Personal characteristics, resources, and environment as predictors of business survival

Abstract

Although new venture success is frequently investigated in entrepreneurship, economics, and psychology, the studies published to date vary widely in their theoretical basis, study design, and research methodology. Based on organizational lifecycle theory and interactional personality theory, this longitudinal study analyses predictors of venture survival. Of 354 small business owners observed over 8 years, 283 (79.9%) still had active businesses at the end of the observation period. A survey instrument was developed to measure the relevant characteristics of the entrepreneurs, their resources, and the environment. Logistic regression models predicting medium-and long-term business survival included these characteristics and the interactions between them entered stepwise as blocks. Startup decisions (line of business, type, and size of planned business) were used as control variables. Much of the variance is explained by our research model (Nagelkerkes R 2 ¼ :36 for survival at 4 years, and .33 for survival at 8 years). Although long-term business survival is predicted by the individual variables of startup size and social capital (networks), a larger part of the variance is explained by environment/resource interactions.

Towards a new framework for SMEs success: a literature review

“…In fact, the early formation of a business, networking provides a bridging function to the environment and attenuates unfavourable environmental influences on business development, thus having a positive effect on survival (Davidsson and Honig, 2003;Kristiansen, 2002;Littunen, 2000). Last, the importance of networking to the new venture creation process is highlighted by several authors (Baron and Markman, 2003;De Carolis and Saparito, 2006;De Carolis et al, 2009;Korunka et al, 2010;Liao and Welsch, 2005).…”

“…The single most important aspect of the economic environment for small businesses is access to finance (Calcagnini and Favaretto, 2012;Korunka et al, 2010), especially in times of recession. This is due to the fact that small businesses come with a high level of uncertainty and low levels of collateral, making it difficult for lenders to assess the risk of an investment and thus reluctant to lend (De Maeseneire and Claeys, 2012;Harrison et al, 2004;Rutherford et al, 2001).…”

“…Financial support, in means of access to capital and credit schemes, is established as one of the most important obstacles to starting up of new businesses and a cause of slower growth and poor performance in all phases of business development (Alsos et al, 2006;De Maeseneire and Claeys, 2012;Dobbs and Hamilton, 2007;Korunka et al, 2010;Lussier and Halabi, 2010). Alfaro et al (2004) also argue that a lack of well-functioning financial markets hinders export activities.…”

On the importance of forest assets for micro-firm performance

“…Wiklund & Shepherd 2005;Fairlie & Robb 2009) since it provides a protecting buffer and improves the prerequisites for survival, growth and profitability (Shane 2003). According to Korunka et al (2010), access to financial capital at startup is the most important determinant of longterm business survival. Firms of small entry size tend to have limited access to resources for coping with initial challenges, and a shortage of resources is a common disadvantage faced by small firms more generally (Malecki 1993).…”

“…This provides novel perspectives on the entrepreneurial activities of forest owners as well as new insights into the importance of a rural resource for nonprimary economic activities. Finally, the paper contributes to the rather scarce research on entrepreneurship and firm performance using longitudinal methodological approaches (Korunka et al 2010).…”