International Journal of Management Reviews, Vol. 22, 378–407 (2020)
DOI: 10.1111/ijmr.12229
New Venture Survival: A Review and
Extension
Aracely Soto-Simeone , Charlotta Sir
´
en
1
and Torben Antretter
2
Aalto University & Universidad del Desarrollo Maarintie 8, Espoo 02150, Finland,
1
UQ Business School, The
University of Queensland, St. Lucia, Queensland 4072, Australia, and
2
University of St. Gallen, Dufourstrasse 40a, St.
Gallen CH-9000, Switzerland
Corresponding author email: torben.antretter@unisg.ch
This paper provides an evaluative overview of the new venture survival literature.
Since Stinchcombe’s primary attempt to explain the mort ality rates of new ventures,
different research fields, including entrepreneurship, management and sociology, have
devoted considerable attention to the antecedents of new venture survival. Despite this
lively research commitment, a comprehensive review of the literature on new venture
survival – as one of the most essential performance measures for new ventures – is
missing. Covering 54 years of research, this paper provides an overview of the factors
affecting new venture survival and highlights important methodological aspects in this
research field. The review concludes by discussing opportunities for future research.
Introduction
It is well known that many new ventures do not sur-
vive the first few years of their existence and thus
overburden themselves, their investors and the econ-
omy (Headd 2003; Wiklund et al. 2010). Given the
high failure rates of new ventures,
1
it is essential to
understand why some new ventures survive and oth-
ers do not (Stenholm and Renko 2016).
In understanding survival, one of the key concepts
to consider is the liability of newness (Stinchcombe
1965). The liability of newness exists because new
ventures lack specific resources and capabilities
that more established organizations have already
accrued (e.g. Freeman et al. 1983; Morse et al. 2007).
In his seminal work on the liability of newness,
Stinchcombe (1965) proposed antecedents to explain
new ventures’ chances of survival; consequently,
the foundations of our current understanding of new
venture survival were developed long before recent
technological advancements, such as the internet,
1
For example, Shane (2009, 2012) found that more than
half of US start-ups launched between 1977 and 2005 failed
within the first 5 years and that failure rates rose after 2000.
rose to disrupt a variety of industries (Bettis and
Hitt 1995; Shapiro and Varian 1998) and many
established venture creation processes (von Briel
et al. 2018). Not surprisingly, research has dedicated
considerable attention to identifying additional
antecedents of new venture survival (e.g. Delmar
and Shane 2006; Hyytinen et al. 2015; Stenholm and
Renko 2016). Despite this lively research commit-
ment, our knowledge about why some new ventures
survive and others fail remains largely fragmented.
Although this fragmentation has led to increased
interest in synthesizing knowledge on firm survival
and failure (e.g. Cafferata et al. 2009; Josefy et al.
2017), there have been no systematic reviews looking
exclusively at the antecedents of survival for new
ventures.
To fill this void, this paper provides a systematic lit-
erature review of 205 studies on new venture survival
factors found in the top journals on entrepreneurship,
management and sociology in the past 54 years. We
refer to new ventures as firms that have not reached
the point of stability proposed in Kazanjian’s (1988)
four-stage model (cf., Stages 2–3 in Hanks et al.
1994). Thus, the aim of this review is to provide
a comprehensive and up-to-date picture of what
factors influence survival—one of the most essential
C
2020 British Academy of Management and John Wiley & Sons Ltd. Published by John Wiley & Sons Ltd, 9600 Garsington
Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA
New Venture Survival 379
measures of entrepreneurial success (Josefy et al.
2017; Mudambi and Zahra 2007). To identify mutual
themes and potential research gaps in a fragmented
field of study, we build on Br
¨
uderl et al. (1992) and
categorize the antecedents of new ventures survival
into three categories: (1) conditions characterizing
new ventures’ environment; (2) attributes, structural
characteristics, and strategies of new ventures
themselves; and (3) individual characteristics of
founders and founding teams. In addition, we build
on Fichman and Levinthal’s (1991) interpretation of
Stinchcombe’s liability of newness concept as the de-
velopment of social relationships and consider inter-
organizational and intra-organizational relationships
as intermediaries between the different levels of our
analysis.
Overall, our review makes several contributions to
the new venture survival literature. First and most
importantly, it provides an up-to-date systematization
of the literature on new venture survival factors pub-
lished in the top entrepreneurship, management, and
sociology journals since Stinchcombe’s seminal work
in 1965. As we trace the evolution and refinements
of the new venture survival research, both conceptual
and empirical, this review develops an updated un-
derstanding of the liabilities of newness framework.
Second, it discusses the primary definitions of new
venture survival and provides a clear taxonomy of the
extant operationalizations of the survival construct
that future studies can utilize. Third, this review pro-
vides a comprehensive overview of methodologies
used to empirically study new venture survival and
establishes a springboard to further discussions on
methodological choices in this field. Finally, this re-
view articulates some challenges still to be explored
and sets out an agenda for future research.
