"The downside of entrepreneurial orientation: Linking innovativeness, risk-taking, and proactiveness to business discontinuation"

Prof. Dr. Werner Bönte, University of Wuppertal (Germany)

This paper examines the relationship between Entrepreneurial orientation (EO) and failure of newly founded businesses. EO refers to a firm’s strategic posture and it usually comprises the three dimensions risk-taking, innovativeness and proactiveness. We employ a multidimensional perspective to EO, which emphasizes the potentially independent effects of the facets of EO. While previous research points to a positive and moderately large correlation between EO and the performance of established firms, empirical studies examining the relationship between EO and the performance of start-ups are still scarce and for a multidimensional perspective absent. In order to investigate the relationship between EO and venture closure, we make use of data of 2414 German start-ups obtained from the Mannheim Start-up Panel. Our results suggest that venture closure is linked to innovativeness, proactiveness, and risk taking through distinct and qualitatively different mechanisms, supporting the meaningfulness of considering EO as a multi-dimensional approach. Our results suggest that venture closure is positively related to innovativeness and proactiveness where the latter effect only holds for founders that have prior exit experiences. We do not find any direct effect of risk-taking, but risk-taking may indirectly affect exit through its effects innovativeness and risk-taking.

About the speaker
Prof. Dr. Werner Bönte studied economics at the University of Wien and at the Technical University Berlin. He received his academic degrees from the University of Hamburg. In 2006 he became Associate Director of the "Entrepreneurship, Growth and Public Policy Group" at the Max Planck Institute of Economics in Jena. Since November 2007 he holds the Chair of Industrial Organization and Innovation at the University of Wuppertal.

Venue: Room A1.23 (TS 53)

Date: 19 April 2016

Time: 12:00 - 13:00