As depicted in Figure 1, we propose that young organizations
are more likely to suffer from resource and capability deficiencies than are older firms. This is the
essence of the liability of newness expressed in the
language of the resource-based view. Older firms, having
presumably developed valuable resources and capabilities
in their evolution from being young to being
older, will be prone to hazards of environmental change.
Thus, a resource-based perspective can also be applied
to the liability of obsolescence. The age-specific failure
dynamics are stated more formally in the following two
hypotheses