A brief history of new ventures’
liabilities
The concept of the liability of newness (Stinchcombe
1965) has played a vital role in the debate on new
ventures’ emergence and survival prospects during
the past 50 years. In the following section, we provide
a short discussion of the historical development of the
liabilities that new ventures face. A summary of the
most discussed liabilities is shown in Table 1. Figure 1
illustrates the distribution of articles by research field
over time. We divide our discussion into three themes:
(1) the emergence of the liability of newness and its
first developments; (2) the liabilities of adolescence
and obsolescence as alternative perspectives; and (3)
the liabilities related to resources/capabilities.
Stinchcombe (1965, p. 148) proposed the liability
of newness concept ‘as a general rule [underlying why
a] higher proportion of new organizations fail than
old [organizations]’. The liability of newness predicts
that venture failure rates decline monotonically with
age independent of historical time, place and type
of organization. Based on this notion, Stinchcombe
(1965, p. 148) raised two important questions: ‘what
sorts of things, then make up the liability of newness?’
and ‘how do social conditions affect the degree of
liability?’
Regarding the first question, Stinchcombe (1965)
discussed four central social factors that limit new
ventures’ viability. First, new ventures depend on new
roles and tasks that have to be learned at some cost.
Second, the amount of time and effort required to
learn and coordinate organizational roles is likely to
be significant. Third, new ventures must rely heavily
on social relationships with strangers and may lack
a common normative basis or informal information
structure for doing so. Fourth, new ventures lack sta-
ble links to stakeholders when they begin operations.
To answer the second question, Stinchcombe (1965,
p. 150) firmly believed that social and economic
macro-structures play a pivotal role in enhancing new
ventures’ chances of survival. He thus proposed that
five basic variables influence ventures’ mortality rates
in the early stages of the firm lifecycle: (1) general
literacy and specialized advanced schooling; (2) ur-
banization; (3) a money economy; (4) political rev-
olution; and (5) density of social life. Stinchcombe
(1965, p. 150) emphasized that his discussion of the
initial factors is not exhaustive but represents some
basic variables that affect survival.
After Stinchcombe (1965) introduced the liability
of newness concept, it took a relatively long time
before researchers started to actively build on it.
It was not until the late 1970s that the liability
of newness concept gained new traction in the
organizational ecology literature (e.g. Hannan and
Freeman 1977), greatly influencing this new research
stream’s theoretical and empirical development. In
particular, organizational ecologists were interested
in understanding what macro-economic factors foster
the initial creation of new ventures. In the 1980s,
scholars’ interest shifted to the firm itself, and the first
empirical evidence regarding the liability of newness
hypothesis emerged (Carroll and Delacroix 1982;
Freeman et al. 1983). In their empirical investigation,
Carroll and Delacroix (1982) showed that newspapers
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2020 British Academy of Management and John Wiley & Sons Ltd.
380 Soto-Simeone et al.
Table 1. Types of liability influencing new venture survival
Liability
Introduction
year Introducing authors Core hypothesis
Liability of newness 1965 Stinchcombe The likelihood of venture failure declines monotonically with age.
Liability of smallness and bigness 1983 Freeman, Carroll and Hannan The size of ventures is inversely related to their death rates.
Liability of adolescence 1988/1990 Fichman and Levinthal;
Br
¨
uderl and Sch
¨
ussler
In an early phase (adolescence), ventures face no death risk at all (honeymoon
phase). After this period, the death risk rises abruptly, a stage followed by a
continuous decline.
Liability of aging 1986/1987 Aldrich and Auster; Carroll Existing organizations experience problems that limit their ability to embrace
more adaptive states that would enhance their survival prospects.
Liability of resource scarcity 1989 Carroll and Hannan Adverse conditions on founding hinder resource acquisition by n ew organizations.
Liability of legal form 1990 Br
¨
uderl and Sch
¨
ussler Minimal capital requirements might be high for new organizations depending on
the legal form they adopt.
Liability of obsolescence 1989/1994 Baum/Barron et al. Mortality rates increase with age owing to organizations’ poor fit with their
external environment.
Liability of senescence 1989/1994 Baum/Barron et al. Mortality rates increase with age owing to the accumulation of durable and rigid
organizational features (rules, routines and structures) that hinder adaptability.
Liability of foreignness 1995/2002 Zaheer; Mata and Portugal Firms operating in foreign markets incur additional costs compared to local firms.
Liability of underdeveloped social ties 2004 Delmar and Shane New ventures are vulnerable to an absence of relationships with external
stakeholders.
Liability of success 2010/1999 Ucbasaran et al.; McGrath Experienced entrepreneurs might be excessively optimistic compared to novice
entrepreneurs.
