Research Article: 2018 Vol: 24 Issue: 1
Mina Najafian, University of Tehran
Mohammad Hasan Mobaraki, University of Tehran
Ali Rezaeian, University of Tehran
Jahangir Yadollahi Farsi, University of Tehran
Business Exit, Voluntary Exit, Typology of Exit, Exit Drivers, Grounded Theory.
Many entrepreneurs decide to exit their businesses at some point in time. Exit is the last stage of entrepreneurship process (Watson & Everett, 1999; DeTienne, 2010; Wennberg, 2009). For some entrepreneurs, the exit is a way of exploiting the value created through creating a venture. A great profit could be realized by a suitable exit at a specific point in time (DeTienne, 2010). Furthermore, many scholars argue that finishing an entrepreneurial cycle could provide entrepreneurs with the time and experience needed to start next entrepreneurial cycles (DeTienne, 2010).
During the past decade, the exit has emerged as a major component in the entrepreneurial process and established itself as a distinctive domain of research (DeTienne & Wennberg, 2016). Prior research on the exit has focused on drivers of exit such as performance and environment (Mahmood, 1992; Gimeno et al., 1997; Watson & Everett, 1999; Kaiser & Stouraitis, 2001; Bates, 2005), barriers of exit (Porter, 1976; Wiersema, 1995; Shimizu & Hitt, 2005), different exit strategies and factors that lead to these strategies (DeTienne & Cardon, 2012; DeTienne, 2010; Wennberg et al., 2010, DeTienne & Chirico, 2013; DeTienne et al., 2015), exit at different stages of the lifecycle of the venture (DeTienne, 2010), factors that affects the duration of the exit and consequences of the exit (DeTienne, 2010; Hessels et al., 2011; Ucbasaran et al., 2013). However, despite the research progress during the last decade, still a theoretical gap remains in the body of the exit literature and that is about the processual studies (DeTienne & Wennberg, 2016; Wennberg, 2011, Najafian et al., 2018) and qualitative studies of the exit. Moreover, most of the previous research have studied exit at the firm level of analysis rather than individual level. However, in the case of the voluntary exit where individuals get involved in a cognitive process of decision-making, understanding the process that the entrepreneurs go through to decide and act upon at the individual level of analysis is critical (DeTienne & Wennberg, 2016). The main contribution of this study is extracting the typology of voluntary exit through a qualitative research by focusing on the exit processes that the individual entrepreneurs undertake. In this study, rather than classifying types of exit and exit strategies based on the literature, as has been typical in previous research, we develop a typology by understanding the process that individual entrepreneurs go through to exit their business. The process view gives a broader insight of the nature of different types of exits rather than focusing on the realization of final event of exit. Moreover, the qualitative study is not driven by a single theoretical perspective and a set of predefined concepts; rather, we extract concepts based on the narratives of the entrepreneurs. Thus, the main purpose of this manuscript is to develop a typology based on a qualitative study on the process of exit. This manuscript makes two key contributions to the literature. First, the typology of voluntary exit identified with focus on the process of exit provides a better understanding of voluntary exit in general. Understanding the nature of voluntary exit could lead to valuable guidelines for policy-making and educational system as well as information for entrepreneurs especially for those in dynamic industries. Entrepreneurs in dynamic industries should be able to exit effectively and exploit new opportunities in order to prevent failure and bankruptcy in case of structural changes in the industry. When more owner managers know about exit, the probability of effective exits goes up and entrepreneurs learn to consider the exit as a strategy and avoid late mandatory exit. Moreover, different voluntary exit gives insights regarding the results and outcome of exit, for example what path the entrepreneurs are likely to pursue after exiting their firms.
This paper starts with a discussion of the previous research on exit. In doing so, we discuss exit and its drivers as well as the conceptual gap in the literature and role of the present research in filling this gap. Next, we describe the scope, method and the sample of the research. The fourth section is dedicated to the analysis of findings and results including coding process and the typology. Finally, in the last section, we draw conclusions and compare the results with previous research.
