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Article
Publication date: 24 February 2020

Karen Nicholas, Curtis R. Sproul and Kevin Cox

The purpose of this study is to explore how new firms enter a new industry and which structure will support survival. Essentially, the study examines the extent to which…

Abstract

Purpose

The purpose of this study is to explore how new firms enter a new industry and which structure will support survival. Essentially, the study examines the extent to which new firms choose to be broad with regard to the industry supply chain and deep with regard to their market presence. Based on these two structural decisions, each one is examined independently and in conjunction to discover which aspects support survival.

Design/methodology/approach

A quantitative approach was adopted, consisting of using data supplied by the state of Colorado. More specifically, the study draws on empirical data that identifies which license type (grower, manufacturer and retailer) each firm chose to get and how many retail outlets the firm chose to operate.

Findings

The findings reveal that firms that cover the breadth of the supply chain are twice as likely to survive, while a broad market presence increases the risk of exit by 2.5 times. When the two factors were combined, it was firms with broad integration and deep market presence that had the highest chance of survival, as opposed to firms with intuition. A deep market presence seemed to accentuate the effect of integration, increasing the risk when the firm was not integrated, while increasing the survival rate when the firm was integrated.

Research limitations/implications

This industry is quite new and afforded a unique opportunity to examine the impact of firm structure on survival. However, it may not be generalizable to other industries.

Practical implications

The present analysis argues that firms must adopt a holistic approach to their firm structure, because there are combinatorial effects at play. That is, while one specific strategy may increase survival, other strategies may impact firm survival. Examining and understanding the interplay of firm decisions are critical for firm survival.

Originality/value

Because of the lack of the formation of new industries, the authors’ understanding of the impact of firm structure on survival is limited. This unique context afforded the opportunity to empirically examine how firms can increase their chance of survival based on two aspects of firm structure: the breadth of the supply chain and the depth of the firm’s market presence.

Details

Journal of Business Strategy, vol. 42 no. 2
Type: Research Article
ISSN: 0275-6668

Keywords

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Book part
Publication date: 3 October 2006

Olga M. Khessina

This paper explores how two understudied characteristics of a firm's product portfolio, namely, aging of products and (non)innovativeness of products, affect firm survival

Abstract

This paper explores how two understudied characteristics of a firm's product portfolio, namely, aging of products and (non)innovativeness of products, affect firm survival. The influence of these product portfolio characteristics on organizational mortality can be observed both at the firm and at the industry levels. Paradoxically, the portfolio's influence at the firm and at the industry levels may go in opposite directions. Specifically, I predict that portfolios with aging products make their firms weaker competitors and survivors. However by weakening these firms, “aging” portfolios reduce competitive pressures at the industry level and, therefore, improve firm survival indirectly by changing industry vital rates. In contrast, firms with innovative product portfolios should be stronger survivors. At the same time, they are likely to intensify competition in the industry and, as a result, diminish survival chances of all firms, including those with innovative products. The analyses of all firms’ product portfolios in the worldwide optical disk drive industry, 1983–1999, support these predictions.

Details

Ecology and Strategy
Type: Book
ISBN: 978-1-84950-435-5

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Article
Publication date: 19 December 2019

Stephen Korutaro Nkundabanyanga, Elizabeth Mugumya, Irene Nalukenge, Moses Muhwezi and Grace Muganga Najjemba

The purpose of this paper is to examine the relationship among firm characteristics, innovation, financial resilience and survival of financial institutions in Uganda.

Abstract

Purpose

The purpose of this paper is to examine the relationship among firm characteristics, innovation, financial resilience and survival of financial institutions in Uganda.

Design/methodology/approach

This paper employs a cross-sectional research design, and responses from 143 officers of 40 financial institutions are analyzed using Statistical Package for the Social Sciences. The authors used ordinary least squares regression in testing the hypotheses.

Findings

The authors find that firm characteristics of size, age, innovation and financial resilience have a predictive force on survival of public interest firms such as financial institutions.

