The many faces of entrepreneurial failure: Insights from an empirical taxonomy

Business Failure and Entrepreneurship: Emergence, Evolution and Future Research

“…However, discontinuance of ownership includes firms that are sold due to the owner wanting to retire, firms sold for a profit, and firms sold simply because the owner wants to move on to another venture [Watson and Everett, 1996]. Assuming discontinuance is a synonym for failure is myopic and unreasonable [Khelil, 2016;Wennberg and DeTienne, 2014;Justo et al, 2015] Furthermore, it is the inclusion of these entities that skew and inflate the failure statistics. Additional difficulties arise from the fact that there are multiple variations of discontinuance, some classify discontinuance of ownership whilst others use discontinuance of the business [Watson and Everett, 1996].…”

“…Although exit is multilevel in nature (it may refer to the exit of firms from the market or the exit of founders from their firms), it is a "measurable event that can be easily captured empirically" DeTienne et al [2015, p. 257]. A recent paper by Khelil [2016] argued for exit to be engaged as a base concept that is then built upon with three specific configurations as a means of further synthesizing the phenomena of failure. These configurations being: (1) exit caused by the new venture's economic failure, (2) exit caused by the entrepreneur's disappointment and (3) exit to avoid failure [Khelil, 2016].…”

“…A recent paper by Khelil [2016] argued for exit to be engaged as a base concept that is then built upon with three specific configurations as a means of further synthesizing the phenomena of failure. These configurations being: (1) exit caused by the new venture's economic failure, (2) exit caused by the entrepreneur's disappointment and (3) exit to avoid failure [Khelil, 2016]. Clearly it is easier to identify exit as opposed to failure, and whilst exit as a proxy for failure is not acceptable, it does offer an opportunity to establish a dataset from which to start an investigation into the complex topic of failure.…”

“…Each stage of the failure process is characterised by different symptoms however this is not adequately reflected by prediction models which assumes that all firms follow a uniform failure process DePrijcker, 2008, Balcaen andOoghe, 2006]. It is for these reasons that there has been a shift in focus towards qualitative methods as a means of truly understanding business failure in recent years [Khelil, 2016, Cope, 2011, Singh et al, 2015, Byrne and Shepherd, 2015, Mantere et al, 2013. For some businesses the progression of the process towards failure is inevitable and irreversible; it occurs in spite of, or indeed because of, an individual trying to reverse the downward spiral towards closure [Cardon et al, 2005].…”

“…The voluntaristic perspective of business failure rejects the assumption that the environmental factors have more explanatory power than firmlevel factors [Khelil, 2016]. It is founded on the belief that management is the main decision maker within a firm, therefore their decisions and perceptions greatly affect the firm and thus management is the fundamental cause of firm collapse [Mellahi and Wilkinson, 2004].…”