The case of the disappearing firms: empirical evidence and implications

✍ Scribed by Charles I. Stubbart; Michael B. Knight

• Publisher: John Wiley and Sons
• Year: 2006
• Tongue: English
• Weight: 158 KB
• Volume: 27
• Category: Article
• ISSN: 0894-3796
• DOI: 10.1002/job.361

✦ Synopsis

Abstract

Organizational survival represents a vital objective for firms, managers, and owners. Most organizational theories regard survival as the ‘correct’ outcome for firms whose managers successfully navigate across a hostile competitive landscape. On the other hand, when a firm ‘disappears,’ scholars, managers, and owners ask, What went wrong?' Failure, exit, bankruptcy, liquidation, hostile takeovers, are largely viewed as results of managerial ‘bungling.’ Many theories about performance, competitive advantage, legitimacy, and leadership rest upon a core assumption that firms, at least some of them, have long, perhaps limitless, life‐spans. Long‐term survival is not seen as merely a random outcome or an unattainable goal. This paper surveys a broad set of empirical findings about firms' life‐spans. It is consistently revealed in the empirical literature that the VAST majority of firms, even large firms, survive relatively short periods. Some themes and their implications are discussed. Copyright © 2006 John Wiley & Sons, Ltd.