Research limitations/implications

The implication drawn here is that a combination of firm characteristics, firm innovation and financial resilience explains a significant contribution in the survival chances of financial institutions. However, as much as firm characteristics and financial resilience are significant, innovation explains more of the variances in financial institutions’ going concern appropriateness.

Originality/value

This paper adds to the limited financial institutions literature and provides the first empirical evidence of the efficacy of innovation and financial resilience on financial institutions survival. The auditing profession could consider more seriously the innovation activities and financial resilience of financial institutions in their test for the going concern assumption of such firms.

Details

Journal of Accounting in Emerging Economies, vol. 10 no. 1
Type: Research Article
ISSN: 2042-1168

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Article
Publication date: 14 May 2018

Imen Derouiche, Syrine Sassi and Narjess Toumi

The purpose of this paper is to investigate the effect of the control-ownership wedge of controlling shareholders (excess control) on the survival of French initial public…

Abstract

Purpose

The purpose of this paper is to investigate the effect of the control-ownership wedge of controlling shareholders (excess control) on the survival of French initial public offerings (IPOs).

Design/methodology/approach

This paper studies a large sample of 434 French IPOs. The empirical analysis uses the Cox proportional hazard and accelerated-failure-time models. Data are manually gathered from IPO prospectuses.

Findings

The findings support a positive relation between the control-ownership wedge and IPO survival time, indicating that survival is more likely in firms with high excess control levels. This result is consistent with the view that controlling shareholders with a large control-ownership wedge have incentives to preserve their private benefits of control by increasing firm survival chances. The findings also show that older IPOs are more likely to survive, while riskier and underpriced IPOs are more likely to delist.

Practical implications

The results provide a better understanding of the role of excess control in IPO survival. They also enrich the debate on the efficiency of the one-share-one-vote rule.

Originality/value

The research provides new insights into the role of agency conflicts in IPO survivability. In particular, it explores the effect of dominant shareholders with a control-ownership wedge on survival time.

Details

Journal of Applied Accounting Research, vol. 19 no. 2
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 27 August 2021

Valérie Francois and Matthieu Belarouci

This article investigates the distinctive characteristics and the performance of academic spin-offs within young innovative companies (YICs) supported by public regional…

Abstract

Purpose

This article investigates the distinctive characteristics and the performance of academic spin-offs within young innovative companies (YICs) supported by public regional agencies. Considering that academic spin-offs are characterized by high intensity in innovation and technology transfer, we raise the issue of their performance relative to other YICs.

Design/methodology/approach

The authors focus on YICs which receive support from public or semi-public institutions at the early stage of their development as a reward for their innovative business ideas. The study is performed in two steps. First, the authors estimate the growth of the academic spin-offs within a set of YICs supported for fewer than 5 years. This estimation is based on data gathered in 2014. Second, the authors investigate the survival of these supported YICs with the Cox proportional hazards model, 5 years later, at the end of 2019.

Findings

Results reveal that academic spin-offs are more able to capture resources in the early stages: These firms have more patents, more external funding and higher increases in the number of employees. The authors also demonstrate that academic spin-offs have the highest survival rates.

Research limitations/implications

The drawback of the studies on ASOs is the limited sample. The main issue is related to survival analysis. Limitation of the sample sizes precludes from in-depth survival analyses, which may highlight fundamental differences in the development patterns of the firm.

Practical implications

The study’s results provide evidence on how the identity of academic spin-offs based on technology transfer act as a positive signal to obtain legitimacy. It is of particular interest for entrepreneurs who can rely on trust provided by their parent institution to engage in negotiations with different stakeholders. Moreover, results give insights to policymakers on the usefulness to invest on academic spin-offs because of its outperforming results.

Originality/value

The results provide important insights for designing, conducting and monitoring policies that favor innovation. Moreover, it demonstrates to universities, research institutions and entrepreneurs engaged in technology transfer the economic and social usefulness of their approach.

