Gali et al 2023 ETP - Ent entropy, res exhaustion theory of EO - ACCEPTED.doc (747.5 kB)
Entrepreneurial entropy: A resource exhaustion theory of firm failure from entrepreneurial orientation
journal contributionposted on 2023-01-27, 10:52 authored by Nazha Gali, Mathew Hughes, Robert E Morgan, Catherine L Wang
Entrepreneurial orientation (EO) can generate substantial gains and losses, exhausting firm resources and straining a firm’s ability to sustain its activities. We develop and test a resource exhaustion theory of firm failure, conceptualizing conditions under which EO increases the risk of firm failure by generating unsustainable amounts of entrepreneurial entropy. Using panel data on 804 large U.S. high-technology firms over 18 years, we find that EO increases the risk of firm failure, which is mediated by the lack of organizational resource slack. An abrupt change in EO increases the risk of firm failure, especially among underperforming firms.
Author affiliationSchool of Business, University of Leicester
- AM (Accepted Manuscript)
Published inEntrepreneurship: Theory and Practice