New Venture Survival: A Review and Extension

• Date: 01 October 2020
• Author: Aracely Soto‐Simeone,Charlotta Sirén,Torben Antretter
• DOI: http://doi.org/10.1111/ijmr.12229
• Published date: 01 October 2020

International Journal of Management Reviews, Vol. 22, 378–407 (2020)

DOI: 10.1111/ijmr.12229

New Venture Survival: A Review and

Extension

Aracely Soto-Simeone , Charlotta Sir´

en1and Torben Antretter2

Aalto University & Universidad del Desarrollo Maarintie 8, Espoo 02150, Finland, 1UQ Business School, The

University of Queensland, St. Lucia, Queensland 4072, Australia, and 2University of St. Gallen, Dufourstrasse 40a, St.

Gallen CH-9000, Switzerland

Corresponding author email: torben.antretter@unisg.ch

This paper provides an evaluative overview of the new venture survival literature.

Since Stinchcombe’s primary attempt to explain the mortality rates of new ventures,

different research fields, including entrepreneurship, management and sociology, have

devoted considerable attention to the antecedents of new venture survival. Despite this

lively research commitment, a comprehensive review of the literature on new venture

survival – as one of the most essential performance measures for new ventures – is

missing. Covering 54 years of research, this paper provides an overview of the factors

affecting new venture survivaland highlights important methodological aspects in this

research field. The reviewconcludes by discussing opportunities for future research.

Introduction

It is well known that many new ventures do not sur-

vive the first few years of their existence and thus

overburden themselves, their investors and the econ-

omy (Headd 2003; Wiklund et al. 2010). Given the

high failure rates of new ventures,1it is essential to

understand why some new ventures survive and oth-

ers do not (Stenholm and Renko 2016).

In understanding survival, one of the key concepts

to consider is the liability of newness (Stinchcombe

1965). The liability of newness exists because new

ventures lack specific resources and capabilities

that more established organizations have already

accrued (e.g. Freeman et al. 1983; Morse et al. 2007).

In his seminal work on the liability of newness,

Stinchcombe (1965) proposed antecedents to explain

new ventures’ chances of survival; consequently,

the foundations of our current understanding of new

venture survival were developed long before recent

technological advancements, such as the internet,

1For example, Shane (2009, 2012) found that more than

half of US start-ups launched between 1977 and 2005 failed

within the first 5 years and that failure rates rose after 2000.

rose to disrupt a variety of industries (Bettis and

Hitt 1995; Shapiro and Varian 1998) and many

established venture creation processes (von Briel

et al. 2018). Not surprisingly, research has dedicated

considerable attention to identifying additional

antecedents of new venture survival (e.g. Delmar

and Shane 2006; Hyytinen et al. 2015; Stenholm and

Renko 2016). Despite this lively research commit-

ment, our knowledge about why some new ventures

survive and others fail remains largely fragmented.

Although this fragmentation has led to increased

interest in synthesizing knowledge on firm survival

and failure (e.g. Cafferata et al. 2009; Josefy et al.

2017), there have been no systematic reviewslooking

exclusively at the antecedents of survival for new

ventures.

Tofill this void, this paper provides a systematic lit-

erature review of 205 studies on new venture survival

factors found in the top journals on entrepreneurship,

management and sociology in the past 54 years. We

refer to new ventures as firms that have not reached

the point of stability proposed in Kazanjian’s (1988)

four-stage model (cf., Stages 2–3 in Hanks et al.

1994). Thus, the aim of this review is to provide

a comprehensive and up-to-date picture of what

factors influence survival—one of the most essential

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New Venture Survival 379

measures of entrepreneurial success (Josefy et al.

