haku: @indexterm SMALL BUSINESS / yhteensä: 2030
viite: 175 / 2030
| Tekijä: | Cressy, R. |
| Otsikko: | Why do most firms die young? |
| Lehti: | Small business economics
2006 : MAR, VOL. 26:2, p. 103-116 |
| Asiasana: | entrepreneurship small business human capital risk models |
| Vapaa asiasana: | SME |
| Kieli: | eng |
| Tiivistelmä: | In this paper, a model is developed to explain why most firms die in the first few years of business (here as: b). A Brownian motion in net worth over time is faced by a risk averse entrepreneur with initial capital endowment. To balance return (profits growth) and risk (variance of profits), a portfolio strategy is adopted, choosing market positioning to achieve an optimal combination of risk and return at each instant. Failure occurs with the firm's value falling below the opportunity cost of staying in b. The resulting distribution of failure is Inverse Gaussian, implying a positively skewed failure curve. In addition, the model presents a novel measure of management human capital (MHC). |
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