Entrepreneurial failure in the spotlight of the competence-based theory of the firm

Abstract

The market process selects out a huge number of new ventures. Five years after foundation only about half of a source population remains in the market. Compared to research on entrepreneurial success factors, new venture failure is supposed to take the back seat. Many findings on business failure address more the symptoms (e.g. financial distress) than the final causes. Against this background, this article outlines an explanation of entrepreneurial failure in spotlight of the Competence-based Theory of the Firm (henceforth: CbTF) to explain the oftentimes long causal chains of entrepreneurial failure.