Encyclopedia of Creativity, Invention, Innovation and Entrepreneurship

2013 Edition
| Editors: Elias G. Carayannis

Firm Failure and Exit

Reference work entry
DOI: https://doi.org/10.1007/978-1-4614-3858-8_232


Insolvency as a Crucial Economic Phenomenon

Research on entrepreneurship use to insist upon business creation, firm growth, and market expansion which are then the shining side of economic activity (see the entry “ Entrepreneurship Policies”). However, a dark side of entrepreneurial ventures exists as risk becomes effective and causes the failure of the firm. Exit is generally considered a sign of failure of the firm, a consequence of poor performance: firms that underperform as they compete in the market will, sooner or later, exit the market. This process is worth knowing better at least for two main reasons. Firstly, the Schumpeterian concept of creative destruction which describes the process of transformation that accompanies radical innovation supposes the replacement of established companies by new entrants involves by the fact the exit of a certain amount of existing firms. Besides this renewal of productive system it ensures,...

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Copyright information

© Springer Science+Business Media LLC 2013

Authors and Affiliations

  1. 1.EconomiX, UMR 7235 CNRSUniversity Paris Ouest Nanterre La Défense and Euromed ManagementNanterreFrance