There's no fox like an old fox: Dimensions of entrepreneurial orientation and venture closure

Abstract

Only a few scholars examined downsides of EO and suggest it may negatively affect survival. Previous research, which mainly focuses on mature companies, assumes that the relationship between EO and survival is constant. However, because firm characteristics and causal mechanisms change as young venture survive and grow into mature firms, the relationships between EO and survival could also change over time. We extend the EO literature by considering changing EO effects when venture grow into mature firms and by employing a multidimensional view on EO and identify isolating independent mechanisms for the influence of each dimension (i.e. innovativeness, proactiveness and risk-taking) on the survival of young ventures. While the nature of proactiveness on performance is rathe positive, risk-taking and innovativeness increases the variance of firm performance and thus the chances of failure. However, the latter can be separated according to whether the increase in variance occurs at a single point in time (risk-taking) or over time (innovation) and whether the survivors have more money or more innovations. For young firms, innovativeness and risk-taking inhibit survival, while proactiveness promotes it, so the dimensions have divergent effects. As a consequence of the attrition of young ventures, the associations of innovativeness and risk-taking reverse when they grow older. Our empirical analyses are based on panel data of 8,518 young firms.

Full text

Röder, M., Urbig, D., Stöckmann, C., Bönte, W., Procher, V., Gottschalk, S. (2023) There's no
fox like an old fox: Dimensions of entrepreneurial orientation and venture closure. 26.
Interdisziplinäre Jahreskonferenz zu Entrepreneurship, Innovation und Mittelstand (G-
Forum), September 27-29, 2023.
Contribution Details
156
Submission Type / Conference Track: Science Fullpaper
Format: Full Paper
There's no fox like an old fox: Dimensions of entrepreneurial orientation and
venture closure
Martin Röder
4
, Diemo Urbig
1
, Christoph Stockmann
2
, Werner Bönte
3
, Vivien
Procher
5
Organization(s): 1: Institute of Business and Economics, Brandenburg University of
Technology Cottbus-Senftenberg, Germany; 2: Faculty of Economics and
Management, Free University of Bozen-Bolzano, Italy; 3: Jackstädt Center of
Entrepreneurship and Innovation Research, University of Wuppertal, Germany; 4:
Philipps-Universität Marburg, Deutschland; 5: Philipps-Universität Marburg,
Deutschland
Submitted by: Martin Röder
(Philipps-Universität Marburg, DE)
, ID: 1695
Topics: Corporate Entrepreneurship/Intrapreneurship, Entrepreneurial Failure
41 pages
Abstract
Only a few scholars examined downsides of EO and suggest it may negatively affect survival.
Previous research, which mainly focuses on mature companies, assumes that the relationship
between EO and survival is constant. However, because firm characteristics and causal
mechanisms change as young venture survive and grow into mature firms, the relationships
between EO and survival could also change over time. We extend the EO literature by
considering changing EO effects when venture grow into mature firms and by employing a
multidimensional view on EO and identify isolating independent mechanisms for the influence
of each dimension (i.e. innovativeness, proactiveness and risk-taking) on the survival of young
ventures. While the nature of proactiveness on performance is rathe positive, risk-taking and
innovativeness increases the variance of firm performance and thus the chances of failure.
However, the latter can be separated according to whether the increase in variance occurs at
a single point in time (risk-taking) or over time (innovation) and whether the survivors have
more money or more innovations. For young firms, innovativeness and risk-taking inhibit
survival, while proactiveness promotes it, so the dimensions have divergent effects. As a
consequence of the attrition of young ventures, the associations of innovativeness and risk-
taking reverse when they grow older. Our empirical analyses are based on panel data of 8,518
young firms.
Submitted
File(s)
1st file
FGF 2023.pdf