The exit is a multi-dimensional phenomenon and different aspects are present in the analysis of exit. These layers and different aspects have made exit an inter-disciplinary construct (Wennberg, 2009). Different definitions have been proposed for the exit. For instance, many researchers in the field of Entrepreneurship have defined exit as a decision to quit self-employment, terminate or bankruptcy, exit from a specific market (Wennberg & DeTienne, 2014), the decision to quit entrepreneurship as a career or as reorganizing the business and properties of the firm. DeTienne (2010) proposed another definition of exit with the focus on the voluntary decision: Leaving the ownership or decision-making structure of the firm.
Based on the different definition and their implicit assumption, there are at least two broad types of business exit: 1. Mandatory exit 2. Voluntary exit (DeTienne, 2010; Wennberg, 2009; DeTienne & Cardon, 2012). In the mandatory exit, founder or the owner manager is forced to stop the operation of the business and probably liquidating its properties because of bankruptcy, problems in financing or profit making (Gimeno et al., 1997). In the voluntary exit, the founder or owner manager voluntarily decides to exit and the business will be reorganized based on ownership or decision-making structure or operation domain (DeTienne, 2010).
During the last decade in the field of Entrepreneurship, the focus of research has been on the voluntary exit. Most of the studies have emphasized on different types of exit strategies and factors that lead to these strategies (DeTienne & Cardon, 2012; DeTienne, 2010; Wennberg et al., 2010, DeTienne & Chirico, 2013; DeTienne et al., 2015), exit at different stages of the lifecycle of the venture (DeTienne, 2010), factors that affects the duration of the exit and consequences of the exit (DeTienne, 2010; Hessels et al., 2011; Ucbasaran et al., 2013).
However, despite the research progress during the last decade, still we need to know more about the processual issues of the exit (DeTienne & Wennberg, 2016; Wennberg, 2011) and how the process can impact the nature of exit. Furthermore, in the voluntary exit, when an individual entrepreneur goes through the decision making for exit, the motivational drivers can play a significant role. Therefore, in the following section we provide a brief review of exit drivers in the literature to trace the research on individual motivations.
Exit drivers are those factors that push the owner-manager of the firm towards the exit. Several drivers of are identifiable in the previous research. In the context of small businesses, the current performance and initial resources are among those factors that lead to non-voluntary exit decision. For example, Becchetti and Sierra (2003) concluded that unsatisfactory performance predicts bankruptcy. Gimeno et al. (1997) had a similar result about the termination of a business. Most of the researchers believe that poor performance is not only the driver of exit but also the predictive of the operational way chosen to perform the exit process.
Wennberg et al. (2010) stated that the impact of performance on exit is complicated since exit occurs in both successful and unsuccessful businesses in terms of performance. According to DeTienne and Wennberg (2013) more than 70 percent of all cases of exit among knowledge-based firms are companies which perform better than the average in the industry.
Another driver for exit is alternative opportunities (Bates, 2005). There are different alternative opportunities such as creating a new venture, finding employment job opportunity and pursuing education (Wennberg & DeTienne, 2013).
Some scholars believe that unrealized expectation about profit making or sales, market share and demand growth is the main factor in exit decision-making (Chang, 1996). Another group of scholars believes that firms can exit from a specific domain of operation because of some strategic reasons. For example, the current operation is not aligned to the strategy of the firm as a whole or operating in one domain put much burden on the firm (Kaiser & Stouraitis, 2001) or the shareholders want to control the firm better and hence decide to reduce the degree of diversification in operation (Decker & Mellewigt, 2007).
Another driver of exit is the environment. Patterns of exit are different among various industries and geographical areas (Decker & Mellewigt, 2007). For example, Buehler et al. (2012) concluded that in regions with the lower rate of unemployment, lower tax rates and higher public investment mandatory exit is less probable. Furthermore, uncertainty, structural changes in the industry and rapid changes of technology are the environmental features that facilitate the decision to exit.
