The experience of entrepreneurial exit : an exploratory study of average micro and small business owners

Abstract

This thesis develops a typology and a test of how micro and small business owners experience the entrepreneurial exit process and the primary factors triggering such action. The current study explores the narratives of 40 entrepreneurs from diverse industries in the Southern Ontario region of Canada that discuss 51 retrospective accounts of exits. The departure process is a series of actions and/or events that trigger the relinquishment, by the entrepreneur’s own accord or not, of all ownership shares; operational duties and physical commitments to their venture. Entrepreneurship is significant for job creation; investment; economic growth and innovation. Society is set to experience the significant demographic shift of ‘baby boomers’ from the market, which is concerning for entrepreneurship as Canadian exit rates are increasing and a third have no succession plan.

Much of the entrepreneurial exit literature explores the association between exit planning and outcomes on macro, organisational-levels. Because of its infancy as a field of study, exit literature tends to be piecemeal; crude and develops in isolation to other complimentary academic fields such as family business that can contribute knowledge on the succession process. The exit subfield lacks qualitative and processual contributions to understand the motivations of why entrepreneurs are exiting, which can tie existing academic contributions and develop a greater understanding on discontinuance.

The current research contributes to the entrepreneurial exit; entrepreneurship and family business literatures by developing a typology and test of the exit experiences of Model A: financial harvest exits and Model B: nonfinancial harvests. Key findings identify that the entrepreneurial exit process takes over a year to complete and has five distinct phases: starting; operating; triggering; exiting and post-exiting. Within the exit journey, Model A entrepreneurs rely on their weak networks to achieve a financial harvest, whereas Model B entrepreneurs seek alternative employment for stability before realising their intention to exit. Financial harvests; dissolving and defaulting exit types are planned outcomes whereas bankruptcy is a catastrophic result. The strong networks of the entrepreneur provide emotional support throughout the process which is necessary given the gradual decline in the entrepreneurs’ well-being throughout the journey. Having greater adaptability in the exiting process is beneficial compared to planning an exit strategy early in the venture.