2017; Mudambi and Zahra 2007). To identify mutual

themes and potential research gaps in a fragmented

field of study, we build on Br¨

uderl et al. (1992) and

categorize the antecedents of new ventures survival

into three categories: (1) conditions characterizing

new ventures’ environment; (2) attributes, structural

characteristics, and strategies of new ventures

themselves; and (3) individual characteristics of

founders and founding teams. In addition, we build

on Fichman and Levinthal’s (1991) interpretation of

Stinchcombe’s liability of newness concept as the de-

velopment of social relationships and consider inter-

organizational and intra-organizational relationships

as intermediaries between the different levels of our

analysis.

Overall, our review makes several contributions to

the new venture survival literature. First and most

importantly,it provides an up-to-date systematization

of the literature on new venture survival factors pub-

lished in the top entrepreneurship, management, and

sociology journals since Stinchcombe’s seminal work

in 1965. As we trace the evolution and refinements

of the new venture survival research, both conceptual

and empirical, this review develops an updated un-

derstanding of the liabilities of newness framework.

Second, it discusses the primary definitions of new

venture survival and providesa clear taxonomy of the

extant operationalizations of the survival construct

that future studies can utilize. Third, this review pro-

vides a comprehensive overview of methodologies

used to empirically study new venture survival and

establishes a springboard to further discussions on

methodological choices in this field. Finally, this re-

view articulates some challenges still to be explored

and sets out an agenda for future research.

A brief history of new ventures’

liabilities

The concept of the liability of newness (Stinchcombe

1965) has played a vital role in the debate on new

ventures’ emergence and survival prospects during

the past 50 years. In the following section, weprovide

a short discussion of the historical development of the

liabilities that new ventures face. A summary of the

most discussed liabilities is shown in Table 1. Figure 1

illustrates the distribution of articles by research field

overtime. We divide our discussion into three themes:

(1) the emergence of the liability of newness and its

first developments; (2) the liabilities of adolescence

and obsolescence as alternative perspectives; and (3)

the liabilities related to resources/capabilities.

Stinchcombe (1965, p. 148) proposed the liability

of newness concept ‘as a general rule [underlying why

a] higher proportion of new organizations fail than

old [organizations]’. The liability of newness predicts

that venture failure rates decline monotonically with

age independent of historical time, place and type

of organization. Based on this notion, Stinchcombe

(1965, p. 148) raised two important questions: ‘what

sorts of things, then make up the liability of newness?’

and ‘how do social conditions affect the degree of

liability?’

Regarding the first question, Stinchcombe (1965)

discussed four central social factors that limit new

ventures’ viability.First, new ventures depend on new

roles and tasks that have to be learned at some cost.

Second, the amount of time and effort required to

learn and coordinate organizational roles is likely to

be significant. Third, new ventures must rely heavily

on social relationships with strangers and may lack

a common normative basis or informal information

structure for doing so. Fourth, new ventures lack sta-

ble links to stakeholders when they begin operations.

To answer the second question, Stinchcombe (1965,

p. 150) firmly believed that social and economic

macro-structures play a pivotal role in enhancing new

ventures’ chances of survival. He thus proposed that

five basic variablesinfluence ventures’ mortality rates

in the early stages of the firm lifecycle: (1) general

literacy and specialized advanced schooling; (2) ur-

banization; (3) a money economy; (4) political rev-

olution; and (5) density of social life. Stinchcombe

(1965, p. 150) emphasized that his discussion of the

initial factors is not exhaustive but represents some

basic variables that affect survival.

After Stinchcombe (1965) introduced the liability

of newness concept, it took a relatively long time

before researchers started to actively build on it.

It was not until the late 1970s that the liability

of newness concept gained new traction in the

organizational ecology literature (e.g. Hannan and

Freeman 1977), greatly influencing this new research

stream’s theoretical and empirical development. In

particular, organizational ecologists were interested

in understanding what macro-economic factors foster

the initial creation of new ventures. In the 1980s,

scholars’ interest shifted to the firm itself, and the first

empirical evidence regarding the liability of newness

hypothesis emerged (Carroll and Delacroix 1982;

Freeman et al. 1983). In their empirical investigation,

Carroll and Delacroix (1982) showed that newspapers

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