DeTienne (2010) proposes that the termination of entrepreneurial process in nascency phase is affected by three drivers: Calculative, alternative and normative drivers. Calculative drivers refer to realization of the entrepreneur’s economic goals such as high demand for the product. Alternative drivers refer to other opportunities and normative drivers refer to the entrepreneur’s perception of other people’s expectations about the venture.
Based on the literature, we can classify the drivers of exit in two broad categories: Internal drivers and external drivers. Internal drivers are as important as external drivers. For example, Estay et al. (2013) classify the motivation of entrepreneurship motivations into different groups including intentions, goals, values, needs and the results from the mechanisms of these. They believe that there is a relationship between the results of action and motivation as well as the entrepreneur’s perception of the result of action. However, previous research has not delved into the internal exit drivers in the individual level of analysis. For example, in the case of a business with high level of performance in a given industry, it is not clear what pushes entrepreneurs to a voluntary exit (Wennberg & DeTienne, 2016).
The present research takes a step in filling this gap and studies the exit process in the individual level of analysis and proposes a typology that encompasses the motivational and processual aspect of exit. A typology is an organized system of different types (Collier et al., 2012), which helps in categorizing and measuring as well as refining concepts and extracting dimensions for them. Moreover, typologies create common understanding and common language which can be used for further investigation of the phenomenon (Alach, 2017; Swedberg, 2016).
This study uses a qualitative approach. Creswell (2012) on his definition of qualitative research focuses on nature of the method, complexity of the results and studying the phenomenon in its natural environment and conditions. Qualitative research is a process of understanding social or individual issues based on specific methodological approaches. In such approaches, the participants’ views and the terms they used are analysed and reported. Some of the reasons for carrying out a qualitative research include discovering a subject to formulate new theories, providing a detailed view on a given subject or process, carrying out a study in a natural environment (Creswell, 2012). The current study has been conducted based on the second and third reasons explained above. Common research designs for qualitative research projects include biographies, focus groups, case studies, grounded theory, action research, ethnography and phenomenology (Creswell, 2012). This study uses grounded theory.
The grounded theory methodology is a qualitative research method in which a theoretical understanding is gained about the investigated phenomenon through constant comparison of the collected data during the research process. Different approaches are proposed for conducting the grounded theory method, such as Glaser’s emerging theory (Glaser & Strauss, 1967; Glaser, 1978), Strauss and Corbin's systematic method (1998) and Charmaz’s constructivist method (2006). Constructivists believe that data are not discovered, but made. In the same vein, they consider analysis is the result of an individual's interpretation, not his/her objective report on the data. Therefore, according to the constructivist grounded theory, an analysis on a subject is not the only one analysis. Constructivist grounded theory is an interactive method which emphasizes the role played by interaction between the analysis and data collection process (Charmaz, 2008). Constructing grounded theory is in accord with inductive logic, constant comparison, the emergence of the concept and the open-ended approach of the classic version of Glaser and adds abduction or the best explanation to it (Charmaz, 2006). Unlike the systematic version, constructivist grounded theory does not impose a specific framework on the data.
The statistical population of the study consists of entrepreneurs in the poultry industry in Iran who had exited from their business voluntarily. A voluntary exit is defined as to sell, discontinue or quit the business voluntarily (not due to retirement, unprofitable business or financing problems) (Kelly et al., 2016). In this study we focus only on the exit of the entrepreneur not the business. The business may continue to exist after entrepreneur’s exit or not. To find out whether an entrepreneur is qualified as a case of voluntary exit, we asked some questions such as “Have you ever had a business that you have sold, closed or given to someone else? If yes which option? Did you have problems in financing your business or have high levels of debt and liabilities? If you hadn’t done so, would you have been bankrupt?”
