Edited by Hans Landström and Franz T. Lohrke
Chapter 9: Only the Good Die Young? A Review of Liability of Newness and Related New Venture Mortality Research
9. Only the good die young? A review of liability of newness and related new venture mortality research Brian Nagy and Franz Lohrke INTRODUCTION New ventures often face discouraging odds in terms of their potential long-term survival. For example, both organizational studies and entrepreneurship textbooks frequently cite new venture failure statistics that suggest over half of all new ventures will fail within their first four years of existence. Although these high rates may result, in part, from how ‘failure’ is defined (e.g. selling a successful new venture would be classified as having ‘failed’ in some governmental surveys, see Headd, 2003), organizational researchers have frequently suggested these high mortality rates occur because most new ventures face a ‘liability of newness’. This liability results from a new venture’s lack of an established track record, which, in turn, makes it difficult for its managers to convince potential resource providers (e.g. investors, suppliers, and customers) to conduct business with the firm (Singh et al., 1986). Without these resources (e.g. capital, raw materials, and continuing sales), however, a new venture often faces dim survival chances. In addition, a new venture can initially lack internal efficiencies (e.g. established organizational routines), which can also create significant operational (e.g. cost) disadvantages relative to its more established competitors (Stinchcombe, 1965). Given these high mortality rates among new ventures, numerous organizational studies have examined liability of newness (LoN) issues. Stinchcombe (1965) introduced the construct, and researchers have since examined it in several conceptual (e.g. Shepherd et al., 2000) and empirical...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.