Details

Journal of Small Business and Enterprise Development, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1462-6004

Keywords

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Book part
Publication date: 1 July 2012

David M. Townsend

Despite the growing importance of young, entrepreneurial ventures in modern economic systems, many such ventures fail quite early in their lifecycles. While both…

Abstract

Despite the growing importance of young, entrepreneurial ventures in modern economic systems, many such ventures fail quite early in their lifecycles. While both evolutionary theory and organizational learning theory yield important insights for the literature on young venture survival, questions remain as to why ventures facing similar environments experience differential rates of survival. In response, I propose a theory of entrepreneurial agency – defined as the emergence and/or transformation of firms, markets, industries governed by the evolving interaction of temporally situated, intentional strategic action with a malleable external environment – to complement prevailing viewpoints on the causes of young venture survival. My central thesis in this chapter is that to develop more comprehensive explanations of differential survival rates, a theory of entrepreneurial agency – illuminating the transformative potential of entrepreneurial action – is necessary to complement evolutionary perspectives in the literature on firm survival. With this objective in mind, I construct a theoretical model linking diverse perspectives on the duality of human agency and theories of environmental selection, and offer several theoretical and empirical suggestions to guide future research.

Details

Entrepreneurial Action
Type: Book
ISBN: 978-1-78052-901-1

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Article
Publication date: 9 March 2021

Yu Lin, Jiannan Wang and Yingjie Shi

This paper explores the relationship between inventory productivity and the likelihood of venture survival and then examines how financial constraints moderate the…

Abstract

Purpose

This paper explores the relationship between inventory productivity and the likelihood of venture survival and then examines how financial constraints moderate the inventory productivity–survival linkage.

Design/methodology/approach

Accelerated failure time (AFT) model is employed to study the link between inventory productivity and venture survival by using small- and medium-sized enterprise (SME) data from Chinese Annual Survey of Industrial Firms (CASIF) database over the period 1999–2007.

Findings

The paper demonstrates a converse U-curve relation between inventory productivity and venture survival. Additionally, financial constraints as the moderator weaken the marginal effect of inventory productivity on venture survival.

Practical implications

Managers should pay more attention to the important inventory performance indicator: inventory productivity. In the context of prominent financing difficulties, managers should be rapid to adjust the competitive strategy and optimize the internal production process according to the inherent nature of risks in a friction environment, and thus generate resources that enterprises cannot raise in the financial market.

Originality/value

This study may be the first to practically investigate the role of inventory productivity on venture survival and the moderating effect of financing constraints on this relationship. It adds to abundant articles as regards the interface between operation management and venture survival by exploring how financial constraints moderate the inventory productivity–survival linkage.

Details

International Journal of Productivity and Performance Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1741-0401

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Article
Publication date: 28 February 2020

Shabir Ahmad, Kamran Ahmed Siddiqui and Hoda Mahmoud AboAlsamh

The purpose of this paper is to examine the impact of owner family involvement in business on sustainable survival of family small-to-medium enterprises (SMEs) and to…

Abstract

Purpose

The purpose of this paper is to examine the impact of owner family involvement in business on sustainable survival of family small-to-medium enterprises (SMEs) and to empirically validate the intervening role of corporate social responsibility (CSR).

Design/methodology/approach

The authors analyze data from 489 owner and nonowner executives of 150 family SMEs using PLS-SEM (Partial Least Square–Structural Equation Modeling).

Findings

The authors found evidence that family involvement in business positively impacts the sustainable survival of family SMEs while corporate social responsibility partially mediates this relationship. Apart from effective family involvement in business, active involvement in social causes enhances a firm's ability to survive longer.

Research limitations/implications

This study was conducted in a geographic context and data were collected from family-managed and controlled firms. Further research is needed to generalize the findings to all types of family firms in the global context. In an Islamic society, family firms need to invest in social causes, human development, and environmental sustainability through zakat, sadaqat, and donations.