The sampling method of the study is theoretical sampling. Sampling method in grounded theory is different from data collection methods used in other qualitative studies. This means that here, sampling is intentional (not probabilistic) and focuses on formulating a theory (Creswell, 2012). The sample size in the study is determined by using theoretical saturation i.e., instead of choosing a constant sample, the sample size is increased until the categories extracted from the data are saturated and sampling is enough. The primary data collection method used in the study is semi-structured interviews with entrepreneurs. Overall, 19 interviews were carried out with 14 entrepreneurs all around different provinces in Iran. All 14 entrepreneurs participating in the study were men and ranged in age from 27 to 61. The business exit had happened during the age of 25 to 55. Entrepreneurs had backgrounds in the poultry industry in Tehran, Alborz, Isfahan, Gilan and Markazi. They had different educational backgrounds ranging from elementary level education to master’s degree: One elementary level, one middle school level, four master’s degree, four bachelor’s degrees and the rest high school level. The majors of the entrepreneurs who had university degrees include Animal Science, Nutrition Science, Veterinary, Management, Mathematics and Electrical Technician. They had been involved in their current career (after exit) for 1 to 6 years.
First, three pilot interviews were conducted on three entrepreneurs who had the exit experience in other industries rather than poultry to refine the interview protocol. At the beginning, the researchers, by using their social networks, found two entrepreneurs. After interviewing these entrepreneurs, the researchers asked them to introduce other participants with the same experience if they know any. In this stage, 10 other people were introduced. After phone interview with these people, researchers found that 7 were not qualified for voluntary exit. Therefore, only 3 of them were interviewed and the result was finding another case with voluntary exit. The process of searching for the next qualified entrepreneurs took about 8 months. Finally, other participants were found after 4 months of searching through direct and indirect social networks of researchers. The durations of interview sessions were different based on the time availability if the participants. At the beginning, the interview protocol was used which includes open ended questions about the participant experience. For example, “You said you sold your business, what happened that you decided to sell it? How was the situation? Then what happened?” At the end of each interview session, some other questions were asked about other topics that the participant mentioned during the interview. In the next interviews, questions on topics that appeared in interviews with previous entrepreneurs were included, too. For example, if a participant mentioned a concept such as work stress in the first round of interview, in the second round and in interviews with next entrepreneurs, some questions were added for better understanding of the meaning of work stress for participant and how it relates to exit.
To validate the extracted categories from the data and examine their relationships, researchers modify the items during the research with continuous referring to the data and contrasting the concepts and categories with the data. The researchers also tried to narrow down the questions to better understand the phenomenon. They referred to the respondents and ask them again about the primary findings of the research to improve credibility and resonance of the research (Charmaz, 2008). Since the present study provides a typology of exit in the Iranian entrepreneurs to be used by future quantitative studies, the originality and usefulness measures are achieved, too (Charmaz, 2008).
Constructivist grounded theory, used in this study, emphasizes three open, focused and theoretical coding stages. In the first coding stage, i.e., open coding, the transcription of the interviews with entrepreneurs are coded line-by-line and, in some cases, word-by-word. This required a code for every line or word from the transcripts of interviews. During the process, researchers used action words (Charmaz, 2006). Open coding was time-consuming. The identified open codes were revised and compared with other codes in the same transcript and with other transcripts. The researchers also looked into the emotions of the participants, when they were talking about different parts of their experience. More than 100 open codes were obtained at this stage.
The most important open codes were selected in the focused coding stage. Similar open codes were combined to create new concepts. Researchers tried to define the codes drawing upon the exit experience of each entrepreneur and avoid premature grouping of the codes. The codes were grouped only when the meaning assigned to each code by the participants was the same as other codes. Forty-six focused codes were obtained at this stage. Table 1 shows a few open codes with their instances in the transcriptions of the interviews. Table 2 demonstrates the subjects repeated most in the data and as a result, we defined focused code for them.
