Bankruptcy occurs when firms lack sufficient capital
to cover the obligations of the business (Boardman
et al. 1981). For new firms, the critical challenge then
is to establish valuable resources and capabilities that
lead to the generation of positive cash flow before initial
asset endowments are depleted (Levinthal 1991).
Considerable attention has been paid to early failures
(new and adolescent firms). Research into large, dramatic
megaflops has also been advanced in the literature
(D'Aveni 1989, Hambrick and D'Aveni 1988). However,
though many firms exit between these extreme positions,
there is a considerable gap in our understanding of why.
This paper examines, in some detail, failure across a
wide range of firm ages.