Table of Contents

Handbook of Research on New Venture Creation

Handbook of Research on New Venture Creation

Elgar original reference

Edited by Kevin Hindle and Kim Klyver

This comprehensive Handbook provides an essential analysis of new venture creation research. The eminent contributors critically discuss and explore the current literature as well as suggest improvements to the field. They reveal a strong sense of both the ‘state-of-the-art’ (what has and has not been done in new venture creation research) and the ‘state-of-the-could-be’ (future directions the field should take to improve knowledge). The Handbook comprises nineteen chapters divided into four main sections: setting the agenda; theoretical perspectives; data and measurements; and new venture creation through contextual lenses.

Chapter 12: The New Venture Mortality Myth

Jonathan Levie, Gavin Don and Benoit Leleux

Subjects: business and management, entrepreneurship

Extract

Jonathan Levie, Gavin Don and Benoît Leleux INTRODUCTION In this chapter, we demonstrate the following: in advanced economies of the world: a) new businesses do not suffer a high failure rate; b) most people overestimate the chances of new firm failure; and c) fear of failure reduces entrepreneurial entry. Taken together, they suggest that new venture creation rates are lower than they would be if the true rate of new venture failure was widely known. Official statistics tend to exaggerate enterprise churn, and it is common practice to assume that enterprise discontinuations are failures. A UK example of the weaknesses of sales tax registration, company incorporation data and business bank account data as measures of business failure is provided by the following case of a real business that trades as Young Company Finance. YCF was founded by Equitas, a partnership, in January 1998. At the outset it incorporated (measurable as a Companies House start-up), registered for value added tax (measurable as a VAT start-up) and opened two bank accounts (measurable as two parallel bank start-ups). In 1999 it opened a new bank account (a third bank start-up). In 2000 YCF Ltd sold its business and assets to Jonathan Harris, who incorporated a company to acquire them (a second Companies House start-up), opened a bank account (a fourth bank start-up) and registered for VAT (second VAT start-up). In due course, YCF Ltd, now a cash shell, closed its three bank accounts (three bank closures), deregistered for VAT (first VAT closure)...

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