Small Business Economics
and context.Special Issue Editors:
UNDERSTANDING FIRMS’ EXIT ROUTES: The role of strategies, approach, timing
Elena Cefis, University of Bergamo, Italy; firstname.lastname@example.org
Alex Coad, Pontificia Universidad Catolica del Peru, Peru; email@example.com
Orietta Marsili, School of Management, University of Bath, U.K., O.Marsili@bath.ac.uk
Cristina Bettinelli, University of Bergamo, Italy; firstname.lastname@example.orgManuscripts must be submitted by Sunday January 20, 2019, to email@example.com
Exit strategies can be performed in various forms and at different levels of analysis. At the firm
level (i.e., firm exit) exiting can be seen as part of an overall strategy (Cefis & Marsili, 2012) and
can be performed in various ways (Balcaen et al., 2012). While various definitions exist, (Wennberg et al., 2010; Wennberg & DeTienne, 2014) among the most common forms of firm exit we find closure of the business (e.g., Coad, 2014; Fortune & Mitchell, 2012), Mergers and
Acquisitions (M&A) (e.g., Cefis & Marsili, 2011; Bauer & Matzler, 2014; Cotei & Farhat, 2018),Divestures
(e.g., Villalonga & McGahan, 2005), and Failure (e.g., Bennett & Snyder, 2017). Firm
exit is considered here in
distinction to cases of entrepreneurial exit (e.g. IPO, MBO) where the firm continues even though the entrepreneur exits.
The literature on exit strategies is wide and comes from a variety of fields such as strategic
management, entrepreneurship, organizational behaviour
, and corporate finance. Scholars have
studied a range of aspects related to firm exit (Wennberg & DeTienne, 2014). Some scholars have focused on the possible antecedents of firm exit such as inertial forces and internal selection environment (Burgelman, 1994), performance levels (Chang, 1996), the presence of different types of uncertainty (Gaba & Terlaak, 2013), the role of innovation (e.g., Cefis & Marsili 2012, 2019), of financial constraints (Ponikvar et al., 2018) or of specific seller motives (Graebner & Eisenhardt, 2004). Others have instead studied the process of firm exit considering both internal and external forces (e.g., Bradley, Aldrich, Shepherd, & Wiklund, 2011; de Figueiredo & Silverman, 2007; Leroy et al., 2015; Ebert, Brenner and Brixy, 2018) or seen the phenomenon from a “survival” perspective (e.g., Coad, Frankish, Roberts, & Storey, 2013; Coad & Guenther, 2013; de Figueiredo & Silverman, 2012; Yang & Aldrich, 2012). Still
others have investigated the factors affecting the time and the route to exit
of ventures that are already distressed (Balcaen et al., 2011, 2012; Yamakawa & Cardon, 2017). Despite the actual fragmentation of conceptualizations, approaches, and focus, a common assumption behind most of the literature is that the exit phenomenon is the result of implicit or explicit, strategic or involuntary choices. There is a need for additional theoretically-sound and empirically-based papers embodying both analytical rigor and practical relevance with regards to the strategic choices related to exit. In other words, little research has investigated the actual strategies taken by firms (and entrepreneurs) seeking to exit their markets.
This Special Issue aims at filling this gap, which may represent an essential step in order to contribute to the debate/complete the puzzle on the role of selection and culling of different
strategic choices (Levinthal, 2017) at least with reference to firm exit. Indeed, the recent financial
crisis is a unique natural experiment that allows to study
the strategies – and in particular exit
strategies – firms implemented to respond to sudden environmental changes. Furthermore, in recent years, various national statistical offices no longer treat firm exit as a binary variable, but now they elaborate and share information on exit routes – making possible a new wave of empirical research.
Indeed, it is increasingly difficult to publish empirical work in top journals that treats
survival as a
binary variable. Attitudes have changed dramatically regarding what used to be a central indicator of firm performance: i.e. survival. Entrepreneurship scholars are now increasingly reluctant to equate survival to success, pointing out that persisting ‘zombie firms’ would do better to exit, while acquisitions are increasingly viewed as favourable
outcomes, and even outright failure is being emancipated from its earlier stigma. With this Special Issue
we aim at stimulating research on exit strategies (their antecedents, processes, contingencies, and outcomes) so as to help both scholars and practitioners navigate successfully the complex landscape of the related strategic choices and behaviors.Possible Research Topics
This Special Issue seeks high-quality submissions that provide significant contributions, whether
conceptual, theoretical or empirical, to favour
a clearer understanding of exit strategies. Below are some illustrative research questions (not exhaustive) that would be suitable for inclusion in the Special Issue. In addition, this Special Issue encourages submissions that probe exit strategies from multiple and cross-disciplinary perspectives such as entrepreneurship, strategic management, organizational behaviour
, family business, and economics, among others.
• How can we explicate the processes that lead to strategic decisions related to firm exits?
And their outcomes?
• What is the role of the incumbent management and shareholders, including external investors, in the decision making processes that lead to firm exit?
• What is the role of purpose? How do business goals and expectations interact in determining
the exit strategy?
