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Variable risk preferences in new firm growth and survival

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  • Wennberg, Karl
  • Delmar, Frédéric
  • McKelvie, Alexander
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.

Suggested Citation

  • Wennberg, Karl & Delmar, Frédéric & McKelvie, Alexander, 2016. "Variable risk preferences in new firm growth and survival," Journal of Business Venturing, Elsevier, vol. 31(4), pages 408-427.
    • Handle: RePEc:eee:jbvent:v:31:y:2016:i:4:p:408-427
    DOI: 10.1016/j.jbusvent.2016.05.001
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    More about this item

    Keywords

    Growth; Survival; Aspiration levels; Focus of attention; New ventures; Risk preferences;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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