Variable risk preferences in new firm growth and survival


Abstract We outline and test a decision-making theory of new venture growth and survival. Building upon research in entrepreneurship and decision making under risk, we hypothesize that entrepreneurs’ attention to survival and aspiration reference points changes based on venture age (experience-based learning), size (differences in decision complexity), and performance decision domain. Examining a panel of 14,760 new ventures in the professional services sector, our findings show how risk preferences change as a venture ages and increases in size. This approach offers a more nuanced view of decision making under risk and provides a theoretical explanation for the common patterns of new ventures’ probability of exit and growth diminishing with age and size.

Journal or Publication:
Journal of Business Venturing
Authors:
Karl Wennberg
Frédéric Delmar
Alexander McKelvie
Tags:
Status:
publish
Year Published
2016
Relevant Principles:
Download Attachment:
 PDF Download