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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…

205

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

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

Article
Publication date: 19 October 2021

Dimitrios Chatzoudes, Prodromos Chatzoglou and Anastasios Diamantidis

Looking back on the last 12 years, the whole planet went through two major economic crises (2008 and 2019), which both had a profound impact on the survival of businesses…

Abstract

Purpose

Looking back on the last 12 years, the whole planet went through two major economic crises (2008 and 2019), which both had a profound impact on the survival of businesses. The present study aims to develop and empirically test a conceptual framework that investigates the factors that have an influence on firm survival. More specifically, the study proposes a three-dimensional framework that includes performance drivers (utilizing resource-based view [RBV] factors), performance measures and the measurement of firm survival. Such a multi-dimensional approach has very rarely been explored in the existing literature.

Design/methodology/approach

A thorough literature review revealed gaps in the literature and offered the basis for developing the proposed conceptual framework of the study. Its empirical examination (hypothesis testing) was conducted with the use of a newly developed structured questionnaire that was distributed to a group of Greek manufacturing organizations (the final sample consists of 364 manufacturing companies). Empirical data were analyzed using the “structural equation modeling” (SEM) technique (multivariate analysis) and other similar techniques (i.e. exploratory factor analysis and analysis of variance). The study is empirical (based on primary data), explanatory (examines cause and effect relationships), deductive (tests research hypotheses) and quantitative (includes the analysis of quantitative data collected with the use of a structured questionnaire).

Findings

On the one hand, empirical results point out that “manufacturing-marketing alignment,” “manufacturing capabilities,” “structural configuration” and “business performance under crisis” have the most significant impact and on short-term survival (current situation). On the other hand, “competitive advantage” and “business performance under crisis” have the most significant impact on long-term survival (future situation). Focusing on RBV factors, only “structural configuration” and “manufacturing capabilities” directly affect short-term survival, while “manufacturing–marketing alignment” has an indirect effect on the same factor. Then again, all RBV factors indirectly affect long-term survival. Also, it is confirmed that short-term survival strongly affects long-term survival.

Originality/value

The present study contributes to the debate concerning the antecedents of firm survival, since current empirical findings are quite inconsistent. Specifically, crucial performance drivers and other measures are incorporated into an original model, which reveals their synergies and their impact on the dynamic dimensions of firm survival. Additionally, it enhances the stream of research that investigates firm survival under crisis since very few similar empirical studies have been conducted. Finally, firm survival is not measured as a static concept but rather as a dynamic one (firm survival – current situation and firm survival – future situation). Overall, the final model can explain 35.2% of the variance in “firm survival – current situation” and 46.3% of the variance in “firm survival – future situation.”

Details

EuroMed Journal of Business, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1450-2194

Keywords

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

Keywords

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

Keywords

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

Keywords

Article
Publication date: 8 December 2021

Uday Salunkhe, Bharath Rajan and V. Kumar

Global crises create an environment that is characterized by a fight for survival by countries, companies and citizens. While firms have adopted business initiatives to…

Abstract

Purpose

Global crises create an environment that is characterized by a fight for survival by countries, companies and citizens. While firms have adopted business initiatives to ensure survival in a global crisis, many measures are geared toward preventing customer churn, declining revenues and eroding market share. Such short-term focus raises an important question regarding long-term survival – how can firms survive a global crisis? The purpose of this study is to investigate how firms can survive a global crisis.

Design/methodology/approach

This study considers pandemics as the study context and uses a triangulation methodology (past research, managerial insights and popular press articles) to advance the organizing framework. Using the process study approach, the proposed framework recognizes the onset characteristics of a global crisis with a focus on pandemics and the government actions that reflect the pandemic onset. The framework also identifies a logical order of three marketplace reactions to the pandemic – management response, consumer response and critical business transformations that ultimately lead to firm survival – and advances related research propositions of such reactions.

Findings

By deploying critical business transformations, firms can ensure firm survival in a pandemic by fostering engagement with customers, employees and resources. Additionally, the moderators that influence the relationships between (1) management response and critical business transformations, (2) consumer response and critical business transformations, and (3) critical business transformations and firm survival are identified. Finally, this study presents an agenda for future research.

Research limitations/implications

To the authors' best knowledge, this is the first study to adopt an interdisciplinary approach to study firm survival in a global crisis such as a pandemic. This study answers the call for more research to the growing field of pandemic research in the areas of marketing research and marketing strategy.

Practical implications

The learnings from this study can help firms on what to anticipate and how to respond in a crisis such as a pandemic.

Social implications

Societal welfare is accounted for as firms plan to deal with a crisis.

Originality/value

This is the first study to propose a strategic framework to deal with a crisis that is largely unanticipated where the duration and the impact is not predictable.

Details

International Marketing Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0265-1335

Keywords

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. 29 no. 1
Type: Research Article
ISSN: 1462-6004

Keywords

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. 71 no. 5
Type: Research Article
ISSN: 1741-0401

Keywords

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…

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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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