This study is a follow-up on three others, published in Strategic Management Journal, 1987, 1989, and 1991. A sample of tenured business policy scholars, with significant track records in publishing, rated key management journals with respect to their appropriateness as outlets for scholarly research in the business policy field. The results of the survey are reported.

Research examining predictors of new firm performance is clearly of interest to entrepreneurs and to those who provide advice and funds for their ventures. A growing body of research has examined the influence upon performance of such variables as entrepreneurs' characteristics, processes of founding, venture attributes, and environmental characteristics. However, considered as a whole, this research has shown mixed results and limited findings to date. This paper considers some of the challenges that arise in attempting to predict new firm performance. A key factor is the heavy dependence of new ventures upon environmental developments, many of which may be very difficult to predict. All firms are impacted by the environment, but new ventures have a concentration of risk upon a few products or services, narrow markets, and a few key resources. Thus, well-conceived ventures can fail because of unforeseen environmental shocks and the lack of “deep pockets” to ride out hard times. These same factors can cause new firm performance to swing widely, confounding attempts to identify predictors of good or poor performance. There are also challenges because many entrepreneurs pursue personal goals, some of which are noneconomic in nature. Thus, decisions about whether to found ventures, about how vigorously to grow them, or about whether or not to close down marginal businesses are all influenced by the personal values of entrepreneurs. The diversity of ventures, encompassing firms that differ greatly in scale and potential, complicates the task of determining predictors of performance. It may be that the influence of a particular variable, such as management experience, varies by type of venture. Previous research has also used a variety of performance measures, making comparisons across studies more difficult. Little has been done to determine whether the factors that enhance one measure of performance, such as survival, are the same as those that lead to others, such as growth or profitability. Previous research has been hampered by inadequate theoretical frameworks and, in some cases, by inappropriate methods of analysis. In addition, past research often could have been characterized by a tendency to examine variables that were easy to study, rather than those that were important. Despite limited success to date, we should not forsake research on predictors of new venture performance. The challenges discussed probably put limits on our ability to predict performance of individual ventures. However, the field of study is young and there is much that can be done to add to our understanding. The paper then develops recommendations for future research, noting that each of the challenges considered raises specific research opportunities.

This note is a follow-up on two earlier studies—the first published in 1989 and the second in 1991. A sample of tenured entrepreneurship scholars, with significant track records in publishing, rated key management journals with respect to their appropriateness as outlets for scholarly research in the entrepreneurship field. The results of the survey are reported.

While stories abound in the business press about multibillion dollar leveraged buyouts (LBOs), scant attention has been paid to this type of buyout financing in smaller companies. Some observers argue that LBOs are little more than financial manipulation, while others suggest that they are an alternative form of entrepreneurial endeavor and that smaller company LBOs may serve to rejuvenate formerly stodgy organizations. In this study, data from 56 firms that experienced an LBO between 1981 and 1987 were analyzed to ascertain the current state of smaller company LBOs and what changes, if any, occur after the LBO takes place. Most of the smaller company LBOs occur in industries far different from the high-growth, high-technology environments of the glamorous start-up. The cash flow requirements of the high debt component seem to favor industries in which growth is very slow or even negative and in which the technology is stable. Likewise, smaller LBOs are relatively immune from foreign competition. The typical smaller company LBO individual has generally been associated with the company as an officer or director prior to the buyout, and possesses at least a college education. While it was presumed that the typical LBO individual would be between 40 and 55 years of age, a substantial number of both older and younger individuals were discovered in the study. In terms of internal operating changes after the buyout, it was expected that the locus of decision making would shift toward the lead investor and that managerial compensation would become increasingly incentive based. Unexpectedly, little change in the locus of decision making occurred, but there was a pronounced shift away from salaried compensation. Sample firms indicated that asset stripping or personnel layoffs occurred relatively infrequently, and the most common operating changes focused on such revenue-generation efforts as increased sales and marketing and on imposing more stringent capital budgeting requirements. The study suggests that the once-stable environments in which these firms operated may become far more exciting in the future. On the positive side, these smaller companies are being operated by owner-managers experienced in both the company and the industry. The financial requirements of the high debt levels and the resulting emphasis on cash flow rather than profitability may make these firms extremely fierce competitors. On the negative side is the instability that may be caused by the high debt levels. Because most of these companies have not yet faced an economic recession, their long-term viability remains to be tested.