Abstract

http://ssrn.com/abstract=1340886
 
 

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Reconceptualizing Entrepreneurial Exit: Divergent Exit Routes and Their Drivers


Karl Wennberg


Stockholm School of Economics; Ratio Institute

Johan Wiklund


Syracuse University

Dawn R. DeTienne


Colorado State University - College of Business; Utah State University

Melissa S. Cardon


Pace University; Case Western Reserve University

January 11, 2009

Journal of Business Venturing, Forthcoming

Abstract:     
We develop a conceptual model of entrepreneurial exit which includes exit through liquidation and firm sale for both firms in financial distress and firms performing well. This represents four distinct exit routes. In developing the model, we complement the prevailing theoretical framework of exit as a utility-maximizing problem among entrepreneurs with prospect theory and its recent applications in liquidation of investment decisions. We empirically test the model using two Swedish databases which follow 1,735 new ventures and their founders over eight years. We find that entrepreneurs exit from both firms in financial distress and firms performing well. In addition, commonly examined human capital factors (entrepreneurial experience, age, education) and failure-avoidance strategies (outside job, reinvestment) differ substantially across the four exit routes, explaining some of the discrepancies in earlier studies

Number of Pages in PDF File: 41

Keywords: Entrepreneurial Exit, Prospect Theory, Human Capital

JEL Classification: M13, J24, D81

Accepted Paper Series


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Date posted: February 11, 2009  

Suggested Citation

Wennberg, Karl and Wiklund, Johan and DeTienne, Dawn R. and Cardon, Melissa S., Reconceptualizing Entrepreneurial Exit: Divergent Exit Routes and Their Drivers (January 11, 2009). Journal of Business Venturing, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1340886

Contact Information

Karl Wennberg (Contact Author)
Stockholm School of Economics ( email )
PO Box 6501
Stockholm, 11383
Sweden
Ratio Institute
P.O. Box 3203
SE-103 64 Stockholm
Sweden
Johan Wiklund
Syracuse University ( email )
Whitman School of Management
720 University Avenue
Syracuse, NY 13244-2130
United States
Dawn R. DeTienne
Colorado State University - College of Business ( email )
Fort Collins, CO 80523
United States
Utah State University
Logan, UT 84322
United States
Melissa S. Cardon
Pace University ( email )
One Pace Plaza
White Plains, NY 10603
United States
Case Western Reserve University
10900 Euclid Ave.
Cleveland, OH 44106
United States
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