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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

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journal contribution
posted 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.

History

Author affiliation

School of Business, University of Leicester

Version

  • AM (Accepted Manuscript)

Published in

Entrepreneurship: Theory and Practice

Publisher

SAGE Publications

issn

1042-2587

Copyright date

2023

Available date

2023-11-15

Language

en