Organizational Mortality: The Liabilities of Newness and Adolescence

When is more better? The impact of business scale and scope on long‐term business survival, while controlling for profitability

“…Second, business age influences long-term business survival. The results reflect a liability of adolescence pattern (Bruderl and Schussler, 1990;Fichman and Levinthal, 1991). As compared to AGE9 businesses (businesses 82 years or older in the baseline year), long-term survival is shorter for businesses that were 21 years or younger in the baseline year (AGE1-AGE5), with AGE2 businesses showing the greatest survival vulnerabilities, indicating that the survival threat is greatest for young businesses that have run through their initial capital.…”

Balancing Formality and Informality in Business Exchanges as a Duality: A Comparative Case Study of Returnee and Local Entrepreneurs in China

“…To explore the differences between returnee and local entrepreneurs, we focused on the early stage of venturing. First, the early stage of venturing is critical because ventures are subject to the liability of newness and thus suffer from higher risk of failure (Bruderl & Schussler, 1990). …”

The Effect of Industry, Region, and Time on New Business Survival – A Multi-Dimensional Analysis

“…A number of empirical analyses have found that the likelihood of failure rises during the initial few months following foundation and then, after having reached a maximum, decreases again (Audretsch and Mahmood, 1994;Brüderl and Schüssler, 1990;Mahmood, 2000;Wagner, 1994). The common explanation for this phenomenon, called the liability of adolescence, assumes that it takes some time to make a judgment about the prospects of a new venture.…”

“…The common explanation for this phenomenon, called the liability of adolescence, assumes that it takes some time to make a judgment about the prospects of a new venture. The main determinants of the time span until exit are the exhaustion of initial resource endowment, external resource owners' fading confidence in a venture's success (Brüderl and Schüssler, 1990) and the firm-specific threshold of what is deemed sufficient performance, which may be determined by factors such as the founders' employment alternatives, psychic income from entrepreneurship or the cost of switching to other occupations (Gimeno, Folta, Cooper and Woo, 1997). Some authors assume that also older firms face a relatively high likelihood of closing down.…”