|Table 1: Samples Of The Open Codes And Their Instances In The Transcription Of The Interviews|
|Experience about raw material getting expensive||Nowadays, cheap chicken food is no longer available. Ninety percent of the corn-soybean meal we need is imported.|
|Experiencing lack of support from the government||Another problem is the authorities and policy-makers not paying attention to the quality and productivity of chicken food and modernizing the domestic market.|
|Pursuing more profit||I, too, wanted to gain as much as I had tried.|
|Identify new opportunities||I told myself, if I produce DCP, I will make 500 tomans (~ 0.7 USD) profit in the worst case scenario.|
|Creating distinction||I was into doing something fun and different at the same time...|
|Tendency to learn||It is worthwhile to grow on and learn new stuff|
|Thinking about purpose||I was thinking about the things that mattered to me. My whole purpose of working|
|Tendency to help others||I wanted to do something that mattered to me and I believed in it; something I thought people would need it and it would make my life better.|
|Challenge-seeking||When I repeat something, I get bored. I look to solve problems.|
|Increased competition||Aviculture have grown so much during the recent 35 years that per capita consumption of poultry has increased from 2 kilograms to 22 kilograms in a year.|
|Compare yourself with others||I want to aim for something too big for others to dare, invest or skills to do it.|
|The experience of conflict||It was mine; I had launched it, but it would not satisfy me anymore.|
|The experience of doubt||I didn’t know what to do; to continue? Or what if I don't continue?|
|Table 2: A Summary Of The Most Important Focused Codes Focused Codes|
|Hang on to your role||Experiencing being valued||Self-knowledge||Pursuit for a challenging job||Experiencing expensive production inputs||Learning from new environments|
|Enthusiasm||Experiencing anxiety||Finding your goal||Predicting the future of the industry||Exploiting the opportunities||Experiencing long working hours|
|Experiencing the power of dealers in the industry||Experiencing lack of absolute certainty||Looking for the options||Experiencing high stress||Experiencing the lack of support from the government||Termination of the previous job|
|Perceiving disharmony with the environment||Entering sectors with high potentials||Creating distinction with others||Tendency for more profit||Obtaining guaranteed profit, launching a new business|
At each stage of interview, the open coding and focused coding was done by one of the researchers. No analysis software was used in these phases. Then, in several group meetings, all the researchers discussed the focused codes by comparing the codes with the interview transcripts and data from previous interviews. At each stage some changes were made until the researchers reached consensus on the focused codes. Then, focused codes were reviewed in other group sessions and researchers agreed on the categories after comparing the codes with data. The researchers used several questions to decide whether the categories are saturated or not: 1. Can the category be defined by its properties (that is the participant’s actions and meaning attributed to it)? 2. Can the categories be distinguished from other categories? 3. Is there any relationship between categories? 4. Are there any process and variation? 5. Is the parsimony of theoretical statement enough (Charmaz, 2006)? After each sampling the researchers held a group meeting comparing the data within and between categories and discussed other directions that could be taken or new conceptual relationship that could be seen. Also, the researchers used diagramming as a visual tool for representation of categories and relationships to discuss whether theoretical sufficiency is achieved.
Theoretical coding allows for the integration of the obtained codes in focused coding stage (Figure 1). In fact, this stage opens up an opportunity to develop an analytical story as it determines the relationship between the focused codes. This section tries to aim for giving more in-depth analysis using theoretical codes and to not impose a specific framework on the codes.
In the third stage, i.e., theoretical coding, the focused codes were analysed and the relationships between the codes and the categories were identified. The result of this stage showed the related codes in 6 overlapping categories as follows:
1. Dissatisfaction with the circumstances (6 dimensions)
2. Tendency for more profit (2 dimensions)
3. Exploiting new opportunities (2 dimensions)
4. Social contribution
5. Tendency for personal development (6 dimensions)
6. Foresight (3 dimensions)
Dissatisfaction with the Circumstances
Most of the participants mentioned the special conditions of production in the poultry industry and dissatisfaction with the circumstances. They sought for leaving the job or changing the circumstances. The focused codes in this category include:
Experiencing long working hours, experiencing expensive production inputs, experiencing high stress, experiencing the lack of support from the government, experiencing the power of dealers in the industry, experiencing uncertainty.
Tendency for More Profit
Some entrepreneurs mentioned the role of seeking more profit in their decisions and considered the financial issues as important factors in decision-making. The focused codes in this group include: Seeking more profit, getting guaranteed profit.
Exploiting New Opportunities
Some entrepreneurs said in their stories that they have left their previous businesses to exploit new profitable opportunities. The focused codes in this group include: Launching a new job, entering sectors with high potentials.
