Entrepreneurial Persistence and Exit: An Empirical Investigation

Abstract

Exit from entrepreneurship gets much less research attention than entry to entrepreneurship, but considering the common knowledge that very few firms survive longer period, exit forms an integral part of comprehensive understanding about entrepreneurship. In a given socio-economic context few entrepreneurs persist but others quit. The macro economic factors may influence different entrepreneurs differently, possibly because of difference in the resource endowments and individual perceptions. How are exits different from persistence from an entrepreneurial perspective? This research takes responses from three categories of entrepreneurs; ‘those who are continuing their business’, ‘those who are having part time business’ and ‘those who have quit’. The questionnaire based survey looks into different aspects of entrepreneurship such as:intention, social support, ideation, perceived challenges, conviction, prior knowledge about business functions andability to measure performance, to identify any difference between the three categories of entrepreneurs. The exit timeline is also analysed in this study. The study indicates that most of the ventures close within 2 years and the median time of closure is 3 years. Factors like level of intention, perceived challenges optimism, execution as per plan and satisfaction differentiate persisting entrepreneurs from the exited ones. However, these two groups do not differ significantly with respect to revenue, starting team size, number of employees, social support, investment, opportunity, cost calculation, source and evaluation of ideas, planning, conviction, ability to measure business performance, prior business knowledge, ability to differentiate and need for a god-father. This study responds to the need of research towards entrepreneurial exit and bridges gap in the lack of comprehensive understanding of entrepreneurial life cycle.