New enterprises are a source of economic growth, innovation, structural change and em-ployment. However, new firms face a serious problem of high mortality subsequent to their entry into the market. Thus the goal of this thesis paper was to identify survival factors of newly founded firms. This incorporated first to identify existing theoretical frameworks of SFR and second to provide insights into some empirical key findings for some important survival factors of newly founded businesses within the existing literature. In the core part of this paper, a crude systematization of success determinants into personal, firm-specific and environmental factors was used. The analysis of literature on firm survival and success factors revealed a mixed picture as different studies came up with contradicting results. Only few key findings were revealed to have consistent re-sults, which are further presented and discussed in this paper. Furthermore, a critical review of the success factor literature revealed also that utilization of different success measures, biased and unrepresentative samples, inappropriate analytical methods and the lack of a theory-driven approach all contribute to inconsistent results. Finally, it was also identified that the research community faces a paucity of literature in the field of regional and pre-entry determinants and how they impact on business success and survival.
Table of Contents
1 CHAPTER – INTRODUCTION
2 CHAPTER – CENTRAL TERMINOLOGY
2.1 BUSINESS SUCCESS
2.2 BUSINESS FAILURE
2.3 CLASSIFICATION OF NEWLY FOUNDED FIRMS
3 CHAPTER – THEORETICAL FRAMEWORKS AND EMPIRICAL EVIDENCE
3.1 PERSONAL FACTORS
3.1.1 Human Capital Theory
3.1.2 Empirical Evidence
3.1.3 Social Capital Theory
3.1.4 Empirical Evidence
3.2 FIRM-SPECIFIC FACTORS
3.2.1 Transaction Cost Theory
3.2.2 Learning Theory
3.2.3 Empirical Evidence
3.3 ENVIRONMENTAL FACTORS
3.3.1 Organizational Ecology Theory
3.3.2 Empirical Evidence
4 CHAPTER – CRITICAL REVIEW OF THE SUCCESS FACTOR RESEARCH
5 CHAPTER – CONCLUSION AND OUTLOOK
Research Objectives and Thematic Scope
The primary objective of this thesis is to identify the critical survival factors for newly founded firms by analyzing existing theoretical frameworks and empirical literature. The research addresses the high mortality rates of new ventures and investigates which personal, firm-specific, and environmental characteristics influence the probability of business survival.
- Theoretical identification of success factors in new business creation.
- Categorization of determinants into personal, firm-specific, and environmental perspectives.
- Evaluation of empirical evidence regarding human capital, social networks, and organizational strategies.
- Critical analysis of current research methodologies and identification of inconsistencies in the field.
Excerpt from the Book
3.1.1 Human Capital Theory
Human capital theory is one of these specific theories that are used to identify and examine the significant effects of the founder’s characteristics on the success of the new firm. The main advantage of this specific theory is that it prevents the problem with the electic compilation of personal factors from the vast variety of individual determinants mentioned above (Brüderl et al. 1992). This theory was adopted by researchers from the traditional research on the employees’ human capital and its effect on the employee earnings (Becker 1980; Rauch, Frese & Utsch 2005). Later this theory was modified to the new business foundation context, where human capital is conceptualized as personal factors of the business owner that contribute to the survival or failure of the new firm (Brüderl et al. 1992). Human capital theory differentiates between general and specific human capital (Becker 1975) and assumes that both general and specific human capital induce selection effects and productivity effects on the founders’ performance (Brüderl et al. 1992; Cooper, Gimeno-Gascon & Woo 1994).
Summary of Chapters
1 CHAPTER – INTRODUCTION: Outlines the relevance of new business creation for economic growth and highlights the high mortality rates faced by young firms, setting the stage for success factor research.
2 CHAPTER – CENTRAL TERMINOLOGY: Defines core concepts such as business success and business failure, and provides a classification model for different types of newly founded firms.
3 CHAPTER – THEORETICAL FRAMEWORKS AND EMPIRICAL EVIDENCE: Systematizes success determinants into personal, firm-specific, and environmental factors, supported by established theories and empirical findings.
4 CHAPTER – CRITICAL REVIEW OF THE SUCCESS FACTOR RESEARCH: Analyzes the reasons for inconsistent results in current research, such as biased samples and methodology, and proposes improvements for future studies.
5 CHAPTER – CONCLUSION AND OUTLOOK: Summarizes the key findings regarding survival factors and highlights the need for future investigation into pre-entry and regional determinants.
Keywords
Entrepreneurship, New Business Creation, Firm Survival, Success Factor Research, Human Capital, Social Capital, Transaction Cost Theory, Learning Theory, Organizational Ecology, Liability of Newness, Liability of Smallness, Empirical Evidence, Startup Performance, Business Failure, Founder Characteristics.
Frequently Asked Questions
What is the primary focus of this thesis?
The thesis focuses on identifying the theoretical frameworks and empirical key findings regarding survival factors of newly founded firms, aiming to explain why some startups survive while others fail.
What are the three main perspectives used to categorize success factors?
The research uses a systematization of success determinants into three main groups: personal factors, firm-specific factors, and environmental factors.
What is the main research question?
The research asks what characteristics—individual, firm-related, or environmental—influence the survival probability of newly founded firms subsequent to their market entry.
Which scientific methods are applied in this work?
This thesis is a literature-based research paper that reviews, synthesizes, and critically evaluates existing theoretical frameworks and empirical studies within the field of success factor research (SFR).
What does the main body of the work cover?
The core part covers specific theories like human capital theory, social capital theory, transaction cost theory, learning theory, and organizational ecology, while checking these against available empirical evidence.
How is the research characterized?
It is characterized by a focus on new ventures, an interdisciplinary approach, and a critical look at the inconsistencies inherent in current success factor research.
What is the 'liability of newness' hypothesis?
It is a concept from organizational ecology suggesting that young businesses have a higher failure rate than established ones due to a lack of routines, reputation, and stable ties.
Why does the author argue that success factor research is currently inconsistent?
The author points to the use of different success measures, biased or unrepresentative samples, and a lack of theory-driven approaches as primary contributors to contradictory results in the academic field.
- Arbeit zitieren
- Wladimir Wiegel (Autor:in), 2009, Survival factors of newly founded firms, München, GRIN Verlag, https://www.grin.com/document/167384