Tendency for Personal Development
Some entrepreneurs considered personal development as a significant factor in their decisions to exit. This category includes the below focused codes: Elimination of dissatisfaction, learning from new environments, pursuit of a challenging job, finding your purpose, forecasting the exit, expecting exit.
Some entrepreneurs said that they liked to be useful for their society, playing a role and stand out from the others. This group includes the below focused codes: Creating distinction from others, playing a role, experiencing being valued, foreseeing exit.
Some other entrepreneurs considered predicting the future of the industry as the most important factor in their decisions. They believed that they did not see a promising future for the industry and they have exited the industry to avoid the possible loss they might have endured otherwise. The focused codes in this group include: Predicting the future of the industry, avoiding falling profits, expecting the exit.
In the next step, by sorting the obtained categories and taking advantage of the memos written by the researchers during the interviews and analyses, the researchers extracted the typology.
Typology of the Exit
The analysis of the data collected from the interviews revealed that there are three different groups of voluntary exit. The participants explained their reasons for exiting and the way they view it. Based on their answers, a triple typology was obtained. The typology demonstrates the difference between the participants in the study. Each of the sub-types of the typology provides a better understanding of the subject of the study and the participants. The sub-types are discussed in the next section in detail. In creating the typology, inductive analysis led to the identification of similar patterns among the participants. In the first analysis of the data, the sub-types of the typology were not identifiable because of the high volume of the data, codes and categories. Identification of the differences between the various codes was a time-consuming process and the identification of the categories required thorough review. In the first step of the data analysis, the interviews, codes and categories were compared frequently. After a while, the data were clearer and the sub-types emerged. The typology is developed by the researchers–it is derived directly from the data and the process of grounded theory. Therefore, it is beyond the descriptive analysis of the data. An in-depth data analysis and interpretation of the entrepreneurs’ responses and actions with respect to exit have led to the extraction of the typology.
After applying the instructions provided in the grounded theory method and following the coding procedures and forming the categories, different types of voluntary exit were obtained. There are similarities between entrepreneurs in the sub-types identified in the typology. However, clear distinctions are identifiable in the three groups. A typology helps to see the distinctions between different cases of voluntary exit. The distinctions, in turn, are made based on the ideal cases or cases at the end of the spectrum. They are meant for more explanation and are not necessarily complete (Patton, 2002). This view is consistent with the philosophical foundations of the research and shows the significant role of interpretation.
Type One: Profit-Driven Exit
Entrepreneurs who had a profit-driven exit had experienced external motivational factors. That is, the most important motivation for them to exit from the previous business was to gain more profit or exploit new opportunities. Compared to the other two groups, entrepreneurs in this group had more profiting and bigger businesses after exit. They had entered a new business through information analysis and their foresight. Compared to entrepreneurs of the other two groups, these entrepreneurs had analysed more information about industries other than their own industry and based on that information they had made their decision to exit. Most of the entrepreneurs who had thought about exit from early start-up phase were in this group.
For some of the entrepreneurs in this group, decision-making for business exit was about how and when to exit; that is, they knew that they will exit but the time and method were unclear to them. For the same reason, they have responded more flexible in the after-exit conditions. These entrepreneurs have a high working motivation and self-confidence. Compared to the entrepreneurs of the other two groups, profit-driven entrepreneurs have tangible pre-defined purposes for exiting the business which is achieving more profit.
Type Two: Critical Passion-Driven Exit
Entrepreneurs in this group are different from the other two groups in the way that they exit the business because of experiencing internal motivational dynamics. The term critical used in the study is taken from mathematics. As in the critical point in mathematics a function’s slope or orientation changes, in some point the entrepreneur’s passion changes. That is, when an entrepreneur reaches that point, he is no longer passionate about his previous status and his passion is bent toward a new status. In this point, entrepreneurs decide to exit. Once passionate about their businesses, entrepreneurs lose their passion which makes them dissatisfied with their current role/position until they reach the critical point. After the critical point, the entrepreneur's attention shifts toward something new and changes to a new situation.