• What is the role of individuals’ (and top management teams’) cognitions?
• How can we improve our understanding of the intrinsic processes, paths, conditions, drivers,
actions, and consequences of exit strategies?
• What are the role and effects that context (e.g., institutional context, sector, environmental
competitiveness, geographic location, culture, and history) plays in the process of devising,
organizing, and implementing an exit strategy? What are the managerial actions that capitalize on the effect of context?
• What is the role of specific actors (e.g., family owners, family managers) in the process that
leads to firm exit?
• How do family involvement in the ownership or management of the firm (e.g., owners higher risk aversion, managers' long term
perspectives in investments, economic and noneconomic tasks etc.) contribute to explain firm exit?
• How do contingent strategic choices such as innovation, financial leverage, and human resource management influence the role and effect of exit strategies?
• What insights from the strategic management, corporate finance, and entrepreneurship literatures can
be particularly relevant for understanding, conceptualizing, and measuring
various types of exit strategies?
• What are the implications of different exit strategies for the firm’s scope, governance and
• To what extent are exit strategies conscious and intentional? What is the difference (in terms
of antecedents and outcomes) between conscious and unconscious (intentional and nonintentional
) exit strategies?
• What is the role of time in the process of strategic exit? For example, if entrepreneurs are slow to act, they may slip from voluntary exit to forced closure.
• Is there a stable hierarchy of exit routes (e.g. harvest M&A, voluntary liquidation, bankruptcy)? Where exactly are options positioned in this hierarchy? Is voluntary liquidation closer to failure or success?
• Regarding M&A, is there a continuum of exits ranging from favourable
acquisitions paid at a premium, to asset-stripping acquisitions at a low price? Is the type of buyer important herein (e.g. differentiating between individuals, strategic or financial buyers)? What are the characteristics of this continuum? What is the role of selection events such as the financial crisis?Submission Process and Deadlines
Manuscripts must be submitted by Sunday 20th January 2019, to firstname.lastname@example.org.
All submissions will go through the Small Business Economics regular double-blind review process.
The Special Issue Editors will organize a formal workshop to select between and to develop the
papers that pass the first round of reviews, to discuss these further and to provide editorial guidance for additional revisions. This workshop will be organized at University of Bergamo in May 2019.References
Balcaen, S., Manigart S., Ooghe H., (2011). From distress to exit: determinants of the time to exit. Journal of Evolutionary Economics 21(3), 407-446.
Balcaen, S., Manigart S., Buyze J., Ooghe H., (2012). Firm exit after distress: differentiating between bankruptcy, voluntary liquidation and M&A. Small Business Economics, 39(4), 949-975.
Bauer, F., & Matzler, K. (2014). Antecedents of M&A success: The role of strategic complementarity, cultural fit, and degree and speed of integration. Strategic Management Journal, 35(2), 269-291.
Bennett, V. M., & Snyder, J. (2017). The Empirics of Learning from Failure. Strategy Science, 2(1), 1-12.
Bradley, S. W., Aldrich, H., Shepherd, D. A., & Wiklund, J. (2011). Resources, environmental change, and survival: Asymmetric paths of young independent and subsidiary organizations. Strategic Management Journal, 32(5), 486-509.
Burgelman, R. A. (1994). Fading memories: A process theory of strategic business exit in dynamic environments. Administrative Science Quarterly, 24-56.
Cefis, E., & Marsili, O. (2011). Born to flip. Exit decisions of entrepreneurial firms in high-tech and lowtech industries. Journal of Evolutionary Economics, 21(3), 473-498.
Cefis, E., & Marsili, O. (2012). Going, going, gone. Exit forms and the innovative capabilities of firms. Research Policy, 41(5), 795-807.
Cefis, E., & Marsili, O. (2019), Good Times, Bad Times: Innovation and Survival over the Business Cycle, forthcoming in Industrial and Corporate Change.
Chang, S. J. (1996). An evolutionary perspective on diversification and corporate restructuring: Entry, exit, and economic performance during 1981-89. Strategic Management Journal, 587-611.
Coad, A. (2014). Death is not a success: Reflections on business exit. International Small Business Journal, 32(7), 721-732.
Coad, A., Frankish, J. S., Roberts, R. G., & Storey, D. J. (2013). Growth paths and survival chances: An Application of Gambler’s Ruin Theory. Journal of Business Venturing, 28, 615–632.
Coad, A., & Guenther, C. (2013). Diversification patterns and survival as firms mature. Small Business Economics, 41(3), 633-649.
Cotei, C., & Farhat, J. (2018). The M&A exit outcomes of new, young firms. Small Business Economics, 50(3), 545-567.
de Figueiredo, J. M., & Silverman, B. S. (2007). Churn, baby, churn: Strategic dynamics among dominant and fringe firms in a segmented industry. Management Science, 53(4), 632-650.
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Ebert, T., Brenner, T. & Brixy, U. (2018). New firm survival: The interdependence between regional externalities and innovativeness. Small Business Economics. https://doi.org/10.1007/s11187-018-0026-4
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Yang, T., & Aldrich, H. E. (2012). Out of sight but not out of mind: Why failure
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