Liability of ethnicity 2016 Jiang et al. New ventures started by immigrants are disadvantaged because of their founders’
immigration status.
Liability of identity, conformity and
differentiation
2018 Micelotta et al. New ventures started by women are disadvantaged because of the industry’s
gender bias in assessing the opportunity, performance and uniqueness.
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2020 British Academy of Management and John Wiley & Sons Ltd.
New Venture Survival 381
Figure 1. Distribution of a rticles by ABS categories over time. Note: An explanation of the abbreviations for the categories is provided in
Table 2. The five most cited articles in our review are: (1) ‘Fools rush in – the institutional context of industry creation’ (Aldrich and Fiol
1994; 1414 citations); (2) ‘Initial human and financial capital as predictors of new venture performance’ (Cooper et al. 1994; 880 citations);
(3) ‘Survival of the fittest? Entrepreneurial human capital and the persistence of underperforming firms’ (Gimeno et al. 1997; 859 citations);
(4) ‘The liability of newness – age dependence in organizational death rates’ (Freeman et al. 1983; 712 citations); (5) ‘Beyond survival:
achieving new venture growth by building legitimacy’ (Zimmerman and Zeitz 2002; 688 citations). [Colour figure can be viewed at
wileyonlinelibrary.com]
in Argentina and Ireland suffered from high mortality
in their early years. Only a year after, Freeman et al.
(1983, p. 692) confirmed the liability of newness
hypothesis but further found that the liabilities of
smallness and bigness (i.e. initial size and conditions
at birth related to structural differences over time)
also exist but do not eliminate age dependence.
In the late 1980s/early 1990s, researchers started
to challenge Stinchcombe’s arguments both the-
oretically and empirically. Building on Fichman
and Levinthal’s (1991) work, Br
¨
uderl and Sch
¨
ussler
(1990) formally introduced the concept of the
liability of adolescence. Their main argument a nd
finding was that new ventures could survive for a
time just after their founding with little risk of failure
because they could draw on the initial stock of assets
firms typically acquire at founding (the honeymoon
period). As such, they predicted and showed that fail-
ure rates have an inverted U-shape relationship with
firm age (Br
¨
uderl and Sch
¨
ussler 1990; Fichman and
Levinthal 1991; Henderson 1999). Both the newness
and the adolescence perspective propose that the
early years of a firm’s life are the most hazardous and
that failure rates eventually decline with age. They
differ only in terms of whether failure rates peak
at founding or some years later (Henderson 1999,
p. 283).
Around the same time the liability of adolescence
was introduced, authors started to argue that firms suf-
fer from the liability of obsolescence (Barron et al.
1994; Baum 1989) – that is, failure rates increase
with age. Barron et al. (1994) suggested that core
structures are ‘imprinted’ in young organizations, so
older firms’ fit with the environment is reduced. Ad-
ditionally, by arguing that organizations accumulate
durable features, such as rules, routines and struc-
tures, as they age, which obstruct their ability to act
in a timely fashion when facing changing environ-
ments, Barron et al. (1994) proposed the liability of
senescence to describe old organizations’ disadvan-
tage compared with younger firms. The liabilities of
obsolescence and senescence are close to the liability
of aging concept introduced by Aldrich and Auster
(1986) in the entrepreneurship literature and by Car-
roll (1987) in the sociology literature a year later that
builds on organizational inertia arguments.
Interest in the literature then moved toward the
resource-based view of the firm after Eisenhardt and
Schoonhoven’s (1990) seminal article proposing that
factors related to resources/capabilities enable new
firms to mitigate the liability of newness (Abatecola
et al. 2012). For example, the liability of foreign-
ness (Zaheer 1995), which describes the additional
costs incurred by firms operating in overseas markets
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382 Soto-Simeone et al.
compared to local firms, has been explored in stud-
ies on new foreign and domestic firms’ survival (e.g.
Mata and Portugal 2002; Sethi and Judge 2009). The
problematic accrual of necessary resources also un-
derpins the liability of resource scarcity (Carroll and
Hannan 1989), which describes the adverse found-
ing conditions that hinder organizations’ resource ac-
quisition; the liability of a legal form (Br
¨
uderl and
Sch
¨
ussler 1990), which is related to organizations’
resource dependency and the minimum capital re-
quirements inherent in certain legal forms; and the
liability of underdeveloped social ties (Delmar and
Shane 2004), which is associated with the lack of re-
lationships between new ventures and external stake-
holders (Stinchcombe 1965; Stuart et al. 1999).
Finally, interest in the literature on new venture lia-
bilities has increasingly expanded to include individ-
uals’ different psychological factors. An example of
such a factor is the liability of success (McGrath 1999;
Ucbasaran et al. 2010), which describes success-
ful experienced entrepreneurs’ optimism compared
to that of novice entrepreneurs. Recently, scholars –
especially entrepreneurship scholars – have become
interested in biodemographic characteristics, such as
ethnicity (e.g. Jiang et al. 2016: the liability of ethnic-
ity) and gender (Micelotta et al. 2018: the liabilities
of identity, conformity and differentiation).
