Exits Flashcards
Schumpeter - notion of creative destruction
Purpose of entrepreneurship is to weaned out the business that aren’t very innovative. You have to destroy those that they aren’t doing as well to make room for new ones.
Coad
Birth
Survival
Death
Exit rates
Year 1 - 80% survival
Year 2 - 50% survival
80% small business fam run so risk is shared
Cope (2011)
Failure fosters higher level learning past mistakes are less likely to be repeated
Storey
Focus on entrepreneurial hubis - learning less likely
Shepherd et al
Impact of grief on future activity
Ford
Failure is the opportunity to begin again more intelligently
Hofer and charan
succession diminishes org performance, disrupts work routines, interrupts command and increases employee insecurity
Detienne - maturity phase
large percentage of growth motivated firms, founders have left the firm
Detienne exit strat
the exit may be modified over time, but I argue the development of an exit strategy will increase ability to exit and improve the number and the quality of the exit
Ucbasaran et al
Entrepreneurs are frequently described as suffering from and optimistic bias. High new business failure rates can be attributed to this bias. It is not clear whether all entrepreneurs are equally prone to this bias. We have argued that an entrepreneur prior business experience and business failures are linked to the likelihood of reporting comparative optimism
Wenburg et al avoidance strategies
Reducing costs
Invest equity. Reinvestment reduces probability of exit rates
Cope reading
Financial impact alone of failures can constrain dramatically and lead back to paid employment
Those who have experienced failure more peeped for trails
Woman struggle with grief and loss of failure
Gov statistics can…
Gives off wrong representation of entrepreneurship - don’t show differences between closure and failures
Calculating exit rate
Company registrations - lots of people don’t register or de register to avoid accepting failure
Inland revenues data - Grey areas - informal enterprise - cash in hand
Pressure group evidence
Do they matter - indicative or economic health/ dynamism/ opportunists - of low exit rates you as a country are doing well but may show easy and more have a go
Misinterpreting entrepreneurship exit
Risk calculations of entrepreneurial behaviour
Stigma - uk/us - cope us more accepting of failure
Creative destructions - which to keep going which to let go? You have ability to pic out things that are going to be successful
Learning opportunity - if it’s successful people might go off and learn about other stuff hr have previous knowledge too
Why do firms exit
Sale/merger Financial distress Market contraction Coercion - from contextual point of view, firm transactional economies , eg Bulgaria organised crimes Portfolio entrepreneurs
Why do entrepreneurs exit
Insufficient returns
Employement rate
Retirement
Succession
Return to employment - 10^ more wage - could be inaccurate cause of grey areas
Move in and out depending on market conditions
How do firms fail
Incremental - small, reoccurring problems
Catastrophic - loss of client, late payment, theft, fraud
Poor leadership
Incompetence
Carter and van uken
Firms with less sophisticated owners are more likely to fail
Firms with less access to capital are more likely to fail