Therefore, the critical passion-driven exit is a situation in which entrepreneurs have a high level of zest for life and curiosity which makes them diverge from their current business. These entrepreneurs always have ideas with high potentials. Their motivation is internal. They seek personal improvement and achieve what they have in mind. They have a tendency toward leadership and standing out from the others. Compared to the other two groups, they have higher imagination and mental prospect. The entrepreneurs in this group have uncommon thinking; some of them introduced themselves curious and showed interest into entering and experiencing new areas. They do not favour stalling and look for personal growth and playing a role in the society. Thus, they like to take up more challenges, put themselves in new situations and learn more. This makes them feel valued. The entrepreneurs of this type have boundless energy to free up in new fields.
Type Three: Future-Oriented Reactive Exit
The entrepreneurs in this group exit because they experience prohibiting external factors. In other words, external factors motivate them to exit because they see a dire future for their business and the environment they are working in (for example, because of experiencing high stress in work conditions and increased competition in the industry). One can argue that, while out of their free will, their decision to exit is a reaction because it is not made based upon specific reasons other than avoiding possible loss or frustration over current conditions. They are slow decision-makers compared to the other two groups. Moreover, they decide to exit less enthusiastically in comparison with the other two groups of entrepreneurs. Some even decide to exit desperately. None had predicted exit at the time of establishing their business and most of them had no option in mind for what to do after the exit until they decided to exit.
More than the other two groups, these entrepreneurs had the features of traditional owner-managers and had experienced post-exit discomfort, but they were satisfied with their exit eventually. More than the other two groups, the entrepreneurs in this group, pay more attention to the industry's information before deciding to exit. Also, more than other entrepreneurs, they deal more with areas which are related to their previous field, i.e., poultry.
Figure 2 shows different exit types based on two aspects: Personal and environmental aspects. The vertical axis shows the personal aspect of exit (i.e., how much business exit is influenced by personal aspects). The horizontal axis shows the environmental aspect of exit (i.e., how much business exit is influenced by environmental aspects). The three exit types mentioned above, occupy different positions in the two-dimensional diagram. Different positions show different levels of the interaction between personal and environmental aspects. Among the three exit types, the future-oriented reactive exit is mostly influenced by the environmental aspect, while the critical enthusiasm-driven exit is mostly affected by personal aspects. Meanwhile, the profit-driven exit is mostly affected by environmental aspects, but personal aspects also play a key role here.
This study presents a typology of voluntary exit among poultry entrepreneurs in Iran. Using the instructions provided in the grounded theory method, the data collected from the semi-structured interviews with the entrepreneurs were coded in three stages. After forming the categories, different types of the exit emerged. While the three exit types have similarities, they have some features which distinguish one type from the others. This section compares the results of the study with findings from previous related research. The review of literature in this field reveals that different exit types obtained from the data in this study correspond to the results and theories of previous research. profit-driven and future-oriented reactive exits are consistent with and can be explained by strategic choice theory.
According to strategic choice view, the analysis of external and internal information can help the entrepreneurs to identify opportunities and problems which, in turn, can drive them towards the decision to exit. The initiatives in line with the decision bring about some consequences. The strategic choice theory could be applied at organizational and individual levels of analysis. Moreover, the comprehensive strategic choice theory is appropriate for reaction initiatives (here, future-oriented reactive exit) and proactive initiatives (here profit-driven exit) (Child, 1997).
Critical Passion-Driven Exit: Psychological Need Theory and Passion Theory
We can use the theory of psychological need for success and passion theory to clarify passion-driven exit more. According to the theory of psychological need for success, most of the entrepreneurs who have dealt with this exit type, look for success. The entrepreneurs in this group define new objectives for their jobs and personal lives which affect their success directly or indirectly. Therefore, they may set a new goal after one is achieved and exit a current business to achieve a new goal.