Practical implications

The findings imply that family firms require stakeholder-centric competitive strategies and socially responsible behavior along with effective family control, commitment, enrichment, and successful succession since the path to sustainable survival goes through CSR.

Originality/value

Survival is the biggest challenge facing family SMEs forcing them to achieve the ability to sustain longer. Rooted in transaction cost economics (TCE) theory of the family firm and stakeholder theory, this paper validates an integrative model for family SMEs' sustainable survival.

Details

Journal of Small Business and Enterprise Development, vol. 27 no. 2
Type: Research Article
ISSN: 1462-6004

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Article
Publication date: 2 March 2012

Fariss‐Terry Mousa and William Wales

This paper aims to explore the effects of entrepreneurial orientation (EO) on firm survival and examine whether founder chief executive officers (CEOs) are more effective…

Abstract

Purpose

This paper aims to explore the effects of entrepreneurial orientation (EO) on firm survival and examine whether founder chief executive officers (CEOs) are more effective than other types of managers at utilizing entrepreneurial orientation at initial public offerings (IPOs).

Design/methodology/approach

Using survival analysis the authors investigate the effects of EO on firm survival as well as the moderating role of founder CEOs.

Findings

The results suggest that EO increases post‐IPO survival. Further, founder‐CEOs moderate the EO‐survival relationship.

Originality/value

The paper shows that entrepreneurial orientation enhances long‐term survival in IPO firms. Survival is an important, though generally overlooked consideration in EO research. The paper also concludes that firms with founder CEOs are more likely to value and implement EO. Finally, the paper addresses calls for greater use of secondary measures of EO.

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Article
Publication date: 10 July 2017

David Rodeiro-Pazos, María Jesús Rodríguez-Gulías and Sara Fernández-López

The purpose of this paper is to explore the survival of university spin-offs (USOs) in Spain. First, the survival rates of USOs are compared with those of a group of…

Abstract

Purpose

The purpose of this paper is to explore the survival of university spin-offs (USOs) in Spain. First, the survival rates of USOs are compared with those of a group of similar firms. Second, the firm-specific characteristics of surviving USOs are compared with those of failed USOs.

Design/methodology/approach

The study is based on two subsamples consisting of 469 USOs and 469 non-USOs. A matching procedure is used for identifying a valid control group that allows for an outcome comparison between USOs and non-USOs. A longitudinal data set (2000-2010) is constructed, combining data regarding firm-specific characteristics and patent activity. The survival rates of both USOs and non-USOs are described first, and then, the firm-specific characteristics of the surviving USOs are discussed and compared with those of the failed USOs.

Findings

The authors find that the survival rates of the USOs are slightly lower than those of the non-USOs. In addition, the failed USOs have a longer average life span than the failed non-USOs. Finally, the data show that the surviving USOs are more likely to have venture capital investors, exports and patents than the failed USOs.

Research limitations/implications

This study carries out an explanatory analysis of the survival of Spanish USOs. As the results showed no significant differences between the characteristics of the surviving USOs and those that failed, except for subtle differences in the profiles of the two groups, it is necessary to analyse the underlying causes of this situation.

Practical/implications

In many countries, large amounts of public funds have been invested in the creation of USOs. This policy only makes sense if these firms increase the business value and create jobs. The support of USOs with a low expectation of survival or economic viability opens a debate on the amount of public funds invested in these firms. In the current context, funding obtained by these companies could be considered to drain resources from those projects that really deserve to be targeted.

Originality/value

The creation of USOs has become a mainstay of universities’ entrepreneurship strategies. Analysing USOs’ survival is therefore crucial for understanding the contribution of entrepreneurial universities to society. Survival is not another measure of this performance, but it is a pre-condition for university-based entrepreneurship to have an effect on society.

Details

Journal of Enterprising Communities: People and Places in the Global Economy, vol. 11 no. 03
Type: Research Article
ISSN: 1750-6204

Keywords

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