación –necesidad u oportunidad– del emprendedor y la importancia de ciertos tipos de capital también determinan las probabilidades de supervivencia de las empresas.

Guanxi, performance and innovation in entrepreneurial service projects

PurposeThis paper aims to analyze the role played by two dimensions of entrepreneurs' private social capital in the survival, growth and innovativeness of entrepreneurial service ventures: local size and preferential attachment degree.Design/methodology/approachData were collected by a questionnaire, the unit of investigation being the private entrepreneur in the service sector in the city of Shanghai. The questionnaire allows the authors to identify the social network of the entrepreneurs, estimate the empirical degree distribution for the entire sample, and estimate local size and preferential attachment degree.FindingsThere is empirical evidence that entrepreneurs do not create social networks with preferential attachment structure and a large local size of the network increases the chances of survival of new ventures; however, the chance to become a dynamic venture is only related to entrepreneurs' preferential attachment degree.Social implicationsAny entrepreneurial strategy should include an investment plan to generate a minimum level of social capital orguanxi. Additionally, efficient strategy to generate social capital for dynamic entrepreneurship should focus on the creation of quality social capital. The underestimation of the role of social capital seems to have a deeper impact when analyzing the phenomenon of entrepreneurial innovation.Originality/valueThis conclusion suggests that the role of social capital in the entrepreneurial process could be underestimated systematically, since most of the literature only considers local measures of social capital. This underestimation seems to have a deeper impact when analyzing the phenomenon of entrepreneurial innovation.