Differing perceptions of new venture failure - Essay Example

Summary and Critique of the article Differing perceptions of new venture failure: A matched exploratory study of venture capitalists and entrepreneurs by Zacharkis, A., Meyer, G., and DeCastro, J. (1999).(Name)(University)(Course)(Tutor)(Date)In this study, the authors examined the failures of new ventures from the perspectives of both the entrepreneurs and the venture capitalist in the context of attribute theory. Research has shown that over 20 percent of new ventures fail in their first year of establishment while another 66 percent fails within the next 6 years.

The researchers however note that the introduction of the venture capitalist brings in new dimensions in the survival of new ventures since within the first 7 years of establishment; only 18 percent of the new ventures fail as compared to 75 percent of non VC funded new ventures. The authors note that research on the factors that cause failures of new ventures is limited due to factors such as difficulty in conducting financial analysis on failed ventures and the reluctance of entrepreneurs to discuss their venture failures.

The authors also discuss the factors leading to new venture failures in the perspective of the venture capitalists and the entrepreneurs. Venture capitalists cite factors such as poor management and unfavourable market conditions while the entrepreneurs cite factors such as product factors, financial limitations and managerial problems. All these are discussed in relation to the attribution theory. The argument that the ventures examined represented all the new ventures and that the factors leading to failure as ranked in order of importance by the authors is misleading due to the fact that new ventures and entrepreneurs from other locations may be faced with other factors of failure.

It is therefore important to note that applying the results of the study should be done with that fact in mind. The factors may depend on the location and may also be time determined as well as depend on the individual characteristics. An alternative conclusion could therefore be that the success of the new venture will depend on the internal characteristics of the venture.Work CitedZacharkis, Andrew Meyer, Dale G. and DeCastro, J. “Differing perceptions of new venture failure: A matched exploratory study of venture capitalists and entrepreneurs.

” Journal of Small Business Management 7.1 (1999): 1-14