The Liability of Volatility and How it Changes Over Time Among New Ventures

Lundmark E.; Coad A.; Frankish J.S.; Storey D.J. · Entrepreneurship: Theory and Practice (2020) · DOI: 10.1177/1042258719867564

Resumen

This article theorizes how short-term revenue volatility affects new venture viability and how such volatility develops over time. Tracking the bank accounts of 6,578 new ventures over a 10-year period, we find that, even after controlling for a range of other factors, short-term revenue volatility is a strong predictor of venture exit. Although short-term revenue volatility is associated with the depletion of buffer resources and financial default, surviving ventures do not, on average, decrease their short-term revenue volatility over time. However, short-term revenue volatility decreases at the cohort level due to higher exit rates of volatile ventures. © The Author(s) 2019.

Instituciones: Pontificia Universidad Católica del Perú