What are the Main Drivers for Exit Choice in SME's: Owner or Firm Characteristics?

Posted: 18 Jun 2011

Date Written: June 17, 2011


This study examines the main drivers for the exit choice of small firm owners. Only recently studies have begun to compare the exits of mature firms. Previous studies concentrated on start-ups, primarily trying to explain survival. Exit choice as used in this study differentiates between liquidation vs. sale of the firm. Predictions are drawn from the cognitive biases in financial markets.

Hypotheses propose that key drivers for exit choice vary on firm performance (well vs. poorly performing firms). Hypotheses are tested on a set of 157 small firm entrepreneurs, the majority of which are micro firms (0-9 employees). Results from binominal logistic regressions show support for the predictions: in well performing firms human capital or the characteristics of the entrepreneur (acquisition experience and years of ownership) prevail as key drivers, whereas in poorly performing firms the firm characteristics (dependency on owner and dependency on (few) customers) predict exit choice. These conclusions are made with caution, since interaction between firm performance and human capital is not significant.

Keywords: entrepreneurial exit, sale, liquidation, small firm, human capital, resources, firm performance, cognitive biases

Suggested Citation

van Teeffelen, Lex and Leroy, Hannes Luc and Uhlaner, Lorraine M., What are the Main Drivers for Exit Choice in SME's: Owner or Firm Characteristics? (June 17, 2011). Available at SSRN: https://ssrn.com/abstract=1866244

Lex Van Teeffelen (Contact Author)

HU Business School Utrecht ( email )


Hannes Luc Leroy

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000

Lorraine M. Uhlaner

EDHEC Business School ( email )

24 avenue Gustave Delory
Roubaix, 59057

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