The dualistic model of passion (Vallerand et al., 2003) provides an essential element in defining passion: Valuing an activity, loving it, spending time and finally (automatic versus controlled) internalizing process. Another aspect which is considered important by Vallerand et al., (2003) but is ignored in their definition is the role of an activity in one’s identity. The fact that one sees his identity in an activity, affects the way he values that activity. Therefore, it is among the factors changing an interesting activity into a passion (Vallerand et al., 2003). When an activity is in line with an individual’s perception of his “self”, he sees himself in that activity (Aron et al., 1992).
When someone believes that an activity helps to define his identity, he values that activity and spends more time on that activity and consequently, has more passion for it. Therefore, when an activity defines the identity of entrepreneurs, they feel passion for it. This passion makes them exit from their current business.
The findings of this study are in line with the three forces that DeTienne (2010) proposes for termination of a venture in nascency phase. As the data from this study shows, the profit-driven exit has similar drivers to the DeTienne’s alternative forces which are regarding pursuing alternative opportunities. Future-oriented reactive exit includes DeTienne’s calculative forces as well as normative forces because in such an exit, individual entrepreneur decide to exit based on external factors whether economic or social factors. The Typology proposed in this study is broader than DeTienne’s categories because it introduces critical passion-driven exit in which the entrepreneur exits only based on internal drivers. Moreover, the typology proposed by this study is based on the cases of exit in every stages of venture development, including growth and maturity, not only nascency.
The typology proposed in this study can be integrated with DeTienne et al., (2015) typology of exit strategies. The profit-driven exit is corresponding to their financial harvest strategy in a way that entrepreneurs who seek a profit-driven exit are most likely to take the harvest strategy to exit. Detienne et al., (2015) suggest that harvest strategy is used when the motivations of entrepreneur are external. However, our findings show that in a profit-driven exit, entrepreneurs experience both external and internal motivations. Moreover, the critical passion-driven exit is broader than their stewardship exit strategy. DeTienne et al., (2015) propose that in stewardship strategy the entrepreneur’s motivation is internal and mostly about the autonomy. They discuss this strategy in context of family business succession that the entrepreneur finds a successor for his business. However, the critical passion-driven exit is based on any internal motivation and can happen in every business not only family businesses. Furthermore, finding someone to take care of the business after exit can happen in all types of exit introduced in current study. Finally, the future-oriented reactive exit in this study includes voluntary cessation in the study of DeTienne et al., (2015) where the primary activity of the business ends without causation-based decision-making. However, future-oriented reactive exit encompasses those cases of exit in which the business continues to exist after the exit of entrepreneur.
The result of this study is a typology of voluntary exit. Using the typology helps to form innovative concepts and improve precision in their application and measurement. Therefore, a typology is an important analytical tool in social sciences and entrepreneurship (Collier et al., 2012).
The current work can be helpful in the future research. For example, future research for the investigation of factors affecting entrepreneurs’ exit including the dynamics, barriers, decision-making, the strategies and consequences of exit should take into account the different exit types. That is, further research could select statistical samples for each type and analyse data separately for each type. Given the fact that motivations and exit dynamics are different for each exit type, different qualitative and quantitative studies on each exit type in could yield more valid results. Another opportunity for future research is creating measures for different motivations to exit by integrating the measures in motivation literature and entrepreneurship literature.
Also, understanding the reasons and drivers of the exit in a specific industry and country helps the policy makers to better support the young ventures and prevent the mandatory exits which waste money and resources.
Although this research provides a new insight into the complex phenomenon of voluntary exit, it is not without limitations. Since the data were collected through interviews, participants had to recall the events and recount their exit experience. Errors resulted from retrospection are among the well-known limitations in data collection (Golden, 1997). To reduce the errors, researchers tried to remove from the sample those entrepreneurs who had exited their businesses long time ago. Furthermore, the data of the present research have been gathered in a single slot of time. Therefore, the data may only express the feelings and perceptions of the entrepreneurs in that slot of time and not the whole process of entrepreneurs’ development and their transient states. Future research could take a longitudinal approach to provide a better understanding of the exit process with an evolutionary perspective. Another limitation could be the generalization of the findings. Moreover, since the findings are based on data from a specific industry in a specific context, they might not be applicable to other contexts.
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