The new venture mortality myth

J.D. Levie, G. Don, B. Leleux

Research output: Chapter in Book/Report/Conference proceedingChapter

9 Citations (Scopus)

Abstract

This chapter reviews the literature on perceptions and measures of new business mortality, and notes wide and persistent gaps between perceptions and measures. Official statistics suggest that survival rates of new businesses in advanced economies tend to be around 80% after one year and around 50% after five years. Failure rates appear to be around half to a third of the inverse of the survival rate, depending on how failure is defined. A survey of estimates on the world wide web found the most quoted failure rate was 50% after one year. Explanations for this gap between perception and official statistics include the way firm births are measured, vested interests, and misleading referencing. Using the UK as an example, it is estimated that nascent entrepreneurship rates could be increased by a third if people knew the true failure rate for new businesses.
Original languageEnglish
Title of host publicationHandbook of Research on New Venture Creation
EditorsKevin Hindle, Kim Klyver
Pages194-215
Number of pages22
Publication statusPublished - 2011

Keywords

  • new ventures
  • entrepreneurship
  • mortality

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