Taken together, drawing on Stinchcombe’s (1965)
original insights on the liabilities that influence
new ventures’ probability of survival, scholars have
identified numerous liabilities that stem from a ‘mis-
match’ between organizational factors and industry
conditions (Micelotta et al. 2018). Interestingly, al-
though the liability of newness concept was intro-
duced and first advanced by sociology researchers, a
more vibrant discussion about the topic has evolved
in the field of entrepreneurship. Figure 1 shows that
the years 2010–2018 account for the bulk of research
on new venture survival, with a peak of 17 articles in
2016. The numerous liabilities outlined above, com-
bined with the importance of the new venture survival
topic, warrant a focused review of the antecedents of
new venture survival.
Review method and descriptive results
In conducting the review, we followed the systematic
literature review method suggested by Tranfield et al.
(2003). We focused our search on articles published
after Stinchcombe’s seminal work in 1965, in which
he first introduced the liability of newness concept.
Accordingly, our search covers 54 years of new ven-
ture sur vival research (1965–2019). Consistent with
prior studies published in this journal (e.g. Laakso-
nen and Pe ltoniemi 2018), we searched for articles in
the Web of Science Social Sciences Citation Index.
The search was performed in July 2019. The subse-
quent search and article-selection process followed
four steps (Tranfield et al. 2003).
(1) Search and elimination of unrelated articles
We conducted our search using the Web of
Science field tag for topic (including titles, ab-
stracts and keywords). We entered the terms ‘new
firm*’, ‘new venture’, ‘venture’, ‘start*up*’, ‘newly
founded organization*’, ‘newly founded business’,
‘entrepreneurial’, ‘organizational death’, ‘liability of
newness’, ‘surviva l’ and ‘failure’. The first four terms
were chosen because they are commonly used as syn-
onyms for ‘new business’ in the entrepreneurship
and management literature (e.g. Gartner 1990; Josefy
et al. 2017; Shepherd et al. 2000), whereas ‘newly
founded organization’ and ‘newly founded business’
are terms regularly used as synonyms for ‘new ven-
ture’ (or ‘new organization’) by sociology researchers
(e.g. Br
¨
uderl et al. 1992). The term ‘entrepreneurial’
was included because it usually relates to firm new-
ness and venture creation (e.g. Cefis and Marsili 2011;
Tavassoli and Jienwatcharamongkhol 2016). To cap-
ture survival, we included the terms ‘survival’, ‘orga-
nizational death’ and ‘failure’ (the last two terms as
opposites to survival). Lastly, in addition to ‘liability
of newness’, we added the term ‘liabilit*’ to capture
keywords referring to other liabilities (see Table 1),
which are relevant to the objectives of our study. We
introduced search operators (‘AND’, ‘OR’; see Fig-
ure 2) together with the specified search terms to en-
sure that all the liabilities yielded by the search were
tied to new ventures and their survival. An asterisk
(*) was included as a wildcard symbol to allow for
variations of the search terms in each query. We ex-
cluded the terms ‘joint venture*’, ‘property liability’
and ‘new product*’ since they might have appeared in
the titles, abstracts or keywords given the search terms
we used but do not relate to our research question.
To ensure our search was not too broad and still
focused on a relevant set of research fields, we lim-
ited the search to publications in the Web of Sci-
ence categories of ‘business’, ‘management’, ‘eco-
nomics’, ‘business finance’, ‘operations research and
management science’ and ‘sociology’. Following sev-
eral other systematic literature reviews in the man-
agement field (e.g. Calabr
`
o et al. 2019), we further
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2020 British Academy of Management and John Wiley & Sons Ltd.
![Figure 1. Distribution of articles by ABS categories over time. Note: An explanation of the abbreviations for the categories is provided in Table 2. The five most cited articles in our review are: (1) ‘Fools rush in – the institutional context of industry creation’ (Aldrich and Fiol 1994; 1414 citations); (2) ‘Initial human and financial capital as predictors of new venture performance’ (Cooper et al. 1994; 880 citations); (3) ‘Survival of the fittest? Entrepreneurial human capital and the persistence of underperforming firms’ (Gimeno et al. 1997; 859 citations); (4) ‘The liability of newness – age dependence in organizational death rates’ (Freeman et al. 1983; 712 citations); (5) ‘Beyond survival: achieving new venture growth by building legitimacy’ (Zimmerman and Zeitz 2002; 688 citations). [Colour figure can be viewed at wileyonlinelibrary.com]](/figures/figure-1-distribution-of-articles-by-abs-categories-over